PACS

A picture archiving and communication system (PACS) is clearly a requirement for any radiology department or healthcare organization that is going to survive into the 21st century. The impact of managed care and the requirement for regionalized healthcare are among the drivers of PACS.

When using the term PACS, the following components are implied: radiology information systems (RIS), teleradiology, information networks, archiving schemes, diagnostic reading centers, compression techniques, and so forth. It appears that PACS is becoming a catch-all for any hardware and software devices/tools that attach to the diagnostic imaging network (excluding the imaging acquisition modalities of CT, MRI, etc.). Therefore, computer-aided-diagnostics techniques may become a part of the PACS infrastructure.

In a presentation at HealthTech '97, Dr. Ed Staab, of the University of Florida in Gainesville, cited cost, productivity, and diagnostic accuracy as key areas for focus in the future. Cost and diagnostic accuracy are considered below. PACS is the answer to achieving higher productivity levels within a department, institution, or regionalized grouping of institutions. PACS technology enables reengineering of process to take place at the highest levels of productivity gain.

To date, unfortunately, most of the applications associated with PACS have not resulted in significant gains in productivity. The reason for this is that new technology for PACS was purchased without adequate training associated with reengineering of process. The result has been a low-value condition due to large expenditures without adequate payback.

This situation is changing. Well-documented examples of significant productivity gains and adequate payback obtained from PACS are now available. In some cases, the major gains are found within the hospital and not only in the radiology department.

Several interesting trends associated with PACS were demonstrated at the 1996 RSNA. The integration of PACS components, such as workstations, teleradiology, radiology information systems, and even telemedicine, was demonstrated. The general trend is

to give the customer confidence that a "total system" concept is feasible and that the challenges associated with interfacing equipment are under control. The industry still has not forgotten the interface nightmare associated with digital subtraction angiography equipment.

In addition, several manufacturers demonstrated products that utilize the Internet and worldwide web technology to gain access to imaging databases and information. This area is expected to grow rapidly. The opportunities for sharing clinical study databases and for calling upon algorithms for computer-aided diagnostics are significant.

During the next several years, it is expected that PACS will be one of the fastest growing segments of the diagnostic imaging industry.

Patient-driven purchasing criteria

This is a gradual shift that will probably take another three to five years to reach fruition. However, the trend in this direction has clearly begun.

Over the last 15 to 20 years, the criteria for purchasing diagnostic imaging equipment usually have been based on the following factors.

1. Technical leadership-This concept consists of key specifications that indicate state-of-the-art performance. Examples would be a nuclear gamma camera that has molecular coincidence detection or ultrasound that contains 3D technology.
2. Image quality-This is a combination of spatial resolution, contrast resolution, and signal-to-noise ratio that results in the best conspicuity.

3.  

4. Throughput-This is the number of patients that can be scanned per unit of time. The measurement often is based on the time from the start of one patient exam to the start of the next patient exam.
5. Life cost-This is the number of patients per unit of time required for break-even financial performance. The measurement often is based on a five-year depreciation schedule for equipment and includes all possible costs associated with the use of the equipment in question.

6.  

7. Total service-This is defined as a combination of reliability, applications, marketing, and planning services (e.g., asset management) provided by the manufacturer or independent service provider. This factor has changed over time as new equipment has required special services for successful operation. For example, MRI customers in a private setting required assistance in marketing to attract referrals.

Factors 3 and 4 together represent the profitability of the customer. For example, a CT site where the throughput is 25 patients per day and the life cost is 4 patients per day has a profitability (given the availability of patients) that is based on 21 patients per day.

The factors noted above are sometimes referred to as the old high 5 or specification-based factors. When looking at comparisons between different products, many terms are used. Most often, however, they can be summarized in terms of the factors noted above.

During the last few years, with the advent of managed care, it became apparent that a key ingredient is lacking in the old high 5. That ingredient is the patient. Therefore, it is important to consider a set of factors (sometimes referred to as the new high 5 or outcomes-based factors) that are consistent with the thinking and directions of today and the future. The following set of factors are believed to be appropriate for this purpose.

1. Technical performance-This consists of diagnostic accuracy, sensitivity, and specificity.

2. Diagnostic impact-Does the procedure in question affect the diagnosis? That is, does the procedure provide additional useful information that will alter the conclusion regarding the diagnosis?

3. Therapeutic impact-Does the procedure in question affect the therapy? That is, does the procedure provide additional useful information that will alter the course of the proposed treatment?

4. Patient outcomes-Does the procedure in question affect the morbidity and mortality of the patient? In radiology, there is concern about the feasibility of performing a measurement of outcomes for the radiology portion of a study.

5. Cost-effectiveness-Is the procedure cost-effective relative to existing procedures that are being utilized with existing equipment? Measurement of cost-effectiveness would combine factors 3,4, and 5 under patient-driven purchasing criteria.

It is apparent that the effect of managed care has widely modified the thought process associated with the purchase of equipment. The new high 5 have a clear direction in terms of the patient, which was almost totally lacking in the old high 5.

Decisions being made today regarding the purchase of equipment either rely on the old high 5 or contain a blend of the specification-based and outcomes-based factors. The difficulty in the conversion coming to fruition is a combination of the general difficulty in changing as well as the difficulty in reaching agreement on the definitions of outcomes.

Manufacturer as consultant

This is a natural progression of the "total service" element of the old high 5 discussed above.

In the days of x-ray, service meant reliability of the equipment. As CT and ultrasound came on the scene, applications became an important part of servicing the customer. MRI brought with it the need for the manufacturer to assist the customer with marketing. This was especially true for the private outpatient market. As PACS entered the scene, the need for long-range planning became evident, and the manufacturer often provided this service using internal or consulting personnel.

The buzzword today is "asset management." Within asset management, some manufacturers include equipment planning, productivity enhancement through reengineering of process, multivendor service, and so forth. The right approach for tomorrow may be found by considering the changing role of consulting.

As a business, consulting is changing from providing customers with the right answers to "enabling the customer" to generate the right questions. With the right questions in hand, the customer (as part of a team) will be able to establish the scenarios leading to the right answers. The consultant would be available to serve as facilitator. Strategic thinking is a technique that uses "tools" or "frameworks" to facilitate the process of enabling. The concept of "strategic thinking in radiology" was introduced last year in an article in Applied Radiology.1 Many of the tools noted below can be found in that article.

Strategic thinking is a very meaningful approach to medicine, considering the situation in which clinicians and, in particular, radiologists, find themselves. The advent of managed care has created perhaps the most difficult situation with which radiology has ever been confronted. Practices are being combined, reduced in size, and, in some cases, eliminated. In this environment, answers (often different from different sources) are very confusing at best. The radiology team must be able to understand what is going on around them and play an active role in determining the questions and answers associated with their future.

To enable the customer, it is important to understand the management process that a radiology practice would be considering regarding the purchase of equipment. The following steps have been found to be representative in many situations (the appropriate strategic thinking tool will be included in each step of the process).

1. The practice needs to understand how it wants to be positioned in a three-to-five-year time frame. Associated with that position, the decision makers must determine the strategic steps required to attain the desired position.The vision statement tool is appropriate. An example of a vision statement is found in the accompanying editorial.

2. Consistent with step 1, the equipment requirements (acquisition devices, PACS, networks, etc.) are selected as a function of time over the period. The growth development tool is appropriate.

3. As an equipment milestone is approaching, an evaluation of the necessity to purchase is determined based on the current situation. The real-win-worth tool is appropriate.

4. A review of the requirements within the "regionalized healthcare environment" and the fit of the equipment in question are then carried out. The core tool is appropriate.

5. Once a positive decision is reached regarding purchase of a specific type of equipment, an analysis is required to determine the best source of supply. The high 5 tool is appropriate (see the discussion above).

6. Cost needs to be analyzed from a system perspective, taking into account initial equipment cost, service, up-grades, etc. The total tool is appropriate.

7. To ensure success of utilization of the equipment in question, the highest levels of productivity (reengineering of process) need to be achieved. The two-by-two tool is appropriate.

8. Management of the entire process requires a team effort with clearly defined responsibilities. The sheet-of-music tool is appropriate.

Manufacturers that provide the type of consulting described above will be able to differentiate themselves from their competition and provide the best service value to their customers.

Technical innovation

Innovations in technology continue in a highly selective manner.

PACS is clearly one of the main areas for investment in research and development. Over 30 companies are participating in some aspect of extending the forefront of PACS technology (see discussion above). Other areas that are receiving significant investment resources in the diagnostic imaging field include the following.

Ultrasound-More than 20 companies are providing investment in this modality. Areas of focus include high-performance imaging (high frame rates, large FOV, higher resolution), 3D imaging, breast imaging, and PACS/network-related products.

Digital mammography-This area remains one of the last segments of medical imaging to turn to digital technology. Technical developments fall into the categories of area detectors and line-scan detectors. Materials include silicon for direct detection and CCDs using scintillators. All combinations were shown at the 1996 RSNA.

Digital detection (excluding mammography)-This is focused on repla-cing image intensifiers, computed radiography systems, and detectors for nuclear medicine and PET. Silicon and selenium are among the technologies being considered.

X-ray-In order to increase value, manufacturers are creating systems with greatly increased flexibility as "multipurpose rooms." Radiography, RF, vascular, and interventional procedures can now be performed with a single system configuration.

MRI-Although more than 15 participants continue in MRI, the number of new developments has slowed. Magnetic resonance-guided therapy, specialty scanners, and low-field open systems appear to comprise most of the new development.

CT-As with MRI, CT has seen a reduction in new developments. Helical scanning continues to be one area of development that is receiving attention. Additional areas for future development are noted in the editorial.

Alliances, acquisitions, and mergers

Such agreements are expected to continue along the path that has been evident during the last few years.

A major factor that is accelerating this trend is the lack of profitability of small companies. A study performed by WDI Capital Markets shows that profitability was elusive for the majority of healthcare companies with revenues under $25 million.

Large-scale companies have set the tone for growth through the implementation of an aggressive acquisition strategy. They have gained strength from increased market penetration and the classic economies that come with consolidation. Conversely, smaller companies are finding it more difficult to compete against larger firms, as buyers increasingly negotiate exclusive agreements for "bundled" products and services at discounted prices.

A representative example of the acquisition strategy can be found in Trex Medical. Through a series of acquisitions, Trex has become one of the fastest growing companies in the field of diagnostic imaging. Acquired companies include Lorad, Bennett X-Ray, Continental X-Ray, and XRE. Trex, a division of Thermo Electron, is following in the path of its parent. The corporate philosophy has been to grow through acquisition.

Another example of interest can be found in Sterling Diagnostic Imaging. Sterling acquired the Diagnostic

Imaging Division of DuPont and the Helios Division of Polaroid. Sterling is betting on the combination of digital imaging and high-performance film technologies.

Positron's acquision of GE's PET program (acquisition in process) is an example of a new trend. In this case, the small, niche company is becoming a dominant player in the niche, while the large company removes itself from a market that is too small to be worth the effort. Positron will supply the product to GE's specifications so that GE can continue to offer its customers a complete line of products. AR

Reference

1. Schilling RB: Strategic thinking for radiologists. Appl Radiol 25(8):11-14, 1996.