Competitive Dynamics in the North American VNA Market. Theo Ahadome Senior Analyst InMedica

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1 Competitive Dynamics in the North American VNA Market Theo Ahadome Senior Analyst InMedica

2 Types of VNA InMedica has identified the following VNA architectures Level 1.0 Departmental Archive (DICOM): This refers to a VNA used in a single imaging department, usually radiology. Such architecture must still meet all the minimum components of a VNA discussed in Chapter 2. However, its sole purpose is to provide lifecycle management and disaster recovery for one department. It does not need to share images with multiple PACS. Level 2.0 Multi-department DICOM (Enterprise): This refers to a VNA used to manage and share data between multiple PACS in different departments within the same hospital, such as between radiology and cardiology. It primarily handles DICOM images from these departments. It can also handle non-dicom images by either converting it to DICOM or by keeping it in its native format. Level 2.1 Multi-Site DICOM (Enterprise): This refers to a VNA used to manage and share images between multiple PACS at different hospital locations. This may be between radiology departments, or involve other departmental PACS. The architecture of this system must be somewhat different from Level 2, to handle requirements from different geographic locations. Level 3.0 Multi-department XDS (Enterprise): This refers to a VNA used to manage and share images and non-image across departments using XDS or similar protocols. Level 3.1 Multi-site XDS (Enterprise): This is similar to Level 3.0, but is configured to integrate departments across different hospital locations within a network.

3 Types of VNA 100.0% 90.0% Multi Site XDS 80.0% Single Site XDS 70.0% 60.0% Multi Site DICOM 50.0% 40.0% Multi Department DICOM 30.0% Single Department DICOM 20.0% 10.0% 0.0% North American Market - Types of VNA Relative Proportions of Study Volumes Departmental archives accounted for only 18.0% of study volumes in 2011; this will decrease to less than 10% by Enterprise VNA accounted for 82%; of which XDS is 11%. By 2016 XDS-based Enterprise VNA to account for 30% of VNA studies.

4 PACS Vendors As the VNA market has developed over the decade, PACS suppliers have responded with different strategies. Initially, most vendors opted to address the need for cross-departmental image access by developing enterprise PACS products. These essentially allowed imaging departments outside of radiology to share the radiology PACS product. However, without being specifically designed for other departments, some of these products did not meet the different viewing and workflow needs of these departments. Subsequently, department-specific products were developed for specialties including cardiology, orthopedics and mammography. These solved the imaging requirements of these departments. However, it also meant that images were being increasingly compartmentalized in disparate systems, thus increasing storage requirements and limiting the ability to share images across departments. The limitations of PACS with regards to managing the lifecycle of an image, providing access to disparate PACS from other vendors, have led some PACS vendors to develop VNA products. A challenge for PACS suppliers in the VNA market is to prove the ability to deliver a nonproprietary, standards-based approach to archiving that gives healthcare providers control of their data without being locked in to their PACS. Some PACS vendors can deploy their traditional PACS as a full enterprise archive which provides storage consolidation, lifecycle management and cross-departmental image sharing. These systems are not considered a VNA product due to the lack of a separate DICOM conformance statement and regulatory approval which is separate from the PACS product, and a general inability to interface with other PACS.

5 PACS Vendors Agfa Healthcare, Carestream Health, GE Healthcare and Merge Healthcare have all developed VNA products, either in-house, or through acquisitions. These suppliers were earlier-to-market with their VNA products, driving market leadership. Of these, GE Healthcare has the largest share of departmental archives in North America. While GE has a leadership in departmental archives, other PACS suppliers have established their leadership in cross-departmental, multi-pacs enterprise archives. PACS suppliers without a VNA product in 2011, as defined by InMedica, include Philips Healthcare, Siemens Healthcare, Fujifilm and McKesson. Fujifilm and Philips Healthcare partner with VNA suppliers including Acuo Technologies and Siemens Healthcare has partnered with Dell to supply VNA. It should be noted that some enterprise PACS may meet, albeit in a restricted manner, some of the challenges of image sharing and workflow efficiencies that drive VNA adoption. As such, the decision to deploy a VNA or other enterprise architecture should reflect the challenges that a healthcare provider faces and the extent to which a vendor s enterprise product (VNA or otherwise) meets those challenges.

6 PACS to VNA Philips GE PACS Installed Base Fujifilm McKesson Merge Agfa Siemens Carestream Departmental VNA Installed Base Philips Agfa Healthcare Merge Healthcare Siemens GE McKesson Carestream Fujifilm Note - Size of bubble represents PACS Installed Base in North America.

7 Departmental to Enterprise VNA Departmental VNA Installed Base GE Agfa Dell Carestream Merge Teramedica Acuo Enterprise VNA Installed Base Agfa Healthcare Merge Healthcare Carestream Dell Acuo Teramedica Dejarnette GE Note - Size of bubble represents Enterprise VNA Installed Base in North America.

8 Independent Vendors Independent software vendors (ISV) are who those that have a proprietary VNA product, but not a proprietary PACS. These suppliers have emerged from outside of the PACS market to meet the some of the challenges created by departmentalized data silos. The leading ISV s in the VNA market are Acuo Technologies, Dejarnette Research Systems and Teramedica. These suppliers are positioned to provide a product independent of PACS for healthcare providers whose major challenge is to clearly separate PACS application and image storage. As the VNA market develops towards full enterprise integration of image and non-image data, independent VNA vendors are projected to benefit the most. VNA from many PACS vendors have a strong bias towards DICOM data; even non-dicom data is converted to DICOM for storage. A DICOM-biased VNA still meets the needs of healthcare providers. Over 65.2% of VNA revenues in worldwide 2011 were from managing DICOM images in multiple departments or at multiple hospital sites, reflecting that current demand is driven by the need to consolidate images and reduce image migration costs. However, as VNA penetration increases, so too will demand for larger integration of non-dicom and non-image data. By 2016, XDS-based VNA is projected to account for 30.6% of revenues worldwide; VNA suppliers, who currently provide full XDS document registry and XDS repository features in their VNA, are well positioned to benefit from this shift in demand.

9 Independent Vendors Traditional storage suppliers are also important in the VNA market. These companies may provide the servers and host data from VNA. It is estimated that 11,302 terabytes of new studies were stored by VNA in 2011; this is projected to increase to 114,919 terabytes in In addition, hybrid and hosted cloud models, are projected to account for 38.5% of VNA study volumes in Storage and infrastructure companies currently partner with VNA vendors to host data managed by the VNA. For example, AT &T and EMC partner with Acuo Technologies; Netapp partners with Iron Mountain; and Iron Mountain partners with Dejarnette. Such partnerships may be on a per project basis, or more commonly, the infrastructure provider may market a solution which incorporates the partner VNA product. Dell Healthcare, maintains similar partner relationships. However, Dell also provides a proprietary VNA.

10 Future Direction Departmental VNA Installed Base GE Agfa Dell Carestream Merge Teramedica Acuo Enterprise VNA Installed Base Agfa Healthcare Merge Healthcare Carestream Dell Acuo Teramedica Dejarnette GE Note - Size of bubble represents Enterprise VNA Installed Base in North America. Arrow indicates projected direction of growth in installed base

11 Future Direction PACS Vendors As demand for VNA grows and healthcare providers seek better control of their data, PACS suppliers are well positioned to increase their departmental VNA installed base by providing VNA to their radiology PACS customers. The bigger challenge for them is to meet the needs of healthcare providers across departments. Agfa Healthcare s IMPAX Data Centre VNA provides hospital wide access to images and is combined with its Imaging Clinical Information System, to integrate images into a cross-enterprise workflow to support access to images from the Electronic Health Record (EHR). Agfa is hence expected to increase its presence both in terms of departmental archives and enterprise VNA installations. GE Healthcare has the largest departmental VNA installed base in North America through Centricity Enterprise Archive. It has also recently launched Centricity Clinical Archive to provide a wider non-departmental approach to an XDS-enabled archiving and workflow environment. Centricity Clinical Archive is classed by InMedica as a VNA Level 3.1 (highest possible configuration) and is projected to drive GE s presence in the Enterprise VNA market. Merge Healthcare has the largest VNA Enterprise installed base in North America. With the introduction of Merge Honeycomb Archive as a cloud-based platform to further enhance image sharing, Merge seeks to solidify its position as a provider of non-proprietary imaging IT platforms. Carestream Health, with the second largest enterprise VNA installed base in North America, also focuses heavily on cross-departmental synchorinization of patient data through Vue Connect. Growth in the VNA installed base is projected from Carestream s PACS installed base, from a departmental viewpoint, as well as from non-carestream PACS customers, to consolidate DICOM and non-dicom data.

12 Future Direction Independent Vendors Independent VNA vendors have a greater presence in enterprise than departmental VNAs as they focus more on cross-departmental access to images and other forms of data. As VNAs are increasingly used for this purpose, they are projected to increase their presence further. Acuo Technologies is the leading ISV in North America in terms of VNA installed base, a position it has achieved as an early entrant in the VNA market with a focus on PACS interoperability, XDS and zero footprint viewing. It has also successfully partnered with the largest number of third-party vendors including Philips, EMC and AT&T. Dell Healthcare, through its acquisition of Insite One, has established its unique position as one of the only storage providers with a proprietary VNA solution. Dell primarily provides a cloud-based VNA solution, which combined with its experience in data storage, addresses the demand for reduced costs and consolidated medical data storage. Teramedica is also one of the earliest providers of VNA solutions and its Evercore product has been deployed in departmental and enterprise models. It is, however, the cross-departmental approach to PACS data access with analytical tools that is projected to continue to drive its presence in the enteprise VNA market. Dejarnette, arguably the earliest provider of inter-legacy PACS integration tools, developed systems to enhance data migration and connectivity of PACS systems. Out of these, the VNA concept was formed and it has since continued to provide a standards-based approach to data storage and workflow integration across departments.

13 Conclusion For healthcare providers, it is encouraging that VNAs are an increasing priority for PACS vendors; the availability of ISVs also increases the options available. As the issue swiftly moves from whether or not to adopt a VNA to which VNA to adopt, it is up to vendors to prove their ability to meet the most important VNA adoption requirements: reduced storage costs, reduced migration costs, enhanced image sharing, synchronized cross-departmental workflow, enhanced business continuity and enhanced non-image data sharing.

14 Contacts Theo Ahadome Tel: IHS Media Relations Tel: Alternative Contacts: Asia Pacific Yvonne Zhang Tel: About IHS ( IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in Headquartered in Englewood, Colorado, USA, IHS is committed to long-term, sustainable growth and employs more than 6,000 people in more than 30 countries around the world. About InMedica ( InMedica is the medical technology research division of IMS Research, the leading provider of market research and consultancy to the global electronics industry. InMedica publish high quality, in-depth market research on key medical markets including Medical Imaging (such as ultrasound and x-ray equipment), Clinical Care Devices (such as patient monitors and infusion pumps), Consumer Medical Devices (such as blood-pressure monitors and heart-rate monitors), Healthcare IT (such as PACS and EMR) and Telehealth. We offer our clients global coverage of the medical electronics industry, as well as dedicated reports on high growth regions, such as China, Eastern Europe, Latin America and the Middle East. About IMS Research ( IMS Research, recently acquired by IHS (NYSE: IHS), is a leading supplier of market research and consultancy to over 2500 clients worldwide, including most of the world s largest technology companies. Established in the UK in 1989, IMS Research now has dedicated analyst teams focused on the factory automation, automotive, communications, computer, consumer, display, financial & ID, LED & lighting, medical, power & energy, solar PV, smart grid and security markets. Currently publishing over 350 different syndicated report titles each year, these in-depth publications are used by major electronics and industrial companies to assess market trends, solve marketing problems, and improve the efficiency of their businesses.