PACS Business Case Study: Budget

PACS

Business Case Study: Budget Proposal and Justification for Adoption of a Picture Archiving and Communications System (PACS)

Picture Archiving and Communications Systems (PACSs) are increasingly replacing traditional film and other media printing techniques in medical imaging. PACSs benefit patients, physicians, and administrators through improved turnaround times between imaging and result deliveries and ultimately through cost savings to the medical institution. All key stakeholders, namely those listed above as well as investors/operating boards of the medical institution, will ultimately benefit from the adoption of this technology. The objectives of this service are reduced costs and increased efficiencies of medical image creation, transmission, and review, which will also improve the efficacy of care available.

The initial cost of implementing this technology will be considerable, and will also vary depending on the current technological assets and capabilities of the medical institution. Academic literature provides scant concrete information as to the cost of these systems, but estimates of approximately two-and-a-half million dollars appear to be reasonable budgetary targets for the initial adoption of this technology. Ongoing costs will also be incurred through updates to the technology, but these must be measured against the cost savings that the adoption will begin to create immediately. The key risk involved in this proposed technology adoption is the increase of long-term costs, over which the institution will have little control or predictive power, but again the savings will more than offset these costs.

The management of the suggested service will be handled primarily by the IT department/personnel already in existence at the medical institution, along with physicians and other staff that utilize the various medical imaging technologies. These personnel can make recommendations to the proper procurement officials as changes and equipment are needed. The other changes that will need to be made to the institution and its other practices are minimal; the PAC system will essentially replace the existing print technologies by which medical images are currently produced and analyzed, but will require few if any changes outside of these procedures. Dedicated equipment and space for this equipment will need to be created, but this can likely be created through the removal or the adjustment/reconfiguration of current image reading rooms at the institution.

Introduction

The purpose of this business case study is to propose the adoption of a picture archiving and communications system, or PACS. These systems, which have become increasingly common and increasingly reliable since they first began development a decade ago, provide methods for the production and analysis of medical images taken through a variety of different technologies and techniques without the use of specialized films or other printing needs. Instead, PACSs allow for the digital creation and transmission of images, with equal and often greater precision, detail, and clarity than traditional film techniques, and with a much lower per-image cost than older technologies, as well.

This paper will provide a detailed assessment of the initial and ongoing costs of the proposed PACS adoption, as well as of the cost savings and other benefits that this technology will provide. The case for change will be clearly laid out, with the improvements to service and increased cost efficiency of using such systems forming the primary basis for the recommendation made herein. An overall analysis of the proposal and the practicalities of actually achieving his adoption in different budget scenarios will also be provided, along with an assessment of the risks that are an inherent part of any significant change in a medical situation, and those risks that are specific to the adoption of a PACS itself. Management techniques for this technology adoption will also be described, and final recommendations for the implementation strategy will be the ultimate provision of this proposal.

The Case for Change

Changes in technology have made it possible to achieve better and cheaper results from medical imaging techniques (Rath 2010; Jackson & Langlois 2005; Hoffman 2008; Slomka & Baum 2009). While there are several possible alternatives to the traditional production of medical images from MRIs, X-rays, and other similar technologies, the most cost effective method for image generation and transmission as well as the method that provides the greatest clarity and accuracy in the images produced is found through the use of PACSs (Maydell et al. 2009; Hoffman 2008; D'Asseler et al. 2000). Adopting this technology will produce significant long-term cost savings and improve efficacy and efficiency of treatment (Cannavo 2005; Tan & Lewis 2010).

The cost savings is one of the key benefits that is expected as a result of the proposed adoption of PACS technology, with initial outlays being recouped within four to six years of implementation and cost savings totaling half a million U.S. dollars or more within a decade of moving from traditional film technologies to a PACS according to current estimates (Hoffman 2008; Rath 2010). Other benefits include a greatly increased rate of production and transmission of medical images, both of which can occur at a near-instant level with a PACS as opposed to significant delays that often arise with the need to print images, and backlogs that occur in many institutions and processing organizations that deal with high volumes of input and large workloads (D'Asseler et al. 2000; Maydell et al. 2009; Slomka & Baum 2009). The benefits of implementing the proposed system, then, are both financial and medical in nature.

This proposal has not yet been brought to any of the major stakeholders that would be affected by the implementation of this system, or those whose approval would be required before the adoption and implementation of this technology could be permitted to proceed. There is a great deal of evidence, however, that physicians, administrators, and patients would all sign off on this proposal if given the opportunity to witness the technology in action (Jackson & Langlois 2005; Cannavo 2005; Shakeshaft 2010; Tan & Lewis 2010). The benefits and simple changes inherent to this system compared to traditional imaging techniques directly impact each of the above-defined groups of stakeholders through cost savings, improved speed and accuracy of care, and the increased portability of medical images.

Analysis of PACS Adoption

The primary objective of any major change in medical practice is and must always remain the improvement of the care offered to patients. There are many ways to achieve this improvement in care. Better health outcomes, more cost-effective procedures that do not lose any efficacy or may in fact increase it, and increased accuracy and/or speed of diagnosis and care plan determinations all form parts of this larger objective, and all are also brought about by a transition form traditional image production to techniques to a PACS (Rath 2010; Shakeshaft 2010; Jackson & Langlois 2005). The primary alternative to PACS adoption are remaining with traditional techniques or transition to paper- rather than film-based hard copy image production; the former represents no change in practice with no benefits or risks and will lead to a lack of competitiveness, while the latter introduces a less significant cost savings while also producing images of poorer quality, in some cases unacceptable (Maydell et al. 2009).

Up-front costs for the adoption of these technologies is considerable, amounting to approximately two-and-a-half million dollars for an average-sized hospital organization (Hoffman 2008). This cost covers only the initial purchase of equipment and integration with existing institutional infrastructure; other ongoing technology costs will also be incurred and training and adaptation costs that cannot be directly measured must also be acknowledged (Cannavo 2005; Kalyanpur et al. 2009). Given the cost savings that these systems represent over film-printing techniques, however, the long-term cost savings of these technologies are well wroth the substantial up-front fees (Hoffman 2008; Rath 2010).

Most of the major effects of the adoption of a PACS are largely if not entirely quantifiable, with cost savings, improvements in turnaround for image creation and analysis and the making of decisions all measurably different with such systems than in traditional image production techniques. There will also be an enormous though unquantifiable environmental benefit, however, as there are very little or no physical materials involved in the rendering of each image in such systems, and certain benefits to patients and physicians such as easier transmission and increased portability are also difficult to quantify (D'Asseler et al. 2000; Kalyanpur et al. 2010; Shakeshaft 2010). It is through cost savings and the improved efficiency and efficacy of care that stakeholders will derive the largest benefit from adoption of this technology, however.

It is difficult to provide concrete numbers as to the costs and savings that will be presented by adoption of a PACS, as technology costs are fairly volatile. They are following a general downward trend, however, and could thus be considerably lower than the estimated two-and-a-half million dollars of the most recent estimates that can be founding the literature (Hoffman 2008). Other ongoing costs are associated with maintaining and updating serves and connected image viewing equipment, as well as with hardware and software upgrades that often take place every five years and annually, respectively (Cannavo 2005). These maintenance costs will run an estimated four hundred-thousand dollars per year, averaged out over each five-year period and following the initial outlay for equipment purchases, which initially seems to present a great deal of excess expense (Cannavo 2005).

Estimates of cost savings from the reduction in film costs as well as through reduced work hours needed for the creation of images and the reading of images by physicians will lead to an average annual cost savings of between five hundred- and seven hundred and fifty-thousand dollars a year, leading to an overall cost benefit of one hundred- to three hundred and fifty-thousand dollars a year compared to traditional film production techniques (Hoffman 2008; Rath 2010). A ten percent reduction in costs could be achieved through increasing the competitiveness of a the bidding process amongst companies that produce the technologies necessary for a successful PACS, as well as through reducing the time and personnel involved in training programs. This latter is not especially advisable, however, as indirect costs will likely be created though reductions in the efficacy of the adoption and a reduced improvement in treatment efficiencies and speeds (Kalyanpur et al. 2010). At these rates, breakeven points typically occur within a decade of adoption, with immediate benefits to cash flow apparent for most institutions (Hoffman 2008).

Risks

Given the degree to which these technologies have been vetted and supported in the literature, the risks of PACS adoption are minimal. There is some possibility of decreased cost benefit and prolonged breakeven periods due to unforeseen costs, and there are also risks associated with the safety and reliability of digital storage systems for medical images (Cannavo 2005; Kalyanpur et al. 2010). The management of initial costs and providing the necessary for funds for system maintenance and archival processes will mitigate these risks to a large degree, however.

Service Management

The governance of this project will fall primarily to the administrative and medical heads of the radiology and/or imaging department(s) at the identified medical institution, as it in is this/these departments that the changes will be implemented. Staff physicians and other personnel that utilize medical imaging equipment will need to be apprised of the changes, though the actual job functions for many individuals will not be impacted. Equipment procurement will be handled by appropriate administrative staff under the guidance of lead physicians/medical department head(s), and IT staff will be brought in to ensure compliance with existing technological standards. These standards are primarily important to ensure compatibility with other institution equipment and with the equipment and software that exists in other offices and institutions to ensure portability and communicability.