NO RIP for eRAD

According to a very reliable source, eRAD had given up the corporate ghost. HOWEVER, I just heard from a friend at eRAD that they are alive and kicking, so word of their demise is premature. Glad to hear it! My sincerest apologies to eRAD and my friends there, but I promise my source was trustworthy in the extreme! Perhaps his/her unimpeachable source needs to be impeached.

It seems that I have more readers than I ever will admit to myself, and it seems that a bunch of them were burning up the lines to eRAD. I've learned my lesson, I think, about posting unsubstantiated rumours.

To further my mea culpa, I will reproduce an e-mail from Seth Koeppel, eRAD's Senior VP of Sales:

All is well at eRAD, no danger of going out of business. With roughly 220 customers (300+ sites) of various shapes and sizes we're fortunate to be able to sustain ourselves (at a pretty full staff I might add) on residual support contracts, upgrades, expansions and add on sales from existing customers.

With this said I will tell you it's a tough market. Lots of opportunity but not a lot of checks being written right now. So we took the painful step a few weeks ago of reducing staff by a whopping 4 heads (2 direct sales, 1 apps and 1 field support) to ensure we can run at a 'zero footprint' or break even. One of the sales guys went back to work for our best reseller where we originally hired him so no real loss there and a better fit for him. If sales pick back up we'll add the heads back.

We continue to see steady activity from our network of resellers which has been erad's primary sales vehicle. While distributing through resellers can be a challenge it does have some advantages in a down market. If you stop and consider where much of the spend is in pacs right now its the small community hospitals and non-critical care access providers that haven't yet gone digital. There are literally thousands of ortho, multi-specialty, urgent care, etc. Clinics and small imaging centers that have yet to go digital and these are best served by the resellers who've been supplying film, chemistry and service to them for years. I just don't see how a company can afford a direct sales force to reach this market? Particularly with the cost of fuel/travel being what it is I think the regional guys have a huge advantage from a 'cost of sales' perspective and the margin on the low end systems aren't all that appealing for the big guys.

Then there's the replacement market. Talking to Ben Brown from KLAS at SIIM (you were missed by the way) he shared an interesting bit of info with me. He indicated they surveyed both the vendors and the hospitals on what they felt the replacement market is. The vendors weighed in at 40%+ and the hospitals 10%. I think there is some merit to this disconnect. The pacs the hospitals paid big bucks for just a few years ago does what they need it to do. Its the rads and the referrings who are beating the drum for web-based and remote reading to become more efficient and frankly I don't see the hospitals giving a hoot. Certainly not enough to spend the big dollars to make the rads more efficient so they can make more money.

This brings me back to my hot button of 'enterprise reading' or 'worklist consolidation'. I think the market is going to realize that A) hospitals aren't going to rush to upgrade and B) if they do the rads are still left reading from multiple disparate systems which doesn't allow for maximum efficiency of the most expensive resource in the production line. I've seen enough large groups pursuing purchasing their own system and requiring images be sent to it to know this is not just a passing fad but a reality of how groups will need to work in order to grow their reading base and improve efficiency.

This is where our direct sales efforts come in to play as the HL7 interfacing and complex workflow require a certain acumen and experience.

ERAD's technology is very progressive and very configurable so we have a big advantage in this space with some experience vis-a-vi our telerad providers and others whom have endeavored.

Then there are still some of the big guys who need a web based system (Cerner, McKesson, Siemens) to name a few not to mention companies like Sage/Medical Manager who still sell DI integrated to their RIS which is now owned by GE.....a direct competitor. Than there is the whole world of EMR companies who will no doubt want a web based image management component for their customers who do in office imaging and want to access images directly from the EMR in the context of the patient record and not have to go search a pacs worklist. Our API web interface allows this and we're seeing growing interest.

So I see lots of opportunity for a company with a solid platform, good developers, support infrastructure and 9 years of operating history.Everyone is feeling the pain with GE announcing a reduction of 400 heads in their imaging division today and Emageon's management losing its proxy fight with its investors which will no doubt result in a sale to the highest or for that matter any bidder.

So we're still here and will be for the foreseeable future. Hard to convince the world a small little company in Greenville SC can challenge the big guys and win but if anyone stops long enough to dig into the details they too will learn what several others have.

Hope to see you soon!

Seth

And that's all I have to say about that.