A tough sell

Hospital CIOs struggle to cost-justify expensive image-archiving systems, but the benefits are clear.

Imagine trying to talk the CEO of a cash-strapped hospital into buying a multimillion-dollar IT system. It's not an easy chat, but that's the challenge hospital CIOs face when trying to sell management on picture archiving and communications systems (PACS). The systems capture, store and display patient X-rays and other images in digital form instead of on film.

In fact, many hospitals are balking at the technology's high price tag. Although PACS have been used since the mid-1990s, about two-thirds of U.S. hospitals haven't purchased one yet, estimates Jocelyn Young, a health care industry analyst at market research firm IDC.

However, CIOs who have succeeded in purchasing PACS technology can point to advantages such as cost savings, improved workflow, better patient diagnoses and even a competitive advantage over hospitals that don't have the systems.

"The most obvious cost avoidance is film processing, as well as real estate savings for film image archives. But a lot of the benefits also have to do with improved workflow and eliminating mistakes or misplaced film," says Young.

The key to building a business case for a PACS is to figure out which part of the business has the deep pockets and passion to push it through, according to a recent report by Antonio Garcia, an analyst at Frost and Sullivan Ltd. "The simple truth is that PACS will cost a great deal of money. Success often depends on which department (MIS, radiology, administration, etc.) has the most money for medical IT," he wrote.

Success in the Bronx

"I have never done an implementation of any system that has so dramatically impacted the way we do business," says Dan Morreale, CIO at North Bronx Healthcare Network, one of six regional networks established by New York City Health and Hospitals Corp.

Two years ago, at a cost of $6 million, Morreale's organization went live with a PACS in the Jacobi Medical Center and North Central Bronx Hospital, which have a total of 870 beds. The vendor was Agfa HealthCare, a unit of Mortsel, Belgium-based Agfa-Gevaert NV.

A Tough Sell
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Credit: Getty Images
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For Morreale, the task of justifying PACS implementation was made easier by radiology department personnel, who educated physicians about the benefits of the system. Plus, the IT department had been pushing for a PACS to complete the organization's conversion to electronic patient records.

As a result of its PACS, North Bronx Healthcare Network saves almost $2 million per year by eliminating costs associated with film and paper-based reports (see box). "We've found that you can see the ROI easily. In addition, we took the approach that this is a set of tools that provides a higher quality of care and patient safety. Those are the driving forces," notes Morreale.

A PACS can improve patient care because, unlike film, digital images are available to multiple physicians simultaneously at any time, which can speed diagnoses. Physicians can manipulate and zoom in on the images to focus on medical problems. The digital images are less likely to be lost or misplaced as well. And with a virtual private network (VPN), outside experts located anywhere in the world can consult on patient cases.

"Images are almost immediately available. One hundred percent of our PACS images are available to all of our physicians within four minutes," Morreale says.

At the Cleveland Clinic Foundation, the key to return on investment was tying the PACS to the hospital information system (HIS) and, specifically, to billing processes.

Robert Cecil, network director for the foundation's radiology and cardiology divisions, says that it's not uncommon for radiology bills to slip through the cracks—and sometimes never even get issued—when the HIS and radiology information system (RIS) are separate entities. Billing paperwork can get shuffled back and forth between departments past an insurance provider's 30-day billing deadline.

"With PACS, you can generate reports with original order numbers from referring physicians, along with the radiology images," Cecil says. "For all that to come together, you have to integrate the HIS and RIS with the PACS, and then the patient can be electronically billed."

Vendor consolidation and standardization of hardware components have also made systems integration less difficult. In recent years, a handful of medical imaging vendors, including Philips Medical Systems, Siemens Medical Solutions and GE Medical Systems, have snapped up many small suppliers of various technologies used in PACS and now offer better-integrated systems. This means hospitals no longer have to worry about cobbling together PACS components from a variety of sources, making implementation easier and less expensive. In turn, it's easier for IT managers to cost-justify buying the systems.

That was the case when Canton, Ohio-based Mercy Medical Center implemented a $4 million PACS from Philips Medical Systems four years ago. "The PACS acquisitions have cleaned up the market and made the selection and integration process a lot easier," says CIO Joyce Miller Evans.

In addition to making workflow more efficient, implementing PACS as a part of an overall electronic patient record system can help a health care organization stand out in a competitive market. If a hospital can advertise itself as completely filmless, with digital medical images and records that can be viewed simultaneously from anywhere, that can help it attract the best medical personnel.

Indeed, Evans says the IT staff at Mercy Medical Center has been contacted by competing hospitals that want to learn how the organization implemented its PACS. "It's a competitive market out there, and there's a real shortage of good radiologists," Evans says. "We're also looking at making PACS images accessible to radiologists located anywhere worldwide, outside the hospital, via a VPN, which will also make us stand out."

Webster is a freelance writer in Providence, R.I. He can be contacted at john.s.webster@verizon.net.

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Anatomy of PACS ROI

Using a PACS, North Bronx Healthcare Network saves $1.9 million per year by eliminating costs associated with film and paper-based reports. The annual savings break down this way:

$1 million from reduced film-processing costs

$400,000 from eliminat-ing labor costs for film processing and storage

$130,000 from lower real estate costs, because the organization no longer needs the 5,000 square feet of floor space used to store film

$400,000 from eliminating manually produced reports

— John S. Webster

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Copyright © 2004 IDG Communications, Inc.

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