AN ANALYSIS OF AN ADVANCED SOFTWARE BUSINESS MODEL FOR MAGNETIC RESONANCE IMAGING DATA POST PROCESSING by NICHOLAS BARRON Submitted in partial fulfillment of the requirements For the degree of Master of Science Adviser: Edward Caner Department of Physics CASE WESTERN RESERVE UNIVERSITY May 2016 CASE WESTERN RESERVE UNIVERSITY SCHOOL OF GRADUATE STUDIES We hereby approve the thesis/dissertation of Nicholas Barron candidate for the degree of Master of Science*. Committee Chair Edward Caner Committee Member Robert W. Brown Committee Member Michael Martens Date of Defense March 21, 2016 *We also certify that written approval has been obtained for any proprietary material contained therein. ii Dedication I would like to dedicate this paper to the memory of my grandfather, Allen Friedman. From my elementary school days until my last semester in the STEP program, he was my biggest supporter. He passed away just weeks before the completion of my thesis. iii Table of Contents Dedication ............................................................................................................................................................ iii Table of Contents ............................................................................................................................................... iv List of Tables ..................................................................................................................................................... viii List of Figures ...................................................................................................................................................... ix Acknowledgements .............................................................................................................................................. x 1 Abstract ........................................................................................................................................................ 1 2 Introduction ................................................................................................................................................. 2 3 MRI Post Processing Software Industry Analysis ................................................................................. 4 3.1 Users ....................................................................................................................................................... 4 3.2 Customers .............................................................................................................................................. 4 3.2.1 Hospitals .................................................................................................................................... 5 3.2.2 Imaging Centers ........................................................................................................................ 6 3.3 Purchasing Considerations .................................................................................................................. 6 3.3.1 Cost of Care .............................................................................................................................. 6 3.3.1.1 Affordable Care Act ........................................................................................... 7 3.3.1.2 Reimbursement ................................................................................................... 7 3.3.2 Clinical Evidence ...................................................................................................................... 9 3.4 Market Size Estimates .......................................................................................................................... 9 3.4.1 DICOM Market ........................................................................................................................ 9 3.4.2 PACS Market .......................................................................................................................... 10 4 Magnetic Resonance Innovations, Inc. ................................................................................................. 12 4.1 History .................................................................................................................................................. 12 4.2 Team ..................................................................................................................................................... 12 4.2.1 Management ............................................................................................................................ 13 4.2.2 Advisors ................................................................................................................................... 13 4.3 Key Activities ....................................................................................................................................... 14 4.3.1 Research ................................................................................................................................... 14 4.3.2 Products ................................................................................................................................... 14 4.3.2.1 SWI ..................................................................................................................... 14 4.3.2.2 SPIN, NeuSPIN ................................................................................................ 15 4.3.3 Consulting Services ................................................................................................................ 16 4.3.4 Patent Portfolio ...................................................................................................................... 16 4.3.4.1 Siemens License ................................................................................................ 16 iv 4.3.4.2 Pending Patents ................................................................................................. 16 4.4 New Business Model .......................................................................................................................... 17 4.4.1 Advanced Modules ................................................................................................................. 17 4.4.1.1 White Matter Hyperintensity ........................................................................... 17 4.4.1.2 Iron Quantification ........................................................................................... 18 4.4.1.3 Cerebral Microbleed Detection ....................................................................... 19 4.4.1.4 Flow Quantification .......................................................................................... 19 4.4.1.5 Perfusion Weighted Imaging ........................................................................... 20 4.4.2 Value Proposition Analysis ................................................................................................... 20 4.4.2.1 Need .................................................................................................................... 21 4.4.2.2 Approach ............................................................................................................ 21 4.4.2.3 Benefits per Cost ............................................................................................... 22 4.4.2.4 Competition ....................................................................................................... 22 4.4.3 Go to Market Strategy ........................................................................................................... 23 4.4.3.1 Package Sales ..................................................................................................... 23 4.4.3.1.1 Target Customers .......................................................................................... 24 4.4.3.1.2 Pricing ............................................................................................................. 24 4.4.3.2 Cloud Processing .............................................................................................. 24 4.4.3.2.1 Target Customers .......................................................................................... 25 4.4.3.2.2 Pricing ............................................................................................................. 25 4.4.4 Cost Structure ......................................................................................................................... 26 4.4.4.1 Staffing Needs ................................................................................................... 26 4.4.4.2 FDA Costs ......................................................................................................... 27 4.4.4.3 Other Expenses ................................................................................................. 27 4.4.5 Pro-Forma Financial Models ................................................................................................ 27 4.4.5.1 Worst Case ......................................................................................................... 28 4.4.5.2 Likely Case ......................................................................................................... 29 4.4.5.3 Best Case ............................................................................................................ 30 4.4.6 Capital Needs .........................................................................................................................