Kodak sets future targets for Health Imaging business unit

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Eastman Kodak Co. has some aggressive goals for its Health Imaging business unit over the next several years.

 The company sees Health Imaging's revenues growing at a compound annual growth rate of 7 to 9 percent from 2002 to 2006, with earnings advancing at a clip of 8 to 10 percent over that same time span.

 The strategy to accomplish these heights includes advancing a multitude of imaging technologies -- from PACS and RIS to computer-aided detection (CAD) and digital and computed radiography (DR and CR) - with a double-digit percentage increase in R&D spending in 2004 and complementary acquisitions.

 Kodak also will establish Health Imaging's Healthcare Information Systems (HCIS) product group in Rochester, N.Y., by the middle of 2004.

 This past year, Health Imaging acquired four companies; the most notable of which was PACS specialist Algotec Systems Ltd. in November. Algotec and Kodak have been PACS technology partners since mid-2002 and the company was instrumental in the development of Kodak's 2003 release of PACS DirectView System 5.

 "After working with Algotec for a year and a half, [the acquisition] was the right choice," said Dan Kerpelman, president of Health Imaging. "It also was important to signal our customers that this wasn't just an ephemeral relationship until someone better came along. It was the platform, technology and the team we wanted."

 Algotec will continue to operate in Israel and serve as Kodak's prime PACS development business. Algotec has approximately 65 employees.

 Health Imaging also plans to offer what Kerpelman described as "an economy-tier" PACS -- a "derivative" of DirectView System 5 -- for emerging healthcare markets, such as China, as well as mid-size to small hospitals and imaging clinics.

 "That is an underserved market and one that is starting to need PACS as much as anybody else," Kerpelman added.

 Kodak's product plans do not stop at PACS. Kerpelman said Health Imaging looks at healthcare information systems "as a broader phenomenon beyond just PACS. It includes intelligent archiving."

 To that end, Kodak in May purchased exclusive rights to Front Porch Digital Inc.'s DIVArchive Medical Software - renamed Versatile Intelligent Patient Archive, or VIParchive, by Kodak - as a scalable, secure archive management technology with the flexibility for capacity increases and geographical distribution of content. VIParchive also is capable of archiving both DICOM and non-DICOM images.

 "Everyone knows how to store data, but not everybody has solved the problem of taking this exponentially growing - in size and complexity - volume of information," Kerpelman said. "It is very heterogeneous; there is data from radiology, other labs, etc. It must be governed so any one user can have a virtual window to that data; that it is scalable and respects the needs for data security and privacy."

 Front Porch's DIVA Medical Software development staff in Toulouse, France, has since become part of the Health Imaging group.

 Kodak also previously announced plans to bring its radiology information system (RIS) to the United States in the second half of 2004. RIS 2010 has more than 70 installations worldwide, predominantly in Europe and Australia. RIS 2010 is designed with an open architecture for interface with other information systems and can be fully integrated with Kodak PACS.

 In other product areas, Kerpelman said Health Imaging also plans to make a "much stronger statement" in the digital radiography market in 2004. He added that while the company may not be ready to make an announcement regarding a full-field digital mammography (FFDM) system until 2005, an FFDM product is in Kodak's future.

 "We are working on digital mammography through the workstations, through archiving, PACS, printing and CAD. As far as the actual capture solution and whether it will be CR or DR, we have an internal horse race going on about the right thing to do there," he added. "And, frankly, we are waiting to triangulate with industry readiness, both in clinical terms and economic terms. Reimbursements for mammography are so depressed."

 At RSNA 2003, Kodak showed three works-in-progress products for mammography - computer-aided detection (CAD) software, a mini-PACS and the DryView 8900 laser imaging system for mammography. Kodak plans to market all three products in 2004. The CAD product comes from Kodak's September acquisition of MiraMedica Inc.