The problem with building a complete solution is that it usually requires a lot of investment and domain specific knowledge. Having a better algorithm offsets a lot of it but I am not sure I could write a better CAD (computer assisted diagnosis) software on my own in a reasonable time frame that will outperform the market leaders even if using their data I can improve their results by 50%.

There is just too much science involved in feature selection etc...

Subject matter expertise can be hired, as employees, or as advisors to your company. For this type of start up, you not only need a team to build out the product end users will ultimately use (an expensive endeavor in and of itself), but you also need to gain credibility from experts and get published before doctors will look at your stuff.

I was hoping to avoid all the hassle by sticking to my core competency of artificial intelligence doing a co-venture with some established players in the fields and help them improve their results. I know that the Ralph Waldo Emerson quote "Build a better mousetrap and the world will beat a path to your door" is not true but I was hoping that at least the world will meet me half way...

I see. How about creating a public API (like someone else suggested) so we can see what it does, and then have a couple guys shop it around for you as you get validation studies going?

Then you give people enough to get enticed, but don't give everything away. You can then pursue multiple applications with a parallel effort.

Funny, I have the exact same dilemma with my image analysis algorithm...