VHA/UHC MEMBERS SAVE MONEY ON R2 IMAGECHECKER CAD SYSTEM.

Novation, the supply company of VHA Inc. and the University HealthSystem Consortium (UHC), and R2 Technology, Inc., have signed an agreement that will enable VHA and UHC members to save money on purchases of the R2 ImageChecker CAD system for mammography and the recently FDA approved ImageChecker CT system for lung nodule detection on multi-detector CT (MDCT) exams, which extends this valuable tool to another modality.

Computer-aided detection is used by increasing numbers of radiologists as "a second pair of eyes" when reading a mammogram. The ImageChecker CAD system from R2 Technology has the potential to detect findings that might otherwise be overlooked during the review process, thus improving cancer detection capabilities. Clinical trials demonstrated that use of the ImageChecker system could result in earlier detection of up to 23.4 percent of the cancers currently detected with screening mammography. Research studies demonstrate that CAD has comparable capabilities (26%) to reduce the number of potentially cancerous solid lung nodules missed during a Chest CT exam.

The three-year agreement was awarded based on the results of Novation's competitive bid process along with feedback from the Novation Diagnostic Imaging Council, comprised of key imaging professionals from both the VHA and UHC membership. The Novation decision criteria and award matrix are based on objective assessments of both clinical and financial performance. The new agreement also extends to healthcare organizations that purchase supplies through HealthCare Purchasing Partners International, a company that markets Novation purchasing agreements to organizations that do not belong to VHA and UHC.

"VHA and UHC members are thought leaders and early adopters that demand access to new and life saving technologies," says Joe McKinley, director of Diagnostic Imaging for Novation. "Members have indicated they are excited about the prospect of being able to detect breast cancer and lung nodules earlier using innovative CAD solutions from R2 Technology."

The ImageChecker system was the first CAD system approved by the FDA for use with mammography. Since 1998, R2 Technology has received 17 supplemental approvals for technological and clinical advances. Dedicated to developing clinically relevant CAD products, R2 Technology contributes approximately 20 percent of revenues on research and development of new technologies.

"R2 Technology is focused and committed to innovative technology that can help save lives. We are actively looking at all aspects of the imaging process and workflow from image processing and analysis to image storage and recall through PACS and DICOM connectivity to interpretation and display. Adding a new modality is an exciting milestone in R2 history," says William J. Mercer, president and CEO of R2 Technology. "Novation demonstrates a passion for bringing innovative technologies to their patient populations. Their process of looking at a balance of financial and non-financial value allows their members access to high quality and cutting-edge technologies. We are proud that R2 and Novation will continue to work together as partners in healthcare, working for better solutions and supporting early adoption of life-saving technologies."

Lung cancer is the leading cause of cancer-related deaths in the United States in both men and women. According to the American Cancer Society, the disease claims 155,000 lives a year. R2 Technology's ImageChecker CT system is the first CAD system to receive FDA approval for computer-aided detection of solid lung nodules during review of MDCT chest exams. A research study demonstrated that use of the ImageChecker CT CAD system can significantly (p=.003) decrease the number of actionable solid lung nodules overlooked on MDCT chest exams.

"We have been pleased with the increasing number of peer reviewed presentations and publications that report an increase in breast cancer detection with the use of our CAD system. We estimate that approximately 20 - 25 percent of screening mammograms in the US are interpreted with CAD assistance," said Ronald A. Castellino, MD, R2's chief medical officer. "With the ImageChecker CT CAD system, we have developed a tool that helps in both the accuracy of lung nodule identification and in the efficiency of case review. Because lung cancer often presents as nodules that can be difficult to detect, we hope that CAD will have the same impact as it has had in the earlier detection of breast cancer."

About Novation

Based in Irving, Texas, Novation was established in January 1998 through a combination of the supply programs of VHA and UHC, two national health care alliances. Novation serves the purchasing needs of more than 2,300 members and affiliates of VHA a nd UHC. Novation also serves more than 5,400 members of HealthCare Purchasing Partners International (HPPI), another group purchasing organization owned by VHA and UHC. The largest supply cost management company in healthcare, Novation manages more than $22 billion in annual purchases for VHA, UHC and HPPI members in 2003. For more information, visit http://www.novationco.com.

About R2 Technology, Inc.

R2 Technology, Inc., headquartered in Sunnyvale, Calif., is a developer and provider of computer-aided detection (CAD), a technology that assists radiologists in the early detection of breast cancer, lung nodules and other lung abnormalities. As a medical software company, R2 Technology is developing CAD systems for a variety of imaging modalities and disease states. R2 recently received top ratings from MD Buyline in all customer satisfaction categories and was given the 2003 Frost and Sullivan Product Leadership Award.

R2 Technology can be found on the World Wide Web at http://www.r2tech.com/.

For more information, call 510/339-2293.