CEO SUMMARY: There’s a new competitor in the digital pathology marketplace with ambitious plans to deliver a fully-integrated pathologist workflow solution. Inspirata, Inc., of Tampa, Florida, made its debut in March at an international pathology conference. In this exclusive interview, Inspirata Chairman and CEO Satish K. Sanan explains his company’s strategic vision for digital pathology, along with the details of how Inspirata intends to overcome digital pathology’s return-on-investment challenge.
IN THE 2000s, DIGITAL PATHOLOGY WAS THE HOT NEW TECHNOLOGY that held great potential to transform anatomic pathology in myriad ways, not the least of which was an essential tool to streamline pathologist workflow while supporting greater diagnostic precision.
Yet today, approximately 10 years later, those high hopes have not come to fruition. The number of pathology laboratories using digital pathology on a regular basis remains limited.
The primary customers today are mostly biotech researchers, academic pathology groups, national pathology labs, and some large regional pathology practices. Few private practice pathology groups own and use digital pathology systems and digital images in daily practice. It is estimated that around 1,000 pathology labs worldwide own and use digital pathology systems on a regular basis.
Thus, it is noteworthy that a wellfinanced company in Tampa, Florida, has just launched with the goal of making digital pathology easier to use because of the integrated pathologist workflow solution it has developed.
That company is Inspirata, Inc., and it unveiled its products and services in March at the United States Canada Association of Pathology (USCAP) meeting in Boston. Recently, THE DARK REPORT visited Inspirata’s corporate offices to learn more about the company’s business strategy and to see a demonstration of its pathologist workflow solution.
The first aspect that distinguishes Inspirata from the handful of companies offering digital pathology products is that Inspirata is not manufacturing and selling its own hardware, scanners, and associated products. Instead, it is selling a cloud-based pathologist workflow solution.
“It is our view of the pathology marketplace that one big barrier to further adoption of digital pathology is the need to provide pathologists with tools that support an integrated workflow,” stated Satish K. Sanan, Chairman and CEO of Inspirata. “Therefore, early on, we decided to focus our efforts on developing software that would make the pathologist more productive. As to hardware, our strategy is to partner with the manufacturers of digital pathology hardware and scanners.”
Executives at Inspirata evaluated the variety of scanners and digital pathology hardware available. “We were impressed with the products that Philips Digital Pathology Solutions manufactures and sells,” noted Sanan. “It turned out that Philips was receptive to the idea of a collaboration with us.”
“What is significant about this relationship is that we are working together so that the software and applications that are part of our workflow solution for pathologists are properly interfaced and integrated with the specifications of the scanners and digital pathology hardware Philips manufactures,” he explained. “Our goal is for a pathologist working in our pathology cockpit to have a seamless experience in utilizing all the tools and accessing the images and supporting data needed for diagnosis.”
This is how the formal partnership between Inspirata and Phillips was created. The two companies state that they “are jointly developing, selling and supporting an end-to-end digital pathology workflow solution designed to streamline processes and expedite diagnoses in the nation’s comprehensive cancer centers.”
Inspirata’s first stage strategy is to market its digital pathology workflow solution to academic pathology departments and researchers. These laboratories typically find value in using digital pathology images for research, subspecialist consults, tumor boards, and teaching. This is why both sectors have been the fastest to acquire and use digital pathology systems over the past decade.
However, it would be a mistake to view Inspirata as simply a company that will offer an integrated, cloud-based, workflow solution for pathologists that incorporates a multi-screen pathology cockpit. Along with helping pathologists become more productive, the company has a more comprehensive vision that includes developing advanced diagnostic capabilities to allow pathologists to contribute greater value to patient care.
“What we are discussing with pathologists who look at our services is an end-toend digital workflow solution,” noted Sanan. “Think of this as made up of three capabilities. The first capability is what we have already discussed, which is improving the pathologist’s workflow in ways that directly decrease the time to diagnosis.
“This integrated workflow system will address everything, including surgery— where biopsies are collected, transportation, accessioning, histology, scanning, and archiving to support the pathologist in the cockpit who is doing the diagnosis and who may need to share these images with colleagues or subspecialist pathologists,” he explained.
“The second capability is to help pathologists increase diagnostic accuracy by providing novel quantifiable prognostic and predictive assays,” noted Sanan. “Not only will this improve patient care and help pathologists deliver more value, but the use of these assays can bring new sources of revenue to the pathology lab.
Use of Data Analytics
“Over time, the third capability we intend to develop is data analytics that can be accessed through the use of comprehensive databases,” stated Sanan. “Healthcare is moving toward big data, and the pathology profession will gain great benefit when it has the opportunity to access the clinical data of thousands of cancer patients.”
To implement its first strategy— improving the workflow of pathologists— Inspirata has a clever business plan.
Company officials recognize that one important reason digital pathology systems have not grabbed a larger share of the anatomic pathology marketplace is because today’s return on investment (ROI) for acquiring the hardware and software does not pencil out for most pathology labs.
“This is true for several reasons,” noted Sanan. “First, the speed of most scanners means that throughput is not fast enough to meet the daily workflow needs of many pathology labs. Second, the cost of the hardware and systems needed to store and retrieve whole-slide images remains relatively expensive.
“Third, integration of digital pathology images and workflow with the major pathology laboratory information systems is less than ideal,” he added. “Pathologists attempting to work within both systems can be frustrated by the need to jump back and forth when working on a case.
“We believe that most software and workflow systems that come with digital pathology hardware fall short of meeting the expectations of those surgical pathologists who must use them,” emphasized Sanan. “Solving this problem is an opportunity for any digital pathology company that can provide a solution that addresses these issues, performs with an acceptable ROI, and allows pathologists to be more productive while also delivering more diagnostic value to referring physicians”
One way that Inspirata may prove disruptive to the anatomic pathology profession is its business strategy to address the ROI issue with digital pathology in the short term. “Typically, existing competitors will sell pathology labs the scanners, monitors, and associated hardware,” noted Sanan. “The labs need to add storage to handle the increased data. Then the pathologists are somewhat left on their own to use their newly-acquired digital pathology capability, while generating an acceptable rate of return for all that investment.
How a Successful Software Entrepreneur Decided To Create a New Digital Pathology Company
ON OCCASION, IT IS OUTSIDERS to laboratory medicine who bring the most disruption to the status quo. In the case of Inspirata— the new company aiming to deliver a digital workflow solution to anatomic pathologists it hopes will be disruptive in the current marketplace—the moving force is its Chairman and CEO, Satish K. Sanan.
Sanan is a serial entrepreneur. He founded IMRglobal Corp. in 1988 and the company went public in 1996. It was sold to CGI for $438 million in 2001. Sanan next acquired Zavata Inc., of Atlanta, Georgia. This company provided business process outsourcing and revenue cycle management services to the healthcare provider and insurance market. It was sold toApollo Hospitals of India in 2008.
In 2013, at a showcase for emerging companies in Tampa, Florida, Sanan met Mark Lloyd, Ph.D., who had founded a company to develop diagnostics products. Lloyd was a scientist at the Moffitt Cancer Center’s Analytic Microscopy Core Laboratory. He was doing advanced work in digital pathology and computational image analytics.
Meeting pathologists’ Needs
Intrigued by Lloyd’s work and his vision for digital pathology, Sanan did extensive research. Working with Lloyd, the Inspirata team spent a year studying the clinical and workflow activities of pathologists at Moffitt Cancer Center. At the same time, they researched all the scanners and digital pathology systems currently offered for sale to evaluate their strengths and weaknesses at meeting pathologists’ needs.
Sanan recognized one big gap in the digital pathology marketplace. Despite improvements in the function and productivity of scanners and digital pathology hardware over the past decades, pathology labs still lacked one element necessary to use scanners and digital pathology systems cost-effectively: a pathologist workflow solution that functions in a way that meets or exceeds the needs and expectations of pathologists.
However, Sanan’s vision goes beyond providing the pathology profession with a pathologist workflow solution. He sees the opportunity to collect pathology case data and images and combine that with other clinical data sources to create a data warehouse that pathology labs and diagnostic companies— including Inspirata—can use to develop new lab tests and support advances in pharmacogenomics.
Three Business Initiatives
To tackle these business challenges, Sanan did three things to distinguish the company from most other digital pathology vendors. First, he invited 12 prominent pathologists and scientists to be part of an advisory board that is engaged for input.
Second, Sanan tapped his network of successful entrepreneurs to be investors in Inspirata. These individuals believe in the company’s potential to develop and deliver game-changing products and services to the profession of anatomic pathology.
Third, Sanan is moving forward with a $3 million investment in a research center in Bangalore, India. It will start with about 30 scientists, engineers, and software developers. Through its partners, it has relationships with The Rajiv Gandhi Cancer Institute and Research Centre and the All India Institute for Medical Sciences (AIIMS) to access tissue specimens of cancer patients.
Sanan believes that the demand for anatomic pathology services in India will complement subspecialist pathology capabilities here in the United States. “Digital pathology will be the bridge that allows pathology labs in both countries to work collaboratively to improve the diagnostic services available to patients,” he predicted.
“By contrast, Inspirata’s strategy is to eliminate the ROI question,” he explained. “Inspirata will place full scanning capability into a pathology laboratory. We will also put our staff in that laboratory’s new scanning center to operate the systems.
“Under this sales arrangement, the pathology laboratory does not need to put up capital in order to acquire the equipment,” noted Sanan. “Rather, the lab can pay back Inspirata over time. This approach allows the lab to get the scanners, monitors, servers, storage, staffing, and the pathologist cockpit necessary to support diagnostic activities.
Provide A Single Solution
“By eliminating the need for a pathology laboratory to make a substantial up-front capital investment, Inspirata can provide a single solution that covers all that is needed for a pathology lab to begin working with digital images,” emphasized Sanan. “There is strong interest in this business model, and we are in discussions with a number of respected academic pathology departments that are studying this business arrangement.”
Essentially, Sanan is talking about the “rent to own/lease to own” business model that has been successful in all sorts of industries. A form of this is used in clinical laboratories with agreements known as “reagent rental,” where the lab agrees to perform a specific volume of tests and pays the vendor a “per click” fee for each test it runs.
Similarly, back in 2008, another pioneering digital pathology company used a another type of “pay as you go” pricing model for its equipment. BioImagene, Inc., (acquired by Roche Holdings in
2011), offered its scanners and hardware to pathology laboratories priced at 99¢ per scan, similar to the iTunes pricing model. Pathology groups that purchased BioImagene under this arrangement also agreed to pay for a minimum number of digital pathology scans per month. (See TDR, September 29, 2008.)
Thus, there is established precedent in the lab industry for pay-as-you-go pricing similar to what Inspirata is willing to offer pathology laboratories. The downside for Inspirata with this business strategy is that it requires substantial amounts of capital up front to place these instruments and it may take several years for the monthly cash payments to Inspirata from these pathology labs to reach a financially-sustainable level.
If Inspirata is to succeed in distinguishing itself compared to the existing companies in the digital pathology marketplace, it will need to do two things. First, it must convince skeptical pathologists and pathology practice administrators that it is feasible to implement a digital pathology workflow solution that delivers improved pathologist productivity in a cost-effective manner.
Second, Inspirata’s pathologist cockpit must deliver a seamless workflow experience that fully meets or exceeds the expectations of surgical pathologists who spend each day viewing slides and producing diagnoses. These expectations represent a high bar for performance, one that the digital pathology industry has yet to meet.
A Trump Card At Inspirata?
If Inspirata does have a trump card, it is likely to be its hard-driving, visionary Chairman and CEO, Satish K. Sanan. He has access to ample amounts of investment capital to fund the development of the workflow solution, as well as the quantifiable prognostic and predictive assays and the “big data” cancer database. As Inspirata’s leader, Sanan is demonstrating that he can produce significant results in a compressed timeline. That may be what is needed to create momentum across the entire field of digital pathology.
Digital Pathology’s Pioneers: Where Are They Now? Much Has Changed Over the Past 15 Years
URING THE 1990S, rapid advances in information technology, computer chips, and software made it feasible to develop products to support telepathology and digital imaging of glass slides.
One early entrant in the telepathology sector was Interscope Technologies, Inc., founded in 1997 in Pittsburgh, Pennsylvania (it later became Trestle Holdings, Inc.). Its telepathology products found a market, but information technology and the Internet were not developed well enough to properly support the performance of these systems.
In 1999, Aperio Technologies, Inc., of Vista, California, was founded. It developed one of the first lines of digital pathology products that gained market acceptance. During the second half of the 2000s, it was placing digital pathology systems in pathology labs worldwide. In 2012, Aperio was acquired by Leica Biosystems (itself a division of Danaher Corporation).
In 2002, DMetrix Inc., of Tucson, Arizona, began offering scanners and digital pathology solutions. It has had only a small market presence in recent years.
BioImagene of Cupertino, California, was founded in 2008. It differentiated itself from Aperio by offering a “pay per digital scan” sales model. Roche Holdings purchased BioImagene in 2010 and it became part of Ventana Medical Systems Inc. (now renamed Roche Tissue Diagnostics).
GE And UMPC Form Omnyx
Also in 2008, Omnyx, LLC, was formed as a partnership between General Electric and the University of Pittsburgh Medical System. The headquarters for this digital pathology company is in Pittsburgh.
By 2010, a division of Royal Philips Electronics had entered the digital pathology market with a line of scanners and digital pathology hardware.
Along with these companies selling scanners and digital pathology hardware, there were several companies that developed solutions to allow pathologists working with digital pathology images to communicate with each other. These companies did not manufacture or sell scanners or digital pathology hardware.
Founded in 1993, Apollo PACS of Falls Church, Virginia, earned patents related to telepathology. In the mid-2000s, it developed and introduced a PACS solution for digital pathology images.
Aurora Interactive of Montreal, Quebec, Canada, was founded in 2004. Under the brand name, mScope, it developed tools to manage digital images and enable collaboration among pathologists at different sites. Between 2006 and 2011, it had installations operating in both North America and Europe.
This is not a complete list of the pioneering companies in telepathology and digital pathology. But it is representative of the early entrants who marketed their products and systems. These companies used information technology, computer chips, and software that was state-of-the-art for those times, but performed significantly under the capabilities of today’s technology.
There is another field within digital pathology that appeared late in the 1990s and was centered more upon systems designed to help pathologists analyze digital images. One example of such a company was ChromaVision Medical Systems Inc., of San Juan Capistrano, California. It was founded in 1993 and marketed a digital imaging system that supported its ACIS test, that “detects, counts and classifies the HER2 protein.” Chromavision was renamed Clarient Inc., in 2005. In 2010, General Electric (a co-owner of Omnyx, LLC), acquired Clarient.
Contact Satish Sanan at 813-570-8905 or SSanan@Inspirata.com.