Feb 7, 2011

Industry Focus:
Medical Imaging
F R O S T & S U L L I VA N

Vital Signs Company Spotlight: Biotronics3D

Cloud Computing in Medical Imaging: Following in the

Footsteps of Cloud Storage?
By Nadim Daher, Senior Industry Analyst, Medical Imaging and Imaging Informatics, Frost & Sullivan

The recent economic downturn marks a time when healthcare providers, like other
economic entities, have kept busy managing resource levels, sometimes reducing
them, but always looking for more effective ways to utilize existing assets. The
healthcare industry tends to lag behind many other industry sectors when it comes to
investing in, or even simply experimenting with, new models of information technology
(IT) deployment. Such has been the case with the shift toward cloud-based technology
and its two major applications in healthcare, namely cloud storage and cloud
computing. The former has already gone a long way in healthcare and seems to be
emerging as the long-term solution of choice to the formidable challenge posed by
ever-growing data volumes and the geographic dispersion of healthcare-related
information and images. This is a particularly pressing problem in the case of medical
imaging. Cloud computing, for its part, is still in the early stages of development and
adoption, although market conditions may soon start to change.

Navigating a Decade of Medical Imaging Cloud Storage

Perhaps the biggest obstacle standing in the way of any “shift to the cloud” in
the IT strategy of healthcare providers is concerns about the safety and privacy
of patient information. But today, many storage and healthcare IT vendors offer
Software as a Service (SaaS), application service provider (ASP) or other types
of data center solutions, which may or may not use “the cloud.” Generally, these
vendors are going to greater lengths to demonstrate their security policies and
data integrity measures. They must convince care providers that using a third-
party data center or cloud service provider will not compromise their control
and ownership of the data, and that the geographical location of the data center
or the host’s cloud does not constitute a threat to network privacy and
security. Horror stories abound, and any provider can likely recall an incident or
two that they have heard of or even experienced themselves, where the
gatekeeper of the data or the service provider has been negligent or had a
laissez-faire attitude with regard to the integrity of the service. However, with
the penchant for the media to scrutinize this area—often with damaging
consequences for the company exposed—these areas have received fitting “top-

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Devices

down” attention from investors, owners and C-level executives, who have swiftly recognized that
exposure to this kind of event is extremely detrimental. This reaction has led to a progressive adoption
of “triple bottom-line accountability,” owned by every staff member, business partner and supplier.

As such, throughout the past decade, the concept of cloud storage has continued to gain higher and
higher acceptance within the mindset of U.S. healthcare providers, often assisted by the positive
experiences reaped by internal champions within these organizations from their use of cloud-based
services outside the clinical field. Adoption of data center and cloud-based solutions has picked up
slowly in the U.S. medical imaging market, particularly in the areas of long-term image archiving,
including disaster recovery and business continuity (DR/BC), an IT-based strategy mandated by HIPAA
security rules in the first part of the 2000s. Numerous vendors with very diverse industry backgrounds
have actively pushed such types of solutions within the medical imaging market since the early 2000s.
In a trend started by InSiteOne, which was acquired by Dell in December 2010 , the leading hardware
OEMs, select medical imaging IT middleware vendors, a number of RIS/PACS vendors owning data
centers, and most recently information storage and security giant Symantec, have all followed suit. Even
large telecommunication firms are designing cloud-based solutions for healthcare, such as AT&T's
ForHealth portfolio which it will develop working with medical imaging IT middleware vendor Acuo
Tech.

While the market opportunity for these offerings was initially confined to small-scale segments of
the imaging market, typically having limited IT resources on site, recent years have witnessed a revival
of this type of data center offerings across a wider spectrum of providers. This started mainly as the
RIS/PACS vendors, which have the largest footprint in imaging facilities, became more aggressive in
advertising their data center infrastructure and marketing their capabilities and products in this
space. As a result, many larger facilities and multi-site organizations have opted for a centralized
IT model utilizing one or more off-site data centers, sometimes also setting up a private cloud for
the organization. Overall, this development aligns well with the overarching trends of U.S. healthcare
IT toward IT consolidation and creating a virtualized IT infrastructure and a service-oriented
architecture (SOA).

Cloud Storage: Overcoming the Real Market Barriers

It turns out, however, that other, less obvious but equally important factors have also been hampering
the widespread adoption of cloud technology in healthcare. The first factor would be the lack of
familiarity with enterprise-wide cloud technology. In a recent study of the medical imaging IT
middleware marketplace, Frost & Sullivan investigated the status, trends and perception of each of the
different components of IT middleware in the market. When asked, “How familiar are you with private
cloud storage?” (Fig.1), only 5 percent of the 160 radiology IT stakeholders surveyed indicated they
were “very familiar” with private cloud storage. Just more than half of respondents indicated they were
“somewhat familiar” with the technology. Strikingly, as much as 44 percent of respondents indicated
they were not at all familiar with private cloud storage, which demonstrates a severe lack of familiarity,
and perhaps of education, about cloud-based technologies in the healthcare market.

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Imaging

Fig. 1—Familiarity with private cloud storage among 160 surveyed U.S. imaging facilities
(Frost & Sullivan, Dec. 2009).

How Familiar Are Your With Private Cloud Storage?

(N=160)

Very Familiar
5%
Somewhat Familiar

Not at All Familiar

Source: Frost & Sullivan

In another set of survey questions, the study examined PACS as a hosted service, defined as a PACS
service hosted by a vendor (e.g., SaaS, ASP) with clients accessing the system via network or the
Internet. When asked to rank the obstacles to deploying PACS as a hosted service in order of
importance, respondents ranked bandwidth and performance concerns as the topmost obstacle, with
data security only second. Clearly, bandwidth and performance are attributes that are mainly technical
in nature, and that are limited, or enabled, through better IT network infrastructure or prioritization of
use through a quality of service (QOS) policy. Coupled with what we now know about the lack of
familiarity with cloud technology, this concern about bandwidth and performance might be an indication
that the market is slowly leaving behind its initial disfavor of cloud technology, which was partly
psychological, to give way to other, less biased and more practical concerns. Indeed, unlike security-
related concerns, bandwidth and performance considerations can be overcome by vendors solely
through technology improvements, without the need for heightened efforts in marketing
communication and customer education.

In what might constitute bright prospects for the vendors actively selling cloud storage solutions
in healthcare, it appears that the adoption curve of cloud technology will soon be entering its next
phase. When asked, “Would you be interested in setting up private cloud storage in your organization?”
(Fig.2), a considerable 41 percent of survey respondents indicated they would be interested in setting
up cloud storage in the next two to three years. An additional 10 percent of facilities indicated they
would be interested in implementing private cloud storage in the next year. With 43 percent of
respondents indicating they would not be interested and 6 percent already using it, reluctance remains
high in the market and current adoption remains low, such that almost half of the market would remain
non-addressable. Overall, however, the continual advances made with cloud technology in the

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Imaging

mainstream IT industry, coupled with the ongoing upgrades in the IT infrastructure of healthcare
organizations—stimulated further through the recent HITECH Act—are all accelerating the natural
progression of cloud technology within healthcare.

Fig. 2—Interest in setting up private cloud storage among 160 U.S. imaging facilities
(Frost & Sullivan, Dec. 2009).

Would you be interested in setting up cloud storage

in your organization?

No, we are not interested

in setting up cloud storage
Yes, we would be interested
in setting up cloud storage in
next 2-3 years
Yes, we would be interested
in setting up cloud storage in
the next year
Yes, we would be interested
in setting up cloud storage in
the next year

Source: Frost & Sullivan

Cloud Computing Making its Healthcare Debut

Much like PACS can be extremely demanding with respect to storage, certain areas of medical imaging
are extremely intensive with regard to computing. Such is often the case with advanced visualization,
specialty clinical applications, computer-aided detection and diagnosis (CAD), and speech recognition
(SR) applications. These software applications involve intensive image-based post-processing, which can
usually rely on the storage capabilities of PACS, but generally require computing capabilities far above
those of traditional PACS solutions. In order to propose an effective workflow, these solutions often
require incremental hardware and network resources, involving further capital IT investment. Given the
typically low volume of clinical procedures requiring advanced post-processing, these added capabilities
are often under-utilized, and their total cost of ownership unjustified. As such, they constitute an area
of predilection for cloud computing, which uses the Internet to access, on-demand, the computing
resources of shared remote servers, much like cloud storage uses the Internet to access the storage
capabilities of remote data centers.

The business case for cloud computing has a definite appeal. By not owning, but rather “leasing” or
“renting” the physical infrastructure under a cloud-based model, imaging facilities are able to adopt
advanced clinical applications using limited or no upfront costs. The capital expenditure involved in
implementing a turnkey advanced processing solution converts into operational expenses, typically in
the form of subscription fees or per-procedure fees, similar to those offered for hosted data centers

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Imaging

or cloud storage. The model requires fewer IT skills in-house and on-site for the implementation,
maintenance and support of the system, which further lowers the barriers to entry of these modalities
into the marketplace. However, while upfront costs might be greatly reduced, the total cost of
ownership (TCO) is not necessarily lower, as customers might actually pay more for operating
expenses, so these outsourced models might not always make great sense fiscally compared to
operating a data center in house. In these instances, the terms of use and the terms of the contract are
key to grasping the real costs of the proposal, with the most flexible arrangements naturally enticing
savvy buyers, who are afforded the protection from low entry costs but higher TCO over time.

Fig. 3—The mainstream cloud industry offers numerous partnership opportunities for
medical imaging vendors.

Some of the larger IT firms that are

Major cloud service providers:
actively involved in cloud computing:

• Amazon • Fujitsu • IBM

• Microsoft • Dell • VMware
• Google • Red Hat • NetApp
• Rackspace Cloud • Hewlett-Packard
• Salesforce

Source: Wikipedia

Cloud computing is being deemed one of the most important paradigm shifts in the business IT world
today. The common but often unnoticed experience that every prospective buyer will have had from this
utility-type delivery model—from electricity to cellular phone to water supply arrangements—is
another great help when trying to weigh the overall benefits of cloud computing. Like other industries,
healthcare is starting to realize that what used to be merely a means of lowering costs or converting
capital expenditure to operating expenses in response to tough economic conditions, today is a means
for the healthcare enterprise to become more agile, more innovative, and more competitive. Not only
does cloud computing enable the mainstream adoption of otherwise inaccessible advanced clinical
applications, it also gives these applications added benefits that resonate well in the market today.
Benefits include its location independence, which helps a mobile radiology workforce because users can
access the system from anywhere, and scalability, which can help a provider start small, yet think big.
Despite having already reached high levels of usability, cloud-based solutions must continue to improve
in performance and availability in order to make cloud computing a seamless alternative to fully owned
turnkey systems.

These factors contribute to building an ever-stronger case for cloud storage and cloud computing in
the healthcare market. Moving forward, the favorable value proposition of these cloud-based
technologies is set to accelerate their adoption in the U.S. market, especially as IT gains more
ownership of medical imaging IT systems within the healthcare enterprise.

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Imaging

Company Spotlight: Biotronics3D

In 2003, the co-founders of Biotronics3D saw that physicians wanted to enhance advanced medical
imaging capabilities throughout their facilities but at the same time felt that available applications were
vastly overpriced. The weak value proposition offered by providers of these applications pointed to a
clear gap in the market. The ambitious plan was to create a unique, innovative way of experiencing
advanced imaging, delivering value to all stakeholders and enhancing the quality of clinical outcomes. On
that foundation and concept, Biotronics3D was formed.

Identifying then that the chief barrier to acceptance of these tools was total cost of ownership in lieu
of the proprietary nature of the technology delivery, custom components and engines, Biotronics3D
introduced the 3Dnet Suite advanced visualization workstation with advanced clinical applications.

Later acknowledging the gradual creep of the pain points through their close contact with the imaging
fraternity, including more examinations, more data in those examinations, diversity in the number of
locations producing the exams coupled with an increased expectation from consumers of healthcare for
greater accuracy and faster outcomes, and in keeping the fundamental conviction to democratize
imaging interpretation, 3DnetMedical, the cloud-deployed Software as a Service, was conceived.

Flagship Product
Biotronics3D 3DnetMedical—Cloud Imaging, is a way to distribute medical imaging services with
advanced visualization productivity and analysis tools without the need for the user to purchase, install,
or manage any infrastructure. 3DnetMedical grants access to diagnostic imaging data anywhere, anytime,
on any PC/MAC, with minimal bandwidth, to perform comprehensive clinical analysis instantly, view and
send reports, or collaborate with colleagues.

Collaborative Community: Imaging is increasingly central to point-of-care episode management.

3DnetMedical facilitates collaboration between radiologists, specialists and technologists.

Fully Secure: The service was designed around secure Internet rules and protocols, providing
banking-level encryption, VeriSign service authentication, user authentication, HIPAA compliance, and is
hosted in fully resilient and redundant Tier 4 data centers. Service access is realized in minutes,
requiring users to go through a simple online registration, with a clear menu permitting users to select
from additional clinical applications that they can use at any time. While this is not a long-term PACS
archive (it is complementary to PACS, RIS and EPRs), 3DnetMedical does provide a short-term cache of
one month’s data that can be extended.

Economical & Productive: There are no setup costs, overheads, or minimum terms. Also, no
pay-per-click, only pay per registered user. 3DnetMedical optimizes all imaging modalities and resources
by using the same utility model used for cellular contracts, and combines this with a much higher level

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Imaging

of accuracy achievable in understanding all costs, plus greater service precision through SLAs. This is
augmented with current, innovative tools and techniques that increase productivity and service income.
The workload is effectively distributed throughout the healthcare system to raise standards of practice
and outcomes.

Noteworthy Milestones:
2003 Biotronics3D is founded
2004 3Dnet Suite launched
2007 3Dnet True Web—Thin client for enterprise introduced
2010 3DnetMedical—Cloud-deployed advanced visualization
collaboration utility launched
2011 Biotronics3D launches platform as a service framework within 3DnetMedical

Contact Information:
HQ: +44 (0) 207 093 0903
http://www.biotronics3d.com/
http://3Dnetmedical.com
infoUSA@biotronics3D.com

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 F R O S T & S U L L I V A N This Week's Industry Focus
Medical Imaging

Recent Announcements

Date Company Product Name Function Designation

Watson Laboratories Fentanyl Buccal tablets, the generic equivalent

10-Jan Generic Fentora FDA Approval
(Morristown, NJ) to Cephalon's Fentora ® tablets

Therapeutic Plasma
NxStage Cartridge for use with the NxStage® System
10-Jan Exchange (TPE) FDA Clearance
(Lawrence, MA) One™ in a clinical environment
Cartridge

Rapid Test for Allows egg producers and processors to use

Neogen Corporation
12-Jan Salmonella Neogen's Reveal for SE to shorten the testing FDA Approval
(Lansing, MI)
Enteritidis (SE) time and comply with the FDA

Ready-to-use
B. Braun Over-the-counter test providing easy
12-Jan Prontosan® Wound 510(k) Clearance
(Bethlehem, PA) accessibility to patients
Management Gel

New formulation of Acetadote®

Cumberland
New Formulation (acetylcysteine) injection, the company's
13-Jan Pharmaceuticals FDA Approval
of Acetadote product used to treat acetaminophen
(Nashville, TN)
poisoning

Radiopharmaceutical agent intended for use

DaTscan™ with SPECT imaging for the detection of
GE Healthcare
14-Jan (Ioflupane I 123 dopamine transporters (DaT) in the brains of FDA Approval
(Princeton, NJ)
Injection) adult patients with suspected Parkinsonian
Syndromes (PS)

Test for Simultaneous

AdvanDx Identification of E. coli, Test directly from positive blood cultures in
17-Jan 510(k) Clearance
(Woburn, MA) K. pneumoniae and P. less than 90 minutes
aeruginosa

Acarbose tablets, the generic version of Bayer's

Mylan Generic Version of Precose® tablets, a treatment to be used with
18-Jan FDA Approval
(Pittsburgh, PA) Precose® Tablets diet and exercise to improve glycemic control
in adults with Type 2 diabetes

Natroba (spinosad)
ParaPRO LLC Treatment of head lice infestation in patients
18-Jan Topical Suspension FDA Approval
(Carmel, IN) ages 4 years and older
0.9%

Pediatric fixed-dose combination (FDC) in

Mylan Lamivudine and Tentative
19-Jan tablet form for use in treating children with
(Pittsburgh, PA) Zidovudine Tablets FDA Approval
HIV/AIDS

Zyga Technology, SImmetry™ Sacroiliac Treats degenerative sacroiliitis and sacroiliac

19-Jan 510(k) Clearance
(Minneapolis, MN) Joint Fusion System joint disruptions

Viibryd Tablets
PGxHealth
21-Jan (vilazodone Treats major depressive disorder in adults FDA Approval
(New Haven, CT)
hydrochloride)

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Medical Imaging

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Products

Clinical Diagnostics Medical Imaging

• Molecular Diagnostics • Genetic Testing • Core Imaging Modalities • PACS & Imaging IT
• Immuno-chemistry • Infectious Disease • Imaging Agents • Digital Imaging
• Point-of-Care Diagnostics • Imaging Software
• Cell Culture • Cancer Diagnostics
• In-Vitro Diagnostics

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• Biopharmaceuticals • Cardiac Monitoring • Temperature Monitoring
• Contract Research & Manufacturing • External Defibrillators • Pulse Oximetry
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• Drug Delivery • Glucose Monitoring • Patient Monitoring IT
• Vaccines • Blood Pressure Monitoring • Sleep Apnea Monitoring

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• Data and storage management • CPOE • RFID in Healthcare
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