This report originally appeared in the January 2009 issue of DOTmed Business News. Also read our CT industry sector report in the April 2009 issue.

The jury is still out as to the impact of the global economic downturn and U.S. presidential transition on the health care industry. But it's easy to predict that companies that can save on health care costs are well positioned. Business models designed to maximize equipment life and help manage life cycle expenses stand to benefit. This all suggests a favorable outlook for companies that make or install X-ray tubes. What's more, capital expenditures on new medical equipment are being delayed, putting the focus on parts and service for both CT and radiographic X-ray applications.

"There's always a 'replace versus repair' equation and when times are tough the needle moves a little further over to the repair side," says David Hurlock, International Marketing Manager, Varian Medical Systems, Interay. "As the upgrades are delayed, it gives us a longer market opportunity to replace tubes on the older products." Varian manufactures X-ray tubes for the full range of CT and radiographic uses for both OEM equipment and for replacement parts on installed machines.

"We sell at the wholesale level, not directly to hospitals," says Robert H. Kluge, President, X-Ray Products, Varian Medical Systems. "We sell either to OEMs who take our product and build it into a system, or we sell to service providers who take our X-ray tube and replace one on an existing piece of equipment."




The world market for X-ray tubes is not especially large, about $750 million on a wholesale basis or topping $1.5 billion in terms of what providers pay. Since new tubes are bought and sold worldwide and re-imported, it's difficult to gauge the exact market size. Industry experts project that the market will grow in the mid-single digits in the next few years.

With the availability of quality replacement tubes, there is no doubt that hospitals can stretch their CT and radiographic investments. "The trend we are seeing is the health care provider using the tube until it is completely dead...so they are getting the most bang for the buck," says Jeff Rondeau, President, 5 Star Imaging, Inc.. "Our customers are doing a lot of preventive maintenance to make sure they are getting the life they need out of X-ray and CT equipment. Service companies are busy." This trend shifts business to companies that perform service and cost-effective upgrades. For example, some CT scanners have upgrade packages with larger tubes and new software. "The hospitals may do that for the next year or so to generate revenue and move forward until this economy picks up and they can buy a new scanner," Rondeau says.

While suppressed sales of new equipment negatively impacts tube sales to OEMs, the other side of the equation, glassware for the installed base, remains a healthy market.

Dunlee is the other major manufacturer that supplies both new tubes for OEM equipment as well as replacements for X-ray tubes, CT tubes, and image intensifier equipment and components.

"If new equipment sales are down, that means sales of new tubes going into that equipment are also down. But clinical utilization of equipment has not decreased, it's actually increasing," observed Thomas T. Spees, Director of U.S. Sales for Dunlee, a division of Philips Healthcare. "It means that the demand for maintenance - and that includes replacement tubes on the installed base - is going to increase. And we're seeing that already."

Many independent service providers get their replacement tubes directly from Varian or Dunlee at wholesale prices and their hospital customers benefit.

"We keep talking about reducing health care costs. Don't go directly to the OEM for replacement tubes and image intensifiers. Go to a third party because you are going to save loads of money and get the same quality if not better," said Sal Aidone, Vice President, Deccaid Services Inc. Deccaid is a member of a consortium, the Association of Medical Service Providers, which negotiates favorable rates for its members with tube makers, passing the savings to health care providers.

Reloaded Tubes Another Option

In addition to new X-ray tubes, some quality remanufactured glassware is also available. Hospitals and imaging centers can save 30% to 60% by opting for a reloaded tube.

The "slice race" toward more capable CTs of 64 slices or more has resulted in a market flooded with older CT scanners. These scanners are sometimes sold for parts. As a result, replacement tubes and parts are available for older equipment. They are remanufactured to OEM specifications, but it's still a good idea to get a warranty.

"We see a lot of competition for used tubes. Hospitals are trying to save money. So they often look at used tubes in lieu of new tubes," said Ralph Babcock, General Manager, Imaging Affiliates. "Some people consider a 'remanufactured' tube one in which just the oil has been changed. To qualify as a remanufactured tube under our definitions, components of the insert must be replaced. You need the right skills and technology. The tube must be properly labeled as remanufactured and come with a warranty."

Reloaded tubes can be as good as new, according to Greg Kramer, C&G Technologies, Inc. "It depends on what the re-loader does when installing a new insert. If it has a new oil pump, new bellows, and new High Voltage tube wells (candlesticks), then it is very close to new and probably will last as long," he noted.

Image Intensifiers-Still Alive and Kicking

Flat panel DR image detectors are replacing clunky image intensifiers especially in demanding cardiac applications. This DR market is expected to grow at double-digit percentages over the next several years. At the same time, a market persists for analog image intensifier sales and service. In fact, some radiologists still swear by them simply for their image intensity. The image intensifier components of older systems can still be successfully serviced by knowledgeable independent service organizations.

"The buzzword of DR panels is certainly out there, mainly on the radiographic side. But when you start going for a dynamic DR panel, the cost is way up there," Rondeau said. To simulate a 12-inch image intensifier with a dynamic DR plate can cost $125,000. "With money being so tight, a doctor who has been using the image intensifier for 20 years will wonder if he can justify the expenditure . . . I think the intensifier will be around another five years."

The cost effectiveness may ultimately come down to the size of your overall investment. "Image intensifiers are still a viable option especially in products that are more price sensitive on the capital equipment side," said Dunlee's Spees. "Flat detector panels have replaced most of the image intensifiers sold into cardiac cath labs. Part of the reason is those products are expensive anyway and can absorb an initial expense of a flat detector without having as much impact on the total sale price of the equipment." He explained that for other disciplines, such as RF or surgical C-Arms, which cost less, the price points of the flat detectors need to be more in line with the cost of image intensifiers to penetrate the market.

While analog image intensifiers are still doing yeoman's service at many facilities, the future is undeniably in digital image detection driven in part by the need for integration with PACS systems. It is interesting to note that intensifiers can be fitted with digital camera packages to integrate with PACS.

"Instead of spending two to three million dollars on a new cardiac angio lab, some providers are spending $100,000 on a new image intensifier with a CCD camera and digital package to get them through a couple of years until they can buy a new room," Rondeau said.

Nevertheless, DR is the future. For instance, Dunlee, which sells image intensifiers, has also just introduced a new flat detector that promises to allow OEMs to build and distribute a DR system that is cost competitive with CR or CCD.

Varian also offers flat panel imagers. "Image intensifiers for dynamic imaging and film for radiographic imaging are old technologies," Kluge said. "Imaging panels will revolutionize the way X-rays are taken over the next five to ten years."

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DOTmed Registered X-ray Tube and Image Intensifiers Sales & Service Companies
Names in boldface are Premium Listings.

Domestic
Doug Anderson, DGA Medical, LLC, AZ
June Fan, Calisota Medical Equipment LLC, CA
David Denholtz, Integrity Medical Systems, Inc., FL
DOTmed Certified/DOTmed 100
German Filgueira, PODER< Inc., FL
DOTmed Certified/DOTmed 100
Paul Aagaard, 5 Star Imaging, Inc., FL
Bobby Serros, Amber Diagnostics, FL
Larry Dewey, Dewey X-Ray, FL
Steven Anderson, Dunlee, IL
John Pemberton, Barrington Medical Imaging, LLC, IL
Charles H. Manecke, Viking Parts and Equipment, IL
Greg Kramer, C& G Technologies, Inc., IN
DOTmed Certified/DOTmed 100
Roy Hayward, Radiology Services, Inc., MA
Glenn R. Hammerquist, Berrien X-Ray, MI
Robert Burbury, Central X-Ray Corporation, MO
DOTmed Certified
Ralph Babcock, Imaging Affiliates, NC
Robert Manetta, Nationwide Imaging Services, Inc., NJ
Sal Aidone, Deccaid Services, Inc., NY
DOTmed Certified/DOTmed 100
Dave Hurlock, Varian Medical Systems, SC
DOTmed Certified
Tim Davis, STAT Medical X-Ray Tubes, Inc., SC
Maurice Dilick, J&M Trading, Inc., TN
Mark Mellen, Sempco X-Ray, Inc. , TX
Jeremy Probst, Technical Prospects LLC,, WI
DOTmed Certified/DOTmed 100

International
Norbert Schulz, Schulz Consulting , Austria
Fred Fischer, FMS X-Ray Services, Canada
Girish Chandarana, Hem-Tech Services , India
Hossein Shirazi, Baresh Partov, Iran
Bilal Durrani, Durrani Medix, Parkistan
Borhan Kalash, Memco , Syria
Qasem Shahin, Hunain Medical , United Arab Republic

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