Firm gets good news with modification of CPT code
Holographic display developer Voxel is encountering delays in the anticipated launch of its novel 3-D imaging system, due to a disagreement with the company it has hired to manufacture the product. The dispute came just as Voxel, of Laguna Hills, CA, was beginning a program to install the systems at six beta sites across the U.S. in preparation for a commercial product launch.
Voxel's technology takes scan slices from CT, MRI, or other modalities and converts them into holograms that appear to extend into space when displayed on a special light box (SCAN 9/23/92). The company believes that the images, dubbed Voxgrams, are a useful way of viewing 3-D data, particularly for angiography studies.
Food and Drug Administration clearance for the technology was received in late 1995, and Voxel had hoped to begin commercial shipments last year. To manufacture a production version of the Voxcam system that converts scanner data into holograms, Voxel contracted with General Scanning, a laser system developer based in Watertown, MA.
Despite the mid-1996 target date, General Scanning's first Voxcam wasn't shipped until late last year to Voxel's initial beta site, the New Mexico Institute of Neuroimaging at New Mexico Regional Federal Medical Center in Albuquerque, which is operated jointly by the Regional Federal Medical Center and the University of New Mexico. In addition to the delay, the system's image quality has not performed to the company's expectations, according to Raymond Schulz, director of marketing at Voxel.
On Dec. 24, Voxel announced that it believed General Scanning was in breach of the contract between the companies for failure to meet engineering specifications, product performance requirements, and scheduled delivery dates. The announcement triggered the beginning of a 60-day period of informal negotiations between the companies regarding the status of the contract. The dispute will go to arbitration at the end of the period if a resolution has not been reached, Schulz said.
Voxel said that until a resolution with General Scanning is reached, it would work to establish an alternative source to supply Voxcams. The company could select a new third-party supplier or choose to purchase sub-assemblies and perform systems integration in-house.
General Scanning denies that it is in violation of the contract, stating that it is in the process of completing and delivering beta units. It also stated that it expects Voxel to honor its obligations under the contract, including General Scanning's exclusive rights to produce Voxcams.
The dispute hits Voxel at an inopportune time. The company already faces an uphill battle in winning acceptance for its technology, which differs considerably from the film-based slices that radiologists are used to. A good beta-site program could help the firm generate a positive buzz for the technology, but that is behind schedule, due to the production delays. Voxel has five other beta sites waiting to receive Voxcams, Schulz said.
Despite the delays, Voxel is refining its sales and marketing strategy to emphasize leasing arrangements rather than outright systems sales. Voxel hopes to sign healthcare facilities to four-year deals in which systems are leased for $75,000 a year. The amount includes a Voxcam to produce films, 10 Voxboxes for film viewing, Voxpads for routing data from modality scanners to the Voxcam, and enough film to produce about 1000 Voxgrams in a year. Service and maintenance are also covered. The systems use Konica holographic film, which Voxel sells to its customers.
Such leasing agreements may find favor with hospitals reluctant to take a gamble on acquiring such a new technology. The deals will also help keep the cost of using Voxel technology out of a hospital's capital equipment budget, according to Schultz.
"It minimizes the risk," he said. "After four years, if you don't want it anymore, you stop paying $75,000 a year."
At last month's Radiological Society of North America meeting, Voxel emphasized the potential economic payback of using its technology. In fee-for-service situations, Voxel holograms can become a marketing tool by helping generate referrals from referring physicians, Schulz said. In a managed-care environment, Voxgrams may be able to save money, such as by allowing radiology departments to conduct a CT angiography study rather than a standard angiogram.
Voxel got some good news on the economic front a week after the RSNA meeting, when its application to modify an image reconstruction CPT code to include holography was approved. Using CPT code number 76375, physicians can be reimbursed starting Jan. 1, 1998, for holographic reconstruction of data from MRI, CT, or other tomographic modalities.