The October issue of Laboratory Economics contained an article on the front page about the digital pathology market (see: DIGITAL PATHOLOGY MARKET POSTS SLUGGISH GROWTH). Here is the full text of it:
After several years of 10% to 15% annual growth, the U.S. clinical market for digital pathology has lost speed. Medicare Part B carrier spending on CPT 88361 (digital pathology for quantitative IHC) increased by only 4% to $18.9 million in 2010. CPT 88361 is used to bill Medicare for the reading of digital HER2, ER and PR slides from a computer monitor. Laboratory Economics estimates the total U.S. clinical market for digital pathology is currently about $80 million (or about 4x the size of Part B carrier expenditures on 88361).
Approximately 500 academic medical centers, hospitals and independent labs have a digital pathology system in place. The market leaders are Aperio Technologies and BioImagene (owned by Roche-Ventana). At this point only the Aperio and BioImagene systems have FDA clearance for HER2 scoring. No vendor has received the Holy Grail: FDA clearance to use digital pathology as a primary diagnostic tool. The lack of FDA clearance for primary diagnosis means no vendor can scale up so that prices can come down, according to Michael Farmer, principal at the IVD consulting firm McEvoy & Farmer (Seattle, WA).
“At this point, a digital pathology system costs as much or more than an Xpress or Peloris or a Benchmark Ultra—and yet they are not viewed as being as essential as a high-throughput tissue processor or top-of-the-line IHC system at most of the labs,” says Farmer. Meanwhile, Allen Gown, MD, chief pathologist at PhenoPath Laboratories...believes glass slides will remain the principal media for pathologists for the next 10 years. “No digital image will ever be as efficient for ease of use as a glass slide,” he told pathologists in a presentation at the Med3000-PSA conference in Palm Springs, California, September 21-23. Gown said the biggest problem is the storage of digitized images. “The technology gets obsolete very quickly, but I can still look at glass slides from 100 years ago.” Over time, Gown thinks digital pathology’s principal use will be for telepathology at remote locations and possibly quantification of IHC and FISH stains. “But we’re waiting for more quantification tools,” he added.
Here is an additional quote from Jondavid Klipp of Laboratory Economics about this topic: Vendors tell [us] that the [digital pathology] market is not driven by cash revenue collection, but by cost savings and other competitive advantages provided by digital pathology. I agree totally. It's going to take a long time to make a convincing return-on-investment (ROI) case for digital pathology (DP). Unlike the radiology procedures, histology slides are not digital-from-birth and surgical pathology reports will generally look the same after the new technology deployment. No new tests are being generated by DP with attractive profit margins. Many pathologists are also balking at the need to retrain with the new technology.
However, the future of surgical pathology rests with a conversion to DP. Here's my take on the competitive advantage of the technology. I believe that the pathologists in smaller hospitals can and should create business and strategic relationships with the pathology groups in larger neighboring hospitals. The former will automatically queue up their most difficult daily surgical pathology cases for consultation with the pathologists in the larger hospitals with an expected report by the end of the day. This is easily accomplished when the slides in both facilities are digitized on a routine basis. In exchange for this daily support, the smaller hospitals will agree to send all of their esoteric CP work to the large hospitals rather than shopping the work around to the large commercial labs. This generates a totally different ROI calculation and quality perspective on the conversion to DP for both the smaller and larger hospitals.