NEW YORK – Though only a minority of pathology labs have so far added digital slide scanning and analysis technologies, pathologists and companies in the space see slow but continued growth in the market and the potential for a breakout moment that would bring widespread adoption.
This year, firms have announced plans to bring digital pathology capabilities to more labs, develop more companion diagnostics using those technologies, build alliances to ensure equipment integration, and expand their menus in anticipation of a spike in demand, driven by the added abilities to share and collaborate on whole-slide images, automate time-consuming tasks, and leverage software to help augment pathologists' perception and analysis.
Tempering the enthusiasm around growth in the field, however, are concerns about the costs of scanners, viewers, and related software, especially in the US and other markets where digital pathology tasks are not typically reimbursed. The implementation of CPT Category III add-on codes to track the expanding use of digital pathology technologies and procedures, though, has raised hopes that reimbursement is on the horizon.
The College of American Pathologists said that 28 percent of pathology practice leaders surveyed by the organization this year reported that their labs use whole-slide imaging, up from 20 percent in 2022. CAP officials said in a statement that whole-slide imaging usage more than doubled among independent labs to 51 percent in 2024 from 25 percent two years earlier and rose among academic medical centers to 48 percent from 37 percent. Non-academic hospitals lagged in digitization, with 20 percent adoption at facilities that are owned, managed, or affiliated with academic medical centers and 15 percent adoption in those unaffiliated with academic medical centers compared to 13 percent adoption in 2022 across both types of institutions.
David West, CEO of Proscia, said that digital pathology adoption is accelerating, but "healthcare can take some patience." Even so, he thinks that digitization will become far more widespread in the coming five years.
He said that regulators are providing better guidance to companies in the space, and as a result, more scanners and software products are coming to market. Laboratories and hospital systems could soon worry about missing opportunities, especially if they are unable to offer the newer high-margin tests that he expects will enter the market in the next two years for use to guide precision healthcare.
"That sort of competitive dynamic in the market between laboratories and health systems is very much driving adoption in the US," he said.
Collaboration, AI tools driving growth
Mark Lloyd, VP of pathology for Fujifilm Healthcare Americas, said that digital pathology has allowed pathologists to provide faster, more accurate diagnoses because the technology facilitates greater collaboration among pathologists with more ease compared to a microscope-based review of glass slides. An expert in leiomyosarcoma, for example, can quickly help a pathologist who is seeing their first case to better interpret slide samples without the clerical work and cumbersome processes of courier-based slide sample deliveries, Lloyd said.
"When you ask a CEO why they have invested in digital pathology, it is to improve patient care," he said.
He said that the company's digital pathology technologies are also helping pathologists to collaborate across specialties and give them access in the patient record to more information, including radiologic images, endoscopic videos, and molecular pathology results.
"The more clues pathologists have to render a diagnosis, the more likely they are to get to the most accurate diagnosis," he said.
Jared Abbott, one of the founders and pathologists at Goldfinch Laboratory, said that his Des Moines, Iowa-area firm launched its digital pathology operations this spring to connect the lab with pathologists who could offer subspecialized expertise. Recruiting pathologists anywhere in the US is difficult, he said, and recruiting subspecialists in Iowa is particularly challenging. By building that network, the lab has been able to expand its work with clients in fields such as genitourinary pathology and breast pathology.
Effective implementation
Throughout the industry, the consensus is that digital pathology carries numerous potential benefits for pathologists and patients.
A group of authors from the US, Italy, and Pakistan wrote last year in the journal Cureus that digital pathology has helped to improve outcomes by providing rapid access to expert second opinions and consultations, and it has become a crucial resource in areas with limited access to specialized expertise. Meanwhile, the integration of artificial intelligence-based tools into digital pathology has also helped to improve accuracy and efficiency of slide review.
"The integration of human expertise and AI augmentation resulted in a decrease in diagnostic errors and an acceleration of the diagnostic process," the authors wrote.
Effective implementation, however, still requires a highly skilled workforce that can interpret the results that are generated through AI-based software and make well-informed decisions, they said. Healthcare providers that implement digital pathology systems also have to overcome challenges related to data security and the lack of interoperability among the products in the space, including differences in the labeling and formatting of slide image data.
"The absence of consistency can challenge effective collaboration, limiting the opportunity for additional perspectives and remote consultations," they said.
More recent study results support the suggestion that digital pathology tools can help pathologists to improve accuracy. Researchers in Toronto, for example, reported this year in Scientific Reports that pathologists who evaluated tissue microarray images from patients with invasive breast cancer had a lower error rate when they were aided by AI-based software, as well as faster turnaround times. Study participants had an average error rate of 2.1 percent while using an AI-based tool and 5.9 percent without it.
Rajendra Singh, director of dermatopathology and digital pathology for Summit Health in New Jersey and founder of the slide image sharing firm PathPresenter, said he also suspects that the pathologists from large-scale academic medical centers are pushing for digital pathology adoption to avoid falling behind colleagues. He also heard recently from one healthcare institution that residents are favoring institutions with digital pathology programs over those without.
"They don't want to be trained just on glass slides," Singh said.
Craig Steger, managing director of life sciences at Outcome Capital, said that digital pathology still has a lot of room for growth, although he thinks that pathologists are justified in being cautious when adopting new technologies that can influence a diagnosis. He said that pathologists seem to want software platforms that integrate well into their workflows, enable collaboration, and are useful across multiple disease indications as opposed to those that are limited to the analysis of one or a few cancer types.
While leaders in the development of digital pathology software had an initial focus on specific cancer types such as prostate and breast cancers, he said that companies in the space seem to be moving toward developing tools for broader usage. Some of those companies with a narrow focus have had difficulty with securing adoption outside of the largest hospitals and hospital systems that see a greater number of specific types of cancers, he added.
Razik Yousfi, CEO of Paige, said that the shift toward digitization seems to have gained momentum in recent years. However, he noted that Paige has seen quicker adoption of digital pathology in certain European countries, especially in the UK, than in the US.
Paige recently shifted toward making its AI-based cancer detection tests available as standalone tests on various digital pathology platforms and away from the development of the company's closed software ecosystem. Yousfi said that the move to allow the use of its applications on other platforms can help to drive digital pathology adoption by alleviating concerns that selecting one software system will close off access to certain tools.
Meantime, Danaher officials wrote earlier this year that digital pathology is still in its early adopter phase with implementation in 5 percent to 10 percent of labs globally. In an article posted on the company's website, Rob Monroe, VP and CSO of oncology for Danaher, said that adoption could potentially rocket upward toward 90 percent in coming years if companies in the space can demonstrate the value of digital pathology without significantly increasing costs, although that would require securing reimbursement from payors and increasing acceptance of the technologies among pathologists and other lab decision-makers.
"Early adopters may not see a return on their investments for many years because the evidence supporting reimbursement is still being generated," he said.
Cost, complexity remain barriers
Singh of Summit and PathPresenter said that implementing a digital pathology system can cost a half-million dollars for labs that need only a handful of scanners to upward of $10 million for larger institutions that process thousands more slides daily and need 10 or 20 scanners. In addition to the scanners, the institutions need to invest in image management and storage as well as the personnel to manage the scanners.
He said that some institutions question the value of converting from adequate microscope-based workflows in the absence of reimbursement for slide digitization, although he noted that consultation services can provide revenues from customers across the globe.
The Digital Pathology Association developed a website-based return-on-investment calculator to help labs identify the considerations and financial implications of digitization. An association working group said in April in the Journal of Pathology Informatics that the benefits of digital pathology can be difficult to quantify, but digital pathology can help healthcare providers to reduce or avoid costs, while research collaborations can generate revenue.
Danaher's Monroe noted that the digitization of pathology has been slower than the digitization of radiology, in part, because radiology reduced costs by capturing images directly while digital pathology adds costs because labs still need to create glass slides. The whole-slide images that are created for digital pathology also are between 10 and 100 times larger than the digital images that are used in radiology, so transmitting and storing images is challenging.
"Tissue samples remain a valuable tool to diagnose disease, so we need to figure out how to speed the adoption of diagnostic methodologies, including digital pathology and AI, to these traditional tissue-based methods to increase their impact and improve patient care," he said in the article.
Abbott, however, said that finding help to set up a digital pathology system had been the biggest hurdle at Goldfinch Laboratory. He found few consultants who were able to help the lab make the best upfront decisions related to hardware and software integration. Many companies offer similar products with slight differences in capabilities, and finding technologies that can be combined to create the most effective workflow for pathologists and integrate with the laboratory information system can be a challenge.
"We decided on a scanner where the rack is interchangeable with the rack that comes off our stainer and coverslipper, and that's actually a huge benefit," he said.
Meanwhile, companies are optimistic that more payors will begin reimbursing labs for the clinical staff work and services that are connected with scanning glass microscope slides and analyzing the images for primary diagnosis. The American Medical Association created in 2023 the first Category III add-on CPT codes to track that work.
Those temporary codes are not attached to reimbursement amounts, but CAP officials have previously said that they plan to work with the AMA to convert them to Category I codes that correspond with procedures and services that are submitted for reimbursement.
Fujifilm's Lloyd said that change will occur in the near future, and when it does, digital pathology adoption will spill across the US like a tidal wave. Meanwhile, reference labs and other providers that want to maintain a competitive edge have invested early into digital pathology in anticipation that the current crop of Category III CPT codes will be converted to Category I codes with reimbursement amounts.
West of Proscia predicts incremental reimbursement for digital pathology within the next five years. Meanwhile, labs see the potential to generate revenues from digital pathology through partnerships with pharma companies or the implementation of reimbursable tests.
"I think we'll start to see a growing package of [return on investment] drivers," he said. "We're already seeing that."