The divestiture of a market leader in any segment is unsettling to all parties. End users begin to question the efficacy of the company’s product, while competitors may question the health of the segment. McKesson’s decision to divest in its picture archiving and communication system (PACS) business earlier in June did just that; bells were rung, alarms went off, and people started asking questions. But instead of a doomsday prophecy for PACS, the company’s departure illustrates the transient state looming over all PACS vendors as they come to terms to the shifting earth beneath their feet.

In today’s health care IT market, a sole reliance on PACS structures is no longer applicable. Companies that want to remain competitive must offer auxiliary technologies that allow health care facilities to create enterprise IT structures between departments and facilities. Industry sources have noted that McKesson had very little interest in expanding its PACS offerings to include the likes of vendor neutral archives (VNA), and ultimately could not justify investing in their portfolio to make it more capable of handling a world where PACS is no longer a constant. If anything, McKesson’s divestiture is a real-world visualization that after years of debate over the enterprise IT concept, the market is now truly primed to take off and only those PACS vendors who can accept a world outside of PACS will be ready for where the market is currently headed.

As we advance bravely into this new world outside of PACS, traditional PACS vendors that have been dominant will have to adapt to new challenges. Most PACS vendors have expanded their propositions to include more enterprise-scale technologies, like VNA, through the acquisition of smaller specialty companies or internal development. This is a step in the right direction, but having looked below, they must now look at what lies above.

Computing and software superpowers that traditionally stay outside of health care IT have settled their targets on the health care market. With the growing appetite for big data analytics and cloud services, hospital tastes are increasingly falling in line with the offerings that these behemoth companies specialize in. IBM acquired Merge Healthcare and infused it with its Watson cognitive computing capabilities; Dell has been an active VNA player for quite some time; Apple just announced its acquisition of a patient records and data company; Alphabet has demonstrated an interest in medical technology, which the company will likely use as a gateway to its computing expertise; while the cloud services of Amazon and Microsoft, the two largest cloud networks in the world, are finding increasing applications in the IT structures of health care facilities. In full force, these are all entities that are capable of truly disrupting the health care IT market.

For traditional PACS vendors, new behemoth competition and the dissolution of the PACS paradigm is disheartening. The future of the technology is blurry, but what these vendors must remember is that, at least for the time being, they remain at the center of the market.

The clouds are gathering above, now is the best time to prepare for the storm.

DRG has published an all new report: US Enterprise Solutions. It provides qualitative and quantitative insight on VNAs, enterprise PACS, and dedicated image exchange solutions. The market for enterprise solutions is rife with risk and opportunity. Discover a roadmap for your company to navigate through this evolving market. Follow @benli_DRG for more medtech insights


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