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The Market Reflects
Broader Health Care
Technology Stressors

DOTmed Industry Sector Report: CT Sales and Service

by Barbara Kram , Editor
This report originally appeared in the April 2009 issue of DOTmed Business News

January 1, 2007 was an infamous day for the CT industry and in many ways the beginning of a new era.

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Special-Pricing Available on Medical Displays, Patient Monitors, Recorders, Printers, Media, Ultrasound Machines, and Cameras.This includes Top Brands such as SONY, BARCO, NDS, NEC, LG, EDAN, EIZO, ELO, FSN, PANASONIC, MITSUBISHI, OLYMPUS, & WIDE.

That date initiated cuts in Medicare reimbursement for imaging studies at free-standing radiology centers as a result of the Deficit Reduction Act (DRA). Also at that time, the reimbursement rate for cardiac computed tomography angiography (CTA) was slashed in half or more, depending on the rate and region. As a result U.S. sales of CT, which had risen dramatically, came down from a spike of about $1.8 billion in 2006 to just over one billion in 2008.

"That's a fairly significant drop but the market was very highly accelerated before that. The stable range is probably $1.2 or $1.3 billion per year," said Doug Ryan, Senior Director, CT, Toshiba America Medical Systems. "You need to constantly be flexible and change your business. In the U.S. there has not been one year that is the same as another," he observed.

This unpredictable climate is worsened by the economic storm, uncertain federal regulatory shifts, concerns about the overuse of medical imaging, clinical issues of radiation dose exposure, and the potential reform of the U.S. health care system.

These factors leave hospitals and imaging centers more focused on the bottom line than ever. Some practice models just won't make it. Others are postponing equipment investments.

"The way the economy is going right now, we're seeing a trend of more small imaging centers shutting down. Small centers don't fall under the same Medicare reimbursement arrangements that large hospitals do," said Larry Knight, Chief Operating Officer, Sunrise Medical Technology, Inc., Waxahachie, TX. Reimbursements that had been over $1,000 per study a few years ago have been trimmed to about the $300 range. "So their entire business model was based on higher numbers. CT in many cases is a loss leader, a device put in the center not as a primary source of revenue, but as a device that must be there to maintain their status overall."

A collimator on a GE
LightSpeed 16 is being checked
at C&G Technologies

Prices on new CT scanners have come down and manufacturers have come up with smaller systems that are more affordable, as well as with scalable solutions. These don't require as great an up-front investment but can be upgraded over time. An example is the Philips Brilliance iCT flagship and its offspring, the Brilliance iCT SP, priced about 20% lower. "The major difference is a smaller detector size compared to iCT," said Peter Reimer, Vice President of Global Marketing, Philips Healthcare. "The detector is an exchangeable unit that could grow with future needs. iCT SP meets a lower price point and meets the need for a secure investment into the future so the product is not outdated in two, three or four years."
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