Medical imaging service providers forced to adapt business to hospitals' one-stop shopping demand

Mountain View 29 September 1999Hospitals are increasingly requiring medical imaging service providers to assist them in areas that go beyond traditional maintenance and imaging system repair. As a result, service providers are broadening their portfolio to also include asset management, technology assessment, training, and consultation services. Winning service providers will be those who are willing to expand their geographical base to cover entire hospital chains. Providing this type of one-stop shopping is expected to remain a key to winning customers.


In 1998, the markets for United States medical imaging services totalled revenues of approximately $2.9 billion, according to new strategic research by Frost & Sullivan. Growth in the U.S. medical imaging services industry has been relatively flat since 1995, when, according to the Frost & Sullivan study on the U.S. Medical Imaging Service Markets, the market was worth $2.85 billion. Reasons for this stagnant growth rate include declining service prices; increased in-house market share, that exerts slight downward pressure on the total market volume; and also the more mature status of the installed base, resulting in marginal socket growth.

The "U.S. Medical Imaging Service Markets" report analyses the services provided by original equipment manufacturers (OEMs), as well as the independent service organisations (ISOs). This research monitors the changing needs of the end users and assesses competitors' tactics as they attempt to meet customer demands. Frost & Sullivan's study provides an evaluation of market drivers and restraints, in addition to expert forecasts, thus offering a comprehensive overview of the U.S. medical imaging services industry.

Although the global economic recession and cuts in reimbursements have forced hospitals to curtail purchases of imaging equipment, there are signs that purchases are again on the rise. The Frost & Sullivan Medical Imaging Analyst Vasudha Badri claims the fluctuating marketplace has encouraged imaging equipment manufacturers to pursue other avenues to maintain a steady stream of profits. Offering services for the installed base of equipment is one means of sustaining revenues.

To capitalise on these markets, Frost & Sullivan stresses that OEM service providers will need to work on proprietary systems other than their own. Multi-vendor service gives a company the opportunity to gain considerable market share, according to Vasudha Badri. Imaging equipment technology is changing rapidly, with many systems becoming dependent on sophisticated information technology. Mr. Badri believes that while service engineers at OEMs are trained as products get upgraded, the engineers at ISOs are at a distinct advantage. Consequently, a number of ISOs have failed to remain profitable and have fallen prey to acquisitions by OEMs. To stay afloat, ISOs will have to make use of service training centres which can bring engineers abreast with the latest technology advances.

This health care industry research has integrated the Market Engineering consulting philosophy into the entire research process. Critical phases of this report included items, such as the identification of industry challenges; market engineering measurements, strategic recommendations, planning and market monitoring. All of the vital elements of this system assist the market participants in navigating successfully through the medical imaging services market.

Frost & Sullivan offers Market Engineering awards to the medical imaging equipment services industry to recognise the companies which have worked hard to make a positive contribution to the medical imaging equipment services market. In giving these awards, Frost & Sullivan recognises some of the departments within the companies for their achievements in the past year. The 1998 Market Engineering Competitive Strategy Award is presented to GE Health care Services, a division of GE Medical. GE Health care Services has strategically acquired independent service companies which provide a wealth of seasoned field engineers and a well-developed customer base.

Consequently, GE Medical was equally offered the 1998 Market Engineering Customer Service Award, in recognition of the company's ability to build and maintain its customer relationships through fast response, good support and fair treatment of customer complaints and marketplace needs. The 1998 Market Engineering Product Line Strategy Award has been given to ADAC for its ability to thoroughly address the niche market of nuclear medicine equipment. ADAC has historically focused on equipment sales but it has also progressively added multi-vendor services and sales of refurbished nuclear medicine equipment into its product line portfolio.

Frost & Sullivan is an international marketing consulting and training company which monitors the health care industry for market trends, market measurements and strategies. This ongoing research is included as part of the Diagnostic Imaging Custom Subscription and is used to support industry participants with customised consulting needs.

Leslie Versweyveld

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