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Company in the Spotlight: UPMC-inspired Stentor to challenge in medical imaging
Sunday, July 09, 2000 By Pamela Gaynor, Post-Gazette Staff Writer
When the Society for Computer Applications in Radiology holds its annual meeting, General Electric Corp., Canon U.S.A. and other big makers of medical imaging technology use the gathering as an occasion to showcase their products.
But last month, when they met in Philadelphia, the heavyweights were a bit upstaged by an upstart company, Stentor, Inc.
"I think Stentor is going to end up pushing the industry," said Dr. Steven Horii, a clinical radiologist and professor at the University of Pennsylvania Health System in Philadelphia.
Penn has one of GE's big, expensive systems for viewing X-rays and other medical images electronically. But it also has been a test site for a cheaper, alternative technology that Stentor launched into the commercial market last month.
Although the Stentor system has been used "as an adjunct" to GE's, Horii said "I think there is the potential for it to be a replacement."
Stentor is a Silicon Valley company, but it licensed the software at the heart of its systems from UPMC Health System.
Unlike previously existing technology, which requires specialized computer work stations costing as much as $120,000 each, the software makes it possible to distribute and view electronic medical images over ordinary networks of desktop PCs.
The cost of the work station-based systems has made them prohibitive for all but the nation's biggest medical centers. And even those institutions can't afford to use the expensive work stations outside their radiology departments.
The work stations had been required because PCs don't have the capacity to handle the volume of data that even a single series of chest X-rays can entail, said Dr. Paul Chang, the UPMC radiologist who developed Stentor's software. A single patient's X-rays can use 200 megabytes of RAM.
The work station manufacturers have tried to overcome the problem and augment their systems with PCs, but they've done so by compressing the data in the images. When that's done, bits of data must be omitted and the image is degraded, Chang said.
He came up with the idea for Stentor's software after visiting a factory that had done away with its parts warehouse by adopting "just-in-time" delivery of its supplies.
Because doctors don't focus on an entire radiological image at one time, he made the software deliver all of the data for the part being viewed just as that part comes into focus.
The software was first put to the test at UPMC Presbyterian. It has been tested at other large medical centers such as Penn.
Stentor has since deployed the technology over the Internet so that it can be installed remotely for subscribing institutions. By next year, the company plans to maintain data centers that will store a subscribing institution's medical images for it, eliminating the need for in-house servers.
Chang said the technology will give all physicians at a health system -- not just the radiologists -- access to top-quality electronic images. It will also end the practice of using "patients as couriers" to take X-rays from one doctor or institution to another. Patients and doctors at a community hospital in the UPMC system, for example, will be able to get quick consultations with subspecialists in Oakland viewing the same image at the same time.
Stentor's system can reduce the costs of storing and distributing images enormously, said Stentor President Oran Murduroglu.
Storing and distributing a typical series of patient X-rays or other medical images on film costs a hospital roughly $35, he said. Stentor expects its electronic technology to slash that to about $10 per series -- with no costly up-front investments for subscribing hospitals.
The company is projecting $16 million in sales by next year and a quantum leap to $89 million in sales by 2002.
Pretax profit margins are expected to be 40 percent to 50 percent, said Murduroglu. The company has been funded by two venture capital firms, one of which, Caduceus Capital, was founded by UPMC. Stentor will likely be taken public or sold within the next few years.
Ironically, Chang, who was more interested in seeing the technology put to use than in founding a company, had initially tried to give it away.
When the software was still in development, "We begged the big vendors to take it off our hands," he said.
Once Chang was recruited to UPMC 2 1/2 years ago, officials steered him toward entrepreneurs instead.
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Business: Managing and distributing radiological images for hospitals using proprietary software and an internet-based system.