Key Emerging Trends in Digital Pathology - KLAS Research

In this newest episode of PathPulse, James Thackeray, Executive Board Member of the Digital Diagnostic Summit, interviews two guests from KLAS Research: Eder Lagemann, Global Director of Digital Pathology, and Sidney Tate, Insights Director. Together, they discuss key emerging trends in digital pathology.

Discover how digital pathology adoption has measured up against radiology, the contrasting adoption rates between the U.S. and Europe, and the primary factors driving this shift across different groups. Gain insights into what’s propelling industry growth and what must change to accelerate widespread adoption.

KLAS is a research and insights firm on a global mission to improve healthcare delivery by amplifying the provider's voice. Working with thousands of healthcare professionals and clinicians, KLAS gathers data and insights on software, services, and medical equipment to deliver timely reports, trends, and statistical overviews. The research directly represents the provider voice and acts as a catalyst for improving vendor performance. Learn more at klasresearch.com.

Submit questions for our future recordings here: https://lumeadigital.com/ask-a-pathologist-podcast/

Sponsored by the Digital Diagnostic Summit and Lumea.

Transcript

Welcome to PathPulse: Pathology Innovators in Action, your go-to podcast for practical and implemented digital pathology insights.

James Thackeray: Welcome to the PathPulse: Pathology Innovators in Action podcast. We're thrilled to announce our rebrand here from Ask a Pathologist podcast. So this podcast is dedicated to showcasing the pioneers, innovators, and movers and shakers who are transforming digital pathology from theory into practical, implemented, and viable solutions. So we're excited about the rebrand and excited to continue these interviews. So I'm James Thackeray. I'm on the executive board of the Digital Diagnostic Summit and am the chief commercial officer at Lumea, who's an organization dedicated to improving diagnostics and digital workflows.

Today, I'm really excited about our guests, two of whom I've met several times and worked with, Sydney Tate and Ed Lagemann from KLAS Research.

We're excited to have both of you here. Thanks for being here, first and foremost. 

Why don't we do this: I'd love for you to both introduce yourselves and then take a few minutes if you would and just help us understand who KLAS is as an organization, a little bit of the history because I think that will be incredibly relevant. I think most of our listeners will know who you guys are, but for those who don't, it would be great to get a little bit of the history of who KLAS is. Why don't we start with you, Sid, and go to you, Ed, after that, if that works?

Sidney Tate: Absolutely. Thank you so much, James, and thank you for having us. We are so excited to get to be here today, and we will take any opportunity we can to talk digital pathology. We love this space and the research that we get to do in this. So, thank you. Yeah, by way of introduction, I'm Sidney. So, I am an Insights Director here at KLAS. I'm kind of a partner in crime with Ed with all of the digital pathology research we've done. So, I've been here for about three years working on the digital pathology research, both in Europe and in the United States. Kind of the data guy in the background, so I analyze a lot of our data, look at the industry trends, and I help to write the reports that we publish as well - as Ed leads out in this space. But I'll kick it over to you, Ed.

Eder Lagemann: Yeah, thanks, James, as well. We're passionate about digital pathology. We're happy to help the industry any way we can. I've been working with KLAS for about 10 years, and currently, I'm the Global Director of Digital Pathology. That's one of my areas of expertise.

So, I lead the efforts in publishing industry reports on digital pathology. We have published many reports already, and our goal here at KLAS is to help two groups of people. First is the healthcare provider, is the pathologist out there that's thinking about implementing the solution, doesn't know which vendors they can count on. These people usually meet with a lot of vendors, right, and vendors make a lot of promises. Some of these vendors are really good at keeping their promises and delivering on those expectations. Others fail to deliver at that level. 

So our goal here is to really highlight to the industry how vendors are doing in meeting the needs of their clients, right? And fulfilling those promises they made when signing the agreement. So KLAS has been doing this for almost 30 years, publishing reports for healthcare IT. That's all we do - publishing this information to help the industry, right? 

And the digital pathology, we started doing this in 2019, right before the pandemic, so it's a great thing because that's when we saw a pick up in the industry, increasing the adoption. So we're very happy to be in this space and helping the market.

James Thackeray: Thank you both. I'm really excited to get into some of this because you guys are the experts in industry trends. And the fact that you started in 2019, I agree that that was an interesting and good time to start because the pandemic did kickstart at least people's thought process around digital pathology - if they weren't thinking about it before they certainly were during the pandemic Let me ask you this.

How Does the Adoption of Digital Pathology Compare with Radiology

Let me, and either of you can answer we can, you can tag team - However, you want to do it. But as I think about KLAS and and some of the things you've done historically my first question would be: How do you compare, because when Lumea started, you know 11 or 12 years ago, we were early in our vision of what digital pathology could do, we often compared it to radiology. And radiology had already gone digital. That ship had left quite a few years ahead of digital pathology and, and still is way ahead. I guess, give us an idea as you compare those two industries. Maybe just give us some background on that and what you see, any similarities you see, and maybe even a couple of the big differences when you think of radiology versus pathology and their journey to go digital. 

Eder Lagemann: So - That's a good question, good question. Because KLAS was here, doing these reports for radiology 25 years ago or so. Sid and I were not here yet, right? Our colleagues were working on that. And there's some similarities because it was a huge change, right? And at the beginning, if you go back in time.

It was a lot of, it was a big change, of course, a lot of investment and a lot of uncertainties, right? Is this going to be worth the investment? Going digital, I get a Pax, for example, but I don't have an x-ray, a digital x-ray. What am I going to do with it, right? So there's a lot of uncertainties at the time. Just like it is now with ROI, for example, right? How can I justify the investment in digital technology? And of course, the nuances are different, but if you go back and ask those people in radiology 25 years ago, it was a similar circumstance at the time.

Should I invest in this? Who is doing it? What are the outcomes? What kind of benefits am I going to get out of it? 

If you ask them today, there's no questions, right? It was a good move. 

And this research we do, actually, we do globally, there are some developing countries where we find people still using film for radiology, like this, 20, 30 years later, some organizations are still debating if they should invest in a digital x-ray, if can even believe on that, right? If you ask any organizations that have done that, like went through that journey, there are no questions on their minds that it was worth the investment, not just on ROI, but the benefits, the clinical benefits for patients, right? And so I think today we're having those questions for digital pathology.

We have interviewed, Sid and I personally have interviewed, have visited many sites doing digital pathology. Those that have done this have went through that transformation. There are no questions on their minds that it was a good investment, right? There's no way back. That's what they tell us. There's no way back. We're so happy with digital pathology. It's not perfect yet. There's still a few things we want. But there are no questions in their mind that they should go back. So that's a really good insight for the market.

Digital Pathology Adoption in the U.S. Versus Europe

James Thackeray: That's awesome. Thank you. That's great insight. Sid, let me ask you, because you mentioned earlier, as KLAS looks at not only the U.S., but they've kind of looked at Europe and other areas of adoption with digital pathology. In your assessment of that...

Where do you figure the U.S. market is in comparison to Europe, for example, if we want to clump all of Europe together? I guess you could divide up Europe, but maybe we don't have time for that. Where is the journey similar and maybe where it's different and why? What would you say the differences are?

Sidney Tate: So there are certainly differences. We know that Europe has led the way when it comes to digital pathology adoption. And I should note and caveat everything that we say that when we do a lot of our research, we are very focused on clinical adoption of digital pathology specifically for primary diagnosis. So that's what we've been trying to measure both in Europe and more heavily in the U.S. right now. But what we've seen is various European countries, especially they kind of led the way when it came to adopting digital pathology. 

And there's a couple of different things that we can point to to show that there were different barriers that they had to jump over that are different than the barriers that organizations in the U.S. have to jump over to adopt digital pathology. Funding looks very differently, it looks very different, I should say, in Europe, in many countries there versus the U.S. where you have more of the public, I should say, kind of government health insurance and the health sector just looks very different. So the funding sources, it can be driven more by the NHS, for example, in England, can drive the funding there. 

And we know that maybe they may not have as much money as some of these individual organizations in the U.S., but it can be more of kind of a group push towards digital pathology versus in the U.S. it's a very kind of individual decision for all these organizations who have to justify the ROI every single time they're deciding whether or not to invest.

So, that looks different. We know that the process to get CE marked versus FDA cleared is also very different, so we saw more CE marking happening in Europe, which also just kind of eased organizations into feeling comfortable moving into digital pathology. Whereas with FDA clearance, we've seen that pick up a lot, especially in recent years in the U.S., but in early days, there were a lot of these organizations who said, we want to jump into this, but there's not a lot of these FDA cleared solutions, so if we go into this, we're going to have to do our own validation and LDTs and figure out how to make all of this work. 

And so, I think that for some of those reasons, we've seen Europe be ahead of the U.S., but we definitely see adoption growing in the U.S. We talk to organizations. We see, we hear about new deals that are signed frequently here and decisions that are made; we estimate the U.S. is still probably somewhere between 10 and 20 percent of organizations that are going, that have gone digital, that have implemented digital pathology solution and kind of sort of at least dipping their toe in it in a clinical sense. When we look at primary diagnosis, it's probably still less than 10 percent of all cases in the U.S. that are signed out digitally to date, but it's growing. 

And that's where so many organizations are wanting to go as well. So we're expecting to see that pick up pretty significantly in coming years, especially some other market factors can kind of fall into place for all of that.

James Thackeray: That's great. I love that. Sorry, because, you know, Lumea as an organization, for example, is just getting into the European market, and it is different. But they've they've had quite a bit more adoption, certainly. And I also like that you're kind of differentiating clinical adoption versus primary diagnosis clinical adoption, right? Which is, I think, a difference. 

I think at Lumea, what we've seen, partially because of the ROI portion that Ed pointed out, our users are using this for primary diagnosis all around the U.S. and are doing it. It's not just a toe in the water. They're fully all in. This is the way they practice pathology, which is exciting for us. But we're also learning the hurdles that are there for larger institutional organizations to go digital. Sometimes that's part of the implementation process, right? You kind of dip in. Maybe you do it with second opinions, and you start with tumor board cases or whatever it might be.

But building that infrastructure is key. Okay, let's get into the numbers.

Digital Pathology Adoption Trends in the U.S.

Why don't, and you can both just chime in on this as you see fit, kind of the growing adoption in the U.S. Give us some statistics and I'd love to kind of hear if you've seen anything specifically in this year as well as we've had some of the FDA stuff. I don't know how that's impacted adoption. At least I have, I have my own sense of it, I'd be curious if just generally what the statistics are saying about adoption in the U.S. and any trends that you want to highlight.

Sidney Tate: Absolutely, and I can start with some stats and then I'll let Ed talk more of the generalities there too. So on the, on the stat side one of my favorite things that we get to see at KLAS is we also do a lot of measuring on the enterprise imaging front and understanding kind of on the broader scale, what are organizations trying to bring into their enterprise imaging strategies, store centrally, view from a central location as well. 

We asked throughout all last year and going into this year, what service lines organizations were looking at pulling into their enterprise imaging strategies. When we looked at this data as of the Digital Diagnostic Summit last year, it was only about 20% of those who said they want to expand their strategies that were looking at digital pathology specifically.

Looking at this year, there's a 10 percentage point increase where we see 30% of organizations who said they're looking to expand their enterprise imaging strategies, said that in the next couple of years, pathology is one of the main areas where they want to at least start exploring doing so. So, as far as this year, even versus last, we've seen... among those more advanced organizations who are alive with enterprise imaging, an even greater appetite to start moving into digital pathology. So that's just one piece. And that's not even discussing all of the reference labs and the pathology groups. They kind of fall outside of that enterprise imaging research where we've also seen deals being signed and digital movement on that front. But everything that we've been seeing has just indicated that there has absolutely been kind of this increase in not only the desire to explore digital pathology, but kind of that willingness to start really moving down that path too.

James Thackeray: Yeah, that's exciting.

Eder Lagemann: And that's really good, interesting statistics because to this point Sid was mentioning, we've talking about larger health systems in the U.S., right? We talked to a lot of them. We have talked to a lot of them over the years.

And we see this trend as Sid mentioned, the interest for digital pathology is increasing, right? As he mentioned, 30% of them are, it's one of their priorities now for the next couple of years. But if you consider them, pathology is not their only priority, right?

Pathology is competing with other priorities. They have cardiology, radiology, ophthalmology, point of care, ultrasound. 

There's a lot of other competing priorities. And still, pathology is one of the top for them, right? So it's really interesting that all of these large health systems are looking at digital pathology. And now if you consider the reference lamps. 

All of those labs we spoke with, like every single one of them, they're either already doing digital pathology or they are looking into it, right? If you consider statistics just for those reference labs, it's close to 100% of them are either doing it or about to get started. So very good for the market.

James Thackeray: Yeah, that's really exciting, and it would be hard for them not to look at it, right? I mean, we're just at that kind of tipping point where it's going to be a competitive disadvantage if you're not digital, especially, I think, in the commercial sense as we start to figure out how pathologists can share work and read from anywhere based on the state that they're in depending on certain regulations. So that's great insight.

Why Are Groups Interested in Digital Pathology?

How about we do this? Let's talk about the why. I really would want to understand: why are these groups? I mean we don't have to get into why it's taken so long I think infrastructure or other things ROI all that has caused a delay in digital pathology adoption. But let's talk about why are most organizations looking at digital pathology at this point. Sid do you want to start?

Sidney Tate: Yeah, I'll start us off, and I smile at that question, and the main reason is this is every time we have a conversation around digital pathology and especially with an organization that's looking to go down that road. We always asked the why, Ed and I, and so, and what I've noticed is that the why looks different across organizations. 

So, at the heart of it, everyone wants to improve the care that we give to patients. And that's really what's driving so much of this. And they know that going digital not only can make it so it's easier to collaborate and we can have maybe more efficient tumor boards and on the medical legal side of things that we can also kind of protect ourselves from malpractice, but especially as we get into having AI come in, screen cases, potentially be able to see things that aren't even visible to the eye of a pathologist under a microscope....that's really what's at the heart of the why for so many of these organizations. But I love…

There was one I spoke to who's an academic health center that's looking at digital pathology right now. I shot over an email and said, okay, why are you looking at this? What's kind of driving this? And they sent back a list of about 15 different things that were saying, we need to figure out how we pay less to… as far as courier costs, and we don't spend so much time trying to ship these slides to different places. We need to make this more easily accessible. We need to have a better history of all of this. And the list just goes on. But so I think that there's also very much that operational side where, as of right now, when organizations are looking at their why, they realize their why also has to ideally be tied to ROI somehow. And a lot of that is looking at, hey, does this help my organization run more efficiently in any way? So they look at that why while the kind of core of patient care is something that a lot look and say, we're going to start getting this. We're not quite sure how to quantify that element of things.

But we know, especially when AI comes into play, that is going to be what kind of flips the switch and allows us to really get running on what digital pathology has to offer.

James Thackeray: That's great. Ed, anything you want to add there?

Eder Lagemann: Yeah, just one thing to add. I know ROI is usually a barrier to adopt to digital pathology.

You don't want to talk about the barriers; you want to talk about the why. But the organizations that have done this, we haven't heard from organizations saying, wow, we're losing money doing digital pathology. They're either like breaking even or, in some cases, there is some financial benefits there with efficiency gains and better collaboration, second opinions. So ROI, although it might be a barrier when they're starting it, organizations that have done this haven't seen it that way. They realize they can profit or at least break even from it.

James Thackeray: That's such good insight, because I think two things, just as I hear this, one, it gets me excited when people are really looking at the patient care side, obviously, and I think most healthcare professionals do that naturally, right? But what we've seen as an organization that gets me, I guess, so passionate about digital pathology is we've actually seen cancer detection rates increase, which isn't necessarily good that we're finding more cancer, but it is in the sense that these patients are actually being treated earlier because we've found things that we would have missed until later. And that's not a, I mean, these are pathologists that are amazing. They're specific to their specialty, and they're calling me all the time saying...

There are different rationales and reasons for catching more cancer when it's in our system. We have some pre-analytic workflow that I think helps preserve more tissue so they have more to look at.

But on the back end, as you mentioned AI, and I wanted to highlight that, I think as you use it as a QC check, even that has caught more cancer. 

We have pathologists all the time that call and say, I would have missed this little thing that I just wouldn't have seen had I not ran that algorithm. I think that's huge. I think as we think of AI and what it can do from an ROI perspective, there's workflow AI that we can develop, and that's been kind of Lumea's focus: how do we make the pathologist more efficient? That's kind of the workflow. Like, how do we just, you know, they're so good under the microscope. They develop that process over years.

How do we now make them even more efficient on a digital platform that gives them the option to have second opinions, AI, all these other things downstream? And then you think of, sorry, other AI, you've got diagnostic, which I think is great. We mentioned that, but then even prognostic AI algorithms are now coming into play. What I get, again, excited about is as these groups go digital, they now have this diagnostic imaging database that they can either work with specific AI companies to do the AI that they think is most needed within their own practice, or they can develop it themselves. And so I think it just, to your ROI perspective, Ed, I think...

There's so much more that it will eventually do that we just haven't gone far enough to even recognize all that it could do. 

Sorry, I'll get off myself.

Eder Lagemann: We haven't seen all of those benefits yet because these technologies have been building the foundation for AI and we have validated some organizations doing AI in a broad scale and well, when you talk to one of those organizations it's a different level of conversation, right? These guys figure out the benefits of digital pathology. The majority of organizations they're using AI lightly, yet, for different reasons, right? It might be FDA clearance or costs involved on the usage of AI. Who's going to pay for that? Digital pathology builds the foundation for the deep adoption of AI. That's a complete game changer, right?

James Thackeray: Yeah, and I think it's such a I think sometimes we don't add that into the ROI up front because it's a delayed ROI. But it's real and those organizations, I mean even organizations we've worked with that have been reading digitally now for seven or eight years, they have a huge database of very specific data that's digitized that they can utilize to improve workflows and Diagnostic AI algorithms and working with these different organizations. It gets it gets pretty exciting.

Industry Needs for More Adoption

So I appreciate that insight. Let's as you as you start to think of some of the challenges, now I don't want to get into the challenges, I just want, I think it would be great for you guys to highlight kind of industry needs for more adoption, specifically standards and regulations. And, and maybe Sid again you start and then we'll go to Ed, does that work?

Sidney Tate: Yeah, absolutely. So, and this is a very pertinent question because I'll refer back to that academic health center who said, we have a quick list of 15 things that we are so looking forward to achieving when it comes to moving into digital pathology. But then, the caveat, and I actually have the exact quote here. So, let me just read what this individual said. And this is an IT director at this academic health center, but they said, there are so many reasons to move forward.

And clinically, the support for doing this is evident. The hindrance is the image storage costs and federal mandates on storing slides.

Until there's a blessing from the FDA or other federal entities on how specimens are being stored, we are going to be in an uphill battle against regulations and ROI. So I think that that's an interesting perspective where, and going back to earlier in our conversation, when we asked about the difference between radiology and pathology and the digital transformation, radiology had that very quick ROI of saying, we can completely get rid of film. 

But on the pathology front, this is something that organizations bring up to us all the time, saying, if I go digital, it's still, I still have to store these slides for 10 years somewhere in a warehouse. And so I'm paying for those storage costs while also having to tack on digital storage costs. And if I want to store a lot in order to be able to train AI, for example, I'm not going to want to just purge studies. 

And so there's a big question around how should lifecycle management work in this lifecycle management in the context of AI as well. 

And so there definitely is a need for greater regulations and kind of an understanding that as organizations go digital, there has to be some sort of balance between the physical and digital storage of these slides because requiring both will make it so organizations may just take the path of saying we're going to keep this for three months and then purge it afterward, and if we need it, then we're going to go and grab it from our warehouse after that because that's where it's stored. So that's an area where there's definitely a need for some of those regulations just to decrease the barrier to jump into things. And then on the standard side, I had an interesting conversation with a director of pathology at another academic health system who has already started down this road, and I ended the conversation by asking, what do you need from us at KLAS in order to be able to help you and help the industry?

And he looked at me and responded, just push DICOM, please push DICOM on everyone, because that's what radiology arises. 

We needed a standard to be able to make sure that it's easier to adopt. There's more standards to implement and integrate. And we're still in the state where there's so much proprietary stuff happening within digital pathology and it makes it so every single implementation kind of has to be its own beast that an organization has to tackle because it's not going to look exactly the same and the DICOM standard hasn't widely been implemented either. 

So that's another area where, especially for on the vendor front because I think there's an appetite on the health system front, but the offerings have to be there both for those produce scanners, the IMS as well, and so pushing towards DICOM or - that's the industry standard we hear about most in conversations - so pushing in that direction I think is another thing that will really lower that barrier and allow for greater adoption moving forward.

James Thackeray: Right. Ed?

Eder Lagemann: And I think one workaround that is you know I was talking to one of those the IMS vendors AI vendors as well, and they're saying the lack of standards it damages our ability to innovate, right? How can we innovate without the standard? We have our standard for the IMS and AI, but we don't choose the scanner for the clients, right? They're coming with different image formats and it makes so hard for them to get that to work with their solution, right?

The one thing that the market can do, if I'm looking for a digital technology solution, I can make that a requirement, right? 

I want some DICOM standard, for example. If you don't have a DICOM standard, you're out of my list, right? There's no conversations. So even though there's no standard today, I think the market can push that. If the market's pushing that, the clients are doing that, the vendors would have to change and adopt the D standard. There's no other way around. 

James Thackeray: That's great. Gosh, this has been so good. I have like 20 other questions, but maybe you both agree to do another podcast at some point. I know we get you at our Digital Diagnostic Summit here in a month or so. It's coming up.

So we'll see you and I don't know, Sid, if you're making that or not, but we'll see you up in Park City. But let me just say thank you first for taking the time. I think the work that KLAS is doing is so pertinent, not only to helping others see maybe the best road to go when they try to go digital, but just the perspective on the industry as a whole. I think it allows us, when you gather that kind of data, it does allow the industry to kind of set the right standards to follow and recognize where we need to innovate more, right? And so I think it's awesome. I think it's exciting the work that you're doing. And yeah, just keep up the good work, and thank you both for joining us today.

Sidney Tate: Thank you so much, James. Thanks for the work that you're doing as well. We love working with you and your competitors as well, who are pushing and trying to make this a better space in digital pathology, innovating and delivering great things to your customers. So thank you, and thank you for having us today.

Eder Lagemann: Yeah, thank you for having us. It's a pleasure to be here and collaborate with you and the market. Looking forward for future opportunities to collaborate with you and our team.

James Thackeray: Awesome. Thank you, guys.

Thanks for listening to PathPulse: Pathology Innovators in Action. Tune in next time for more inspiring conversations with digital pathology experts.