Digitalization The Driving Force in the Cardiology Market
Edition: December 2003 - Vol 11 Number 12
Author: By Mark Thill
Is the physician-based cardiology market really topsy-turvy or does it just look that way? On the face of it, the market does seem a little overactive. For instance, Spacelabs was recently acquired, but sold its primary physician cardiology business – Burdick – to Quinton. And when Welch Allyn and Schiller dissolved their relationship after Welch Allyn acquired Cardio Control, Schiller in turn created their own sales force for the physician cardiology market. What’s more, both Midmark and GE are turning up the heat with robust offerings of cardiology products for the physician business.
But beneath the buzz, a slow, steady force appears to be at work – that is, the continuing movement by physicians and clinic managers toward a digital office. The change has big implications for cardiologists, who have a reputation (like all physicians) for clinging to tradition. But it means big changes for distributor sales reps as well, who must recognize the impact that electronics and information systems can have on their customers. It’s a far cry from selling exam gloves, table paper and even sharps-safety devices. Yet, according to manufacturers, the opportunities for distributors are huge.
“Going digital” means moving from an environment of stand-alone, hard-copy-based Holters, spirometers and ECGs, to microprocessor-based units, which can be connected to each other and plugged into an electronic medical record or practice management system.
The key manufacturers in the market differ as to how rapidly the migration toward digital is occurring. “There’s a slow movement to [the all-digital environment],” says Darryl Lustig, vice president of sales and marketing for Burdick. But Dick Moorman, vice president of sales for Midmark, says, “Physicians may be a little slow to adopt change, but we are now at a point where they are rapidly changing.”
Yet few if any of the players disagree that the migration toward the digital environment is in fact taking place.
Welch Allyn’s Move
Indeed, it was its desire to offer physicians a digital workplace that led Welch Allyn in April to buy The Netherlands-based Cardio Control, a manufacturer of PC-based ECG, stress ECG, spirometry and ambulatory blood pressure systems.
“We believe that as time goes on, connectivity of [cardiology] devices and data management will become much more of an issue,” says Don Abbey, general manager of Welch Allyn’s cardiopulmonary business. “That’s why our products are designed to allow people to share information and to be connected to other information systems.”
Abbey uses the word “connectivity” frequently to describe what Welch Allyn believes it is offering physicians. “Data management and connectivity provide efficiency to physicians, who are under a lot of pressure to become more efficient,” he says.
Still, most physicians won’t plunge into the digital world unless they’re convinced of two things: first, that they can deliver better patient care, and second, that they can operate with greater efficiency and lower costs. Abbey believes that digital cardiology passes muster on both counts.
“Errors are a huge problem in our healthcare system,” says Abbey. Digital technology cuts down on the number of simple typing errors, which can lead to problems later on. And with the new technology, doctors can make much richer diagnoses, he adds. ECGs, for example, can record sound data as well as electrical information. “So case by case, depending on the technology, there are patient benefits and clinical benefits.”
Digital technologies can help doctors run much more efficient operations, adds Abbey. Most data has to be entered only once, then stored in a computer from which the data can be called up for future reference. What’s more, as the pool of skilled labor shrinks (as many expect it to), sophisticated, “smart” technology can do much of the “thinking” that people had to do before. “That means that people with fewer skills can be more productive.”
Welch Allyn is in an enviable position, says Abbey. While it can offer the PC-based systems from Cardio Control, it still offers traditional cardiology devices for those doctors who prefer them.
“I think there’s room for both,” says Abbey. “I don’t think the PC market will eclipse traditional technologies in the near term, but it certainly will gain [market share] over what it has today.”
And truth be told, some of Welch Allyn’s “traditional” boxes already have connectivity options, says Abbey. The company’s new line of cardiographs, for example, has a software product that allows them to behave much like PC-based ECGs. “We’re hoping these benefits will spur the market, and that customers will see them truly as efficiency gains.”
Not That New?
Burdick’s Lustig is quick to note that the line between traditional and digital technology is blurred. “There’s a movement toward [PC-based systems], because of the perception of what they can do,” he says. “But Burdick has been selling digital ECGs since 1987. So are they really new? It’s in a new box, and it’s PC-based, but what can you do differently that you can’t with a standard ECG?”
It’s true that PC-based systems allow users to pull information into other applications, he says. But users of Burdick’s ECGs have been able to pull PDF files off the units and move them into other applications for years, using Burdick’s CardioVault.
“Is it good to offer a PC-based ECG product, because it’s the wave of the future? Yes. That’s why we’re doing it,” says Lustig. “But remember, it’s only 5 percent of the [ECG] market. The other 95 percent is still stand-alone ECGs.”
Even so, Burdick recently added a PC-based ECG to its existing lineup of PC-based spirometers, pulse oximeters and Holters. “We will continue to bring out technology-related and connectivity-related products at the rate of change that the marketplace and the physician want to see them,” says Lustig.
A Matter of Market Share
Part of the activity in the cardiology market has to do with demographics. “In 2003, there were over 38 million ECGs done, making it easily one of the largest diagnostic tests conducted,” says Moorman. “By the year 2010, due to the graying of Americans, it is predicted that there will be more than 72 million ECGs done in America.” So the pie is getting bigger.
Capturing a piece of that pie was why Midmark acquired Brentwood – a manufacturer of PC-based Holter, spirometry and ECG – in 2000 and renamed that part of its business Midmark Diagnostics.
“More and more physicians are opting to make the move toward electronic medical records,” says Moorman. “We saw this change begin about five years ago and decided to get ahead of the curve.”
But the acquisition and integration of Brentwood into Midmark – a manufacturer of tried-and-true hardware, such as power tables, sterilizers and lights – allows Midmark to capture a larger share of business in individual physician offices.
“If you look at our total product offering – not just ECG, Holter and spirometry – you see that we have an entire package that promotes a better patient experience and efficiency for the end user,” says Moorman.
The opportunities for distributors are huge, he says. “We have been extremely successful in taking a sales call that may have started out as a call with a distributor partner to sell an ECG, and turning it into a sales call that resulted in not only the ECG sale, but a sale of exam tables, power tables, lights, stools, casework, sterilizers and so on.
“Our salespeople believe in the ‘get it all’ concept and they’re very equipped to make it happen for our distributor partners.”
The strategy is not without its challenges. “Many distributors and end users still view us as an exam table and sterilizer company,” says Moorman. “However, those distributors who understand what we bring to them, and those who have decided to partner with us, are quickly seeing just what kind of impact we can have on their revenue and margins.”
Welch Allyn’s decision to buy Cardio Control was also motivated, at least in part, by the desire and opportunity to broaden its line of product offerings to the physician. “A company that can offer a broad line of products that work very well – and very well together – is our strategic thrust,” says Abbey.
Sticking to Cardiology
Burdick, on the other hand, is betting that its focused approach to the market will continue to pay dividends.
“Burdick is singularly focused on cardiology,” says Lustig. “No one else has had the same dedication to cardiology over the years.”
The company’s acquisition by Quinton Cardiology Systems in January 2003 has only strengthened Burdick’s hold on the cardiology market, says Lustig. Prior to the sale, Burdick had operated as a cardiology business subsidiary of Instrumentarium’s Spacelabs Medical division.
Being owned by Spacelabs – a monitoring company – meant that Burdick had to share product development resources with other technologies and businesses, says Lustig. But that has already changed under Quinton, a direct-selling company whose strengths are in the acute-care cardiac stress testing and cardiac rehabilitation monitoring markets. “Quinton is a cardiology-focused company and so is Burdick,” says Lustig. “We look for products that will cross all segments of the market. That’s been the biggest benefit of [the Quinton] acquisition – more product offerings.”
That’s good news for Burdick and its distributors, because in a tight market, new products are what distinguish one company from the rest, says Lustig. “[Physicians] can benefit by staying with the company that they think is going to be there and that has the ability to provide the products they’re going to need today and in the future.”
What’s more, the singular focus on cardiology means that Burdick’s salespeople are similarly focused when they call on their distributors. “Having a large bag of products can be distracting,” says Lustig.
Huge Role for Sales Reps
Although their approaches to the market might differ, these companies and others share one thing in common – continued reliance on distributors and their sales reps to penetrate the physician market.
“Some companies underestimate how much control the distributor has in the physician account,” says Lustig. In fact, taking care of the distributor reps is just as important as introducing great products, he says.
“In our market, sales support plays a huge role. So I go back to the Welch Allyn feet on the street, supporting distributor sales reps,” adds Abbey. With that kind of support together with the company’s broad product line, Welch Allyn will continue to be a market leader in the cardiopulmonary market, according to Abbey.
“Distribution needs to understand and accept that change is not coming, it is here,” says Moorman. “Those who understand this and partner with manufacturers who can not only bring them the newest technology, but also the training for their salespeople and marketing departments, will be poised to really reap the benefits of this fast-growing market.
“The new digital diagnostics are perfect products to replace all the old analog, paper-burdened, box style diagnostic machines that are in doctors’ offices everywhere,” he says. “The replacement opportunities alone are huge!
“There is an old saying: Change creates opportunity,” says Moorman. “Nowhere is it more evident or more exciting than right here and now when it comes to digital PC-based diagnostic products!”
Relevant CPT Codes for internal medicine products
93784 ABPM, using a system such as magnetic tape and/or computer disk for 24 hours or longer, including recording, scanning analysis, interpretation, and report.
93786 ABPM, using a system such as magnetic tape and/or computer disk for 24 hours or longer; recording only.
93790 ABPM, using a system such as magnetic tape and/or computer disk for 24 hours or longer; physician review with interpretation and report.
93000 Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report.
93005 tracing only, without interpretation and report.
93010 interpretation and report only.
93015 Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; with physician supervision, with interpretation and report.
93016 physician supervision only, without interpretation and report.
93017 tracing only, without interpretation and report.
93018 interpretation and report only.
93040 Rhythm ECG, one to three leads; with interpretation and report.
93041 tracing only without interpretation and report.
93042 interpretation and report only.
93230 Electrocardiographic monitoring for 24 hours by continuous original ECG waveform recording and storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; includes recording, microprocessor-based analysis with report, physician review and interpretation.
93231 recording (includes hook-up, recording, and disconnection).
93232 microprocessor-based analysis with report.
93233 physician review and interpretation.
Used for monitoring during minor procedures, treatment, and minor surgery.
94760 Non-invasive ear or pulse oximetry for oxygen saturation; single determination.
94761 multiple determination.
94010 Spirometry, including graphic record, total and timed vital capacity, expiratory
flow rate measurement(s), with or without maximal voluntary ventilation.
94060 Bronchospasm evaluation; spirometry as in 94010, before and after bronchodialator (aerosol or parenteral). (For prolonged exercise test for bronchospasm with pre- and post-spirometry, use 94620).
94070 Prolonged exposure evaluation of bronchospasm with multiple spirometric determinations after antigen, cold air, methacholine or other chemical agent, with subsequent spirometrics.
A Word About Coding Information
Please note that the coding information contained here is neither conclusive nor does it ensure that you will be successful in obtaining coverage and/or reimbursement from government and private payers.
Depending on circumstances that will vary from patient encounter to patient encounter, separate reimbursement may or may not be allowed for use of a Welch Allyn product used during a specific procedure or service. Use of the product may be included in the reimbursement for Evaluation and Management services provided by the physician. Please check with the specific payer to confirm whether or not the use of a separate code is acceptable. Welch Allyn does not assume any responsibility for the decisions made by payers regarding payment for procedures involving our devices when the coding information suggested in this catalog is used.
CPT is a registered trademark of the American Medical Association. All Current Procedural Terminology (CPT) five-digit numeric codes, descriptions, numeric modifiers, instructions, guidelines, and other material are Copyright 2001 American Medical Association. All rights reserved.
Source: Welch Allyn Internal Medicine Catalog.
Reprinted with permission of Welch Allyn.