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Clinical Computing
Heading for a boom or the back burner?:
Karen Sandrick
04/30/98
Health Management Technology
Copyright 1998 Intertec Publishing Corporation, a PRIMEDIA Company. All
rights reserved.
Advocates of picture archiving and communications systems (PACS) think a
boom is about to begin. But skeptics dismiss such talk and say high price and
pressure to cut costs will keep PACS purchases on hold.
Ask health care IT professionals what they think about PACS - picture
archiving and communications systems for radiology departments - and you
could get very different responses.
Technology heat-seekers would tell you that a boom in PACS sales and
implementations is about to begin. They'll point to the growing number of
vendors with offerings, and cite research forecasting a dramatic increase in
PACS market revenues in the next decade.
Skeptics, however, would tell you that PACS is a solution in search of a
problem. They'll point out that past research was overly optimistic when it
predicted widespread PACS use by now. And they will add that, with
pressure from managed care to cut costs and the high cost of PACS, the
technology will remain where it appears to be today: on health care IT's back
burner.
Picture archiving and communications systems are medical image
management systems that use electronic devices to transmit, store, and
display diagnostic images.
PACS are designed to eliminate X-ray film, which in turn increases the
efficiency of radiology department operations and saves film costs. They also
support teleradiology to distant sites. And they allow instant access to
diagnostic images by radiologists, referring physicians, and attending
physicians no matter where they are - emergency department, operating room
or wards.
But they are not a small-ticket item.
The cost can range from $150,000 for small, so-called mini-PACS for one
imaging technology, for instance, to $5 million for full-scale installation in a
major teaching hospital.
Cost justifications for PACS One who is optimistic is consultant Michael
Cannavo, president of Image Management Consultants, Winter Park, Fla.
He says that people are flat-out missing the boat on PACS if they think it
simply substitutes technology for manual operations in the radiology
department, with resulting cost-savings from declines in staffing levels, X-ray
film, and storage requirements. Rather, PACS can produce significant cost
reductions across an entire health care delivery system by reducing patients'
length of stay.
The technology also promises to produce hundreds of thousands of dollars in
new radiology business, he says. Using PACS for only one imaging modality,
such as computed tomography, can save as much as 60 minutes a day. If
those 60 minutes were filled with two additional CT exams, at a cost of $500
each, every day five days a week, a hospital potentially could realize $800,000
a year, says Cannavo.
New PACS products Numbers like those might explain why vendors by the
dozens are virtually tripping over themselves to add new PACS products.
In 1996 IMNET Systems, Inc., Atlanta, Ga., introduced infoPACS, which
integrates diagnostic-quality medical images and other health care information
systems via the standard Windows NT operating system on the road to a fully
operational computerized medical record.
Industry giant Fuji Medical Systems, Stamford, Conn., just last December
announced its entry into PACS. Fuji's Synapse is an enterprisewide medical
image and information system that includes computed radiography
workstations, soft-copy review and high-resolution display, a Windows-based
NT platform with an open architecture that utilizes off-the-shelf PCs and the
company's own image processing algorithms for accelerating image
processing. Synapse will begin beta-testing this coming June, and it is
scheduled for full-scale production by the end of 1998.
If vendors' exhibits are any indication, PACS are booming. PACS products
were prominent at both the 1997 Radiological Society of North America
(RSNA) extravaganza and the 1998 meeting of the Healthcare Information
and Management Systems Society (HIMSS).
RSNA saw: *Internet/intranet and Web browsers for PACS from Siemens
Medical Systems, Iselin, N.J., and Access Radiology Corp., Natick, Mass.;
* High-resolution cross-sectional CT and magnetic resonance imaging
viewing software for PACS workstations from GE Medical Systems,
Milwaukee.;
* A seamless PACS network that can link communications across several
hospitals from Agfa Medical, Ridgefield Park, N. J.; and,
* A Java-based image management system from Picker International,
Cleveland, Ohio.
And HIMSS had nearly a four-fold increase in PACS offerings, according to
Cannavo.
Sluggish sales Market surveys nevertheless show sluggish sales of the
radiology systems. And the current PACS market in fact is considerably
smaller than previous forecasts.
The Technology Marketing Group (TMG), Des Plaines, Ill., which has been
surveying PACS purchases since 1988, expected the technology to command
$1 billion in sales by 1996.
TMG's latest survey, however, showed only $400 million in actual PACS
buys in 1997 and a projected growth rate of 5-to-10 percent per year.
Market trend analyses such as TMG's are misleading, however, says
Cannavo, because they do not adequately account for the recent precipitous
drops in prices for hardware.
"At least one major manufacturer of PACS has prices 30 percent below the
rest of the market and uses high-end Pentium processors and Windows NT.
How can you compare that with other companies that use $75,000 to
$80,000 workstations when its products can do the same thing for a fraction
of the cost? The answer is, you can't. And the result is that you may have
lower net dollars paid for individual PACS but your volume of sales may be
higher. So nobody really knows what the PACS market is," he says.
Cannavo pooh-poohs the importance of recent advancements in PACS
hardware ("PACS worked on DOS systems," he says).
Faster, more powerful PCs are driving PACS prices down, however, says
Hemant Goel, vice president of medical imaging for IMNET .
"Two years ago you couldn't use Windows-based workstations for showing
radiology images for diagnostic purposes because the PCs were not powerful
enough. With the advent of Pentium processing chips, you have more
powerful hardware to handle medical images. Your workstations today also
are Windows NT, which means you can use off-the-shelf PCs. These
[developments] have made a difference in creating cheaper, more powerful
operating systems," Goel says.
"Networking has become faster, too," Goel adds. "Today every hospital is
talking about upgrading their network from 10 megabytes to 100 megabytes,
which has significant impact on the performance of a system and physician
acceptance."
As Goel points out, radiologists as well as referring and hospital attending
physicians want access to information about their patients quickly.
"They want to click a button and see their patient's history and physical exam
findings right now," he says. "They want to see the medical images and full
radiology reports no matter where they are in the hospital. And they want
those images in a timely manner.
"In a manual world, physicians will wait half an hour or an hour for a chart,
but as soon as you give them a computer, 30 seconds seems too much to
ask. Now that we can show them performance that is better than they expect
or at least in line with what they expect, physicians will want to use PACS,"
he says.
Managed care irony Ironically, while hospitals and integrated systems are
reluctant to make capital outlays in the face of rising managed care
penetration and capitated contracting, it is managed care that is a principal
driving force behind the growth of PACS, says John Strauss, director of
marketing for Fuji's imaging and information networks group.
"If you look at the dynamics that have been created by the managed care
environment, where you have a need to do the same medical procedures but
have to do them cost effectively, as well as the affiliations and associations
that have to occur between health care facilities and low-cost imaging centers
and physicians' offices, there is a need to acquire, transmit, and share
radiology information across a broad enterprise. The only way to do that is
through PACS because PACS can merge information systems and enhance
management intelligence," Strauss says.
Other motivating factors are peculiar to the specific concerns of certain types
of hospitals.
Among the hospitals that have been particularly aggressive in PACS
development are military and Veterans Administration hospitals. The U.S.
Department of Defense awarded $250 million to IBM, Bethesda, Md., for
example, to install filmless radiology systems in military hospital and clinics
around the world. The Baltimore VA Medical Center has been handling nearly
100 percent of its diagnostic interpretations on PACS workstations since
1994, and the VA North Texas Health Care System has committed $6.3
million to convert from film to PACS for all its imaging over the next few
years. (See page 33.)
University medical centers also have been strong proponents of PACS but for
different reasons. Military and VA hospitals turn to PACS "because these
institutions tend not to be well staffed with physician expertise; so they have a
clear interest in centralizing and making the maximum use of that expertise,"
says Strauss.
University medical centers embrace PACS because of their need to temper in
whatever way they can the overall inefficiency of the teaching environment.
"It is very difficult to serve all the necessary components of a teaching
institution without massive film duplications and film management problems
posed by all the different physicians - residents, referring physicians, and
others - who need to see anduse films," Strauss says.
"As tertiary care sites, university medical centers also have many different
critical care units and other areas outside of radiology that must have access
to film."
PACS also are beginning to trickle down to smaller, community hospitals that
need to connect with their radiologists in their homes or with other outlying
health care facilities. (See page 35 for details of how a small medical center
got started with PACS.)
Skittish over price But many health care organizations remain skittish because
of PACS' high price tags and the difficulty of justifying the cost of the
technology at least in the short term.
As Goel points out, the cost of radiology films has been declining steadily
over the last few years.
"The same radiology film company that was charging a hospital $750,000 for
a whole year is now renewing its contract at $300,000. It's hard for PACS,
which are still on the expensive side, to compete when the cost of film is
dropping tremendously in terms of hard dollars," he says.
PACS have so many soft-dollar, intangible benefits, however, that they
eventually will prevail, Goel believes.
"Administrators of radiology departments and radiologists are showing that
there are too many benefits with PACS in terms of patient care and physician
satisfaction to ignore," Goel says.
There also are major cost-saving implications not just in the radiology
department but throughout the health care facility.
According to Cannavo, PACS improves communication between radiologists
and other health care professionals to such a degree that it can speed
diagnostic and treatment decisions. If this translates into only a one-day cut in
a patient's length of stay in an intensive care unit, for example, a hospital can
realize a net saving of $75,000 per year.
Finally, there is the very real possibility of increasing the number of patients
who can be scanned without raising manpower costs. As a result of PACS,
the Baltimore VA Medical Center was able to increase its patient volume by 23
percent over the period of a year without adding staff.
"The new technology in terms of faster, more powerful hardware and
networking capabilities, the cost saving and revenue generating factors, and
the acceptance of the technology by physicians are starting to have more
influence," says Goel. "I feel comfortable in saying that the next couple of
years will see a significant number of hospitals and radiologists adopting
PACS." HMT
"Better medicine": PACS at VA North Texas connects remote hospital, clinic
and radiologists at home
The quickest way for Ward Terry, M.D., to incense his radiology colleagues
at the VA North Texas Health Care System in Dallas would be to turn off
PACS in the new Spinal Cord Injury Center.
Although the PACS network is only a few months old, it is making life much
easier for the radiologists. "They have instant access to films and so they
don't have to waste time hawking films in the radiology department," he says.
PACS also is "better medicine," he says. PACS and teleradiology connect the
medical center with physicians in another Veterans Administration hospital 90
miles north as well as an outpatient clinic in Fort Worth and radiologists at
home.
"Now if physicians have a consultative radiology question in the middle of the
night, about something they ordinarily wouldn't ask a radiologist to come in
and look at, they can call the radiologist who is on call and he can bring it
right up on his home computer," Terry says.
The Dallas VA Medical Center is working with IBM on a two-phased PACS
implementation. During phase one, which was completed last June, IBM
installed PACS hardware and software, trained medical center staff, and
provided overall project management and support services in the Spinal Cord
Injury Center, a newly constructed rehabilitation facility with 38 inpatient
beds and outpatient facilities.
IBM also integrated PACS components into a single asynchronous transfer
mode network and installed a Fuji computed radiography system. It currently
is implementing MedSpeak/Radiology, the company's speech recognition
system that allows radiologists to dictate their findings directly into their PCs,
instantaneously generate and sign off on their reports electronically, explains
William McGarvey, IBM's program manager for the Dallas VA PACS project.
Phase two of the PACS project, which should be completed later this year,
will extend PACS to the medical center's Clinical Addition. This new building
will house the VA's intensive care units, surgery suites, outpatient clinics,
radiology department, and the laboratory.
Then the radiology department will be almost totally filmless. "The only thing
we will be doing on film will be mammograms, and as soon as the American
College of Radiology [sets communication standards for mammograms], we
will make those filmless as well," says Terry.
Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.
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