How often have you heard a spokesperson for a public health service, or a politician whose brief covers the health sector, claim that the number one priority is to reduce patient waiting times? “Extremely often” or “so often I could scream” are among the likely answers. In one corner of healthcare provision at least, a venture-backed company is offering a solution.
Last month, Barcelona-based European Telemedicine Clinic (TMC) received a €7 million ($9.7 million) investment from London-based Kennet Partners. TMC's specialist field is teleradiology, by which digital diagnostic images such as x-rays and magnetic resonance imaging (MRI) scans are sent to a remote location for interpretation by certified radiologists. TMC offers radiologists who interpret images for both public health bodies, such as the NHS in the UK, and private sector sub-contractors.
There are regulatory barriers in terms of obtaining certification
Kennet partner Maximilian Bleyleben, who led the investment, says that the technology behind diagnostic imaging has become increasingly complex in recent years. For example, CT/PET scans, which provide up to a hundred 3D images of a single brain, are highly popular because they avoid the need for potentially dangerous, invasive surgery. Unfortunately, many countries have a severe shortage of experienced radiologists able to read and interpret such complex images. According to research and consulting firm Frost and Sullivan, 91 million digital radiography exams took place in Europe in 2006 – a figure which is expected to grow to 198 million by 2010. Kennet has estimated that in Europe's most developed teleradiology markets – the UK, Spain and Scandinavia – less than 4 percent of these exams are currently being interpreted remotely. But evidence from the more mature US market suggests that up to 20 percent will eventually be dealt with by remote locations.
TMC has a pool of 80 radiologists to draw upon in Barcelona, and also has specialists in Australia able to provide a service during European night-time hours. He says the firm is confident its market position is not under threat given the high barriers to entry. “There are regulatory barriers in terms of obtaining certification, and it's also a service that demands high levels of quality control and a good relationship with the hospitals. The hospitals were initially sceptical, but TMC overcame this with a very high standard of interpretation quality – higher even than that required by the NHS. For a new company to get that level of trust would be hard.”
TMC was founded in 2001 by two Swedish nationals, David Backstrom and Henrik Agrell. Sweden was a pioneer of teleradiology services given the existence of extremely remote communities in the north of the country which had to be connected to a central hospital network. “That's where they first saw the opportunity and decided to take it abroad,” says Bleyleben.
Bleyleben explains that one reason why the business is based in Barcelona is that Catalonia offers a range of tax incentives for young businesses. There is also a second, arguably less obvious, reason. The pool of radiologists used by TMC includes people taking sabbaticals and one of the keys to attracting them is the beauty of Barcelona as a location. “They know will have a good quality of life for a year or two,” he says. Bleyleben says Kennet's plans include expanding TMC's roster of radiologists, building its technology infrastructure, hiring more sales staff and seeking to take advantage of opportunities in countries where the teleradiology market is likely to grow in the coming years, such as France and Germany.
Kennet's investment sees a partial exit for TMC's existing venture capital backers, Active Capital Partners (ACP) and Invernova – a Barcelona-based venture capital firm and Catalonian government seed fund respectively. Both funds are retaining small interests in TMC as well as a director on the company's board.