Imaging centers across the U.S. have cut back drastically on their purchase of big ticket products. Demand for 64-slice CTs and PET/CTs has plummeted in the wake of belt-tightening prompted by the Deficit Reduction Act. MR sales are sliding, as are those for ultrasound. RIS/PACS, however, is gaining ground, and much of its gain is coming in the outpatient arena.
Hit squarely by reimbursement cuts, diagnostic imaging centers are looking for ways to increase efficiency by doing more exams in the same period of time and with the same labor pool. Worried about a trend toward declining reimbursement, hospitals, especially small facilities, are also looking for improved efficiency. RIS/PACS is taking shape as the means toward that end.
Recognizing this potential, companies are gearing up to satisfy this need with products designed specifically for low-volume facilities. In April, Merge Healthcare, which specializes in the imaging center marketplace, released its Fusion RIS/PACS MX, a best-of-breed hybrid of RIS and PACS whose 64-bit processing reduces wait time when loading large numbers of images, such as those from 64-slice scanners. Two months later, Emageon paired with Dell Computer, making its debut in the healthcare arena, to roll out its RadSuite Express.
The prepackaged IT solution from Emageon and Dell can be tailored to the needs of hospitals, typically supporting fewer than 200 beds, in much the same way Dell puts PCs together for individual buyers. Using a menu-driven website, administrators can choose options addressing memory and computing power that match their needs. The systems are manufactured, delivered, installed, and supported by Dell. Each is tested before leaving the factory by the same people who install it.
Long before the recent offerings from Merge and Emageon took shape, industry giants were gearing up to seize what they expected would be an opportunity. Siemens came up with its syngo Suite, a combination of RIS, PACS, postprocessing, and patient data handling. This union, designed specifically for outpatient imaging centers and small hospitals, is the result of a two-year partnership between Siemens and practice management software developer NextGen. The syngo Suite combines the strengths of Siemens' RIS/PACS with NextGen's electronic medical record. It provides image management, while streamlining scheduling and results reporting and optimizing revenue and cost management.
"These facilities don't have the staff to run IT or the budgets to hire those staff," said Henri "Rik" Primo, Siemens national director of marketing and strategic relationships. "They need robots to help them, and that is basically what our solution offers."
BOOMING POTENTIAL
Especially interesting to GE Healthcare are physician offices. These provide the referral base for hospitals, and many do their own imaging, particularly ultrasound and x-ray. These offices want to be able to do the simple things, said Atul Khosla, director of commercial marketing for GE imaging solutions. GE uses a practice management program to provide them with a simplified EMR that allows patient scheduling, exam ordering, and simple display capabilities. The basic technology came to GE after its corporate acquisition in early 2006 of IDX, a developer of IT products.
GE took the RIS and PACS technologies developed for large institutions, pared them down to the basics needed in the outpatient marketplace, then mixed them with practice management software developed by IDX. The potential market for this hybrid is huge. Khosla estimates that the U.S. hosts about 5000 physician offices, and only about 6% are digital. The enormity of the potential for such tailored technology balloons with the addition of about 6000 imaging centers and about 4600 small hospitals, according to Merge Healthcare.
Most imaging centers have yet to modernize with RIS/PACS. The same is true of U.S. hospitals with fewer than 300 beds, more than 80% of the total, according to Emageon.
With a base composed of some 15,000 prospects, image management has a lot of room to grow, as the technologies transition from early adopters to mainstream buyers. Outpatient centers are focused on trying to recover from the 8% to 25% cuts in reimbursements brought on by the DRA. PACS helps by increasing productivity, getting soft-copy reads finished quicker and reports in the hands of referring physicians, sometimes in the same day, said Steve Renard, a consultant who works mostly for imaging centers grappling with fallout from the DRA
"Millions of dollars are left on the table in some of the practices because they do no prior authorization and have no over-the-counter collection," he said. "RIS keeps that from happening because it won't let you schedule a patient until all the columns are filled in."
The argument that outpatient facilities need RIS/PACS may be sound, but it has not been convincing for many sites that lack the budget and support staff to run an IT system. GE executives figured this in when they began targeting physician offices earlier this year. Their offering is based as much on the human touch as on technology. A clinical consultant from the company goes onsite to gauge a facility's needs, mapping workflow to come up with a configuration exactly suited to the site.
"We skinny down the implementation," Khosla said. "There's no need to activate every possible module."
In dealing with physician offices, GE must factor in the orientation of its prospective client. Many are specialists, such as orthopods or oncologists, who are taking on a new technology-not just IT but the imaging modality itself, which could be digital x-ray, CT, or even MR. The goal is to match the information system to onsite needs.
Siemens' syngo Suite is designed with the same constraints in mind, automating and simplifying many of the processes involved in practice and image management. Clinical alerts put processes and clinical best practices into the user's workflow to boost productivity, reduce medical errors, and improve patient care.
The scalable product handles data from multiple modalities and supports workflow for specialties from radiology to cardiology, general imaging to ob/gyn. It offers scalable archiving options for storage needs ranging from those of private offices on up. It can be hooked into clinical or hospital information systems to create virtually filmless and paperless environments. And it can handle more than one site, which can be a big plus, as more than three-fourths of imaging centers are part of a chain of two or more centers, according to Gail B. Malcolm, a Siemens imaging solution product manager.
Just as these centers have begun hooking up, so have they begun performing sophisticated exams. Over the past several years, many have installed PET/CT and 64-slice CT, even 3T MR scanners. Carestream, the rebranded vendor of PACS/IT and film previously known as the Kodak Health Group, is playing to big and small institutions alike by embedding 3D and other postprocessing capabilities, including image fusion, orthopedic surgical templating, and cardiac functions, into its scalable Carestream PACS.
Companies of all sizes are building on these or other competitive business models. Service models such as Philips' iSite offer a per-click means for handling images. As an application service provider, Philips does it all from image archive to display. Comparatively small NovaRad simplifies the process even further with "PACS for Life." The NovaRad ASP replaces, upgrades, and fixes every piece of its system for a flat monthly fee. Three-year contracts renew at the same rate over and over, said Kay Jax, NovaRad vice president of sales. Capital-averse approaches save imaging facilities the upfront costs that otherwise go with RIS/PACS implementation. In this time of retrenchment, this approach may be just what the sites need, according to Renard.
"If you are pushing a lot of studies through, it makes sense to own the equipment," he said. "But if you are a small operation, doing maybe 20,000 procedures a year, an ASP model is the way to go."
Prepackaged products with financing and ASP options are made to order for the post-DRA era. Following the release of its Fusion MX, Merge Healthcare sent in salespeople armed with case studies and software for processing site-specific data into business models to demonstrate exactly how much a customer could expect to make by investing in the new RIS/PACS.
"The return on investment in this business is substantial because of the almost-immediate impact of these systems on productivity, workflow, and labor content," said Merge Healthcare president and CEO Ken Rardin.
The need for PACS is also growing among small hospitals serving 300 or fewer beds, according to Emageon CEO, president, and board chairman Chuck Jett. These hospitals are adopting multislice CT as replacements for outdated single-slice scanners, even as they replace outmoded film-based radiography. Emageon's RadSuite Express is a fully capable PACS sized to handle no more than 20,000 to 80,000 procedures annually. This helps keep the price of the system down, while eliminating the need for highly trained IT staff, Jett said.
Increasing the appeal further, Emageon offers a straight capital equipment purchase with a financing option through Dell and Emageon, an ASP per-study payment plan, or a combination ASP/capital equipment plan. This third option may include buying PACS equipment and possibly adding RIS, as well as contracting for offsite data storage.
With service models and tailored RIS/PACS, vendors have done a lot to help outpatient centers recover from the ill effects of the DRA. Whether these technologies live up to expectations in this market beset by budget cuts could affect a broader adoption of RIS/PACS, as larger facilities make up their minds about IT.
Greg Freiherr is business editor of Diagnostic Imaging.
Payment cuts hit many procedures
A study commissioned by the Access to Medical Imaging Coalition found that office-based imaging providers are losing money on 87% of the 126 imaging procedures affected by the Deficit Reduction Act.
The investigators found that the DRA will have a highly concentrated effect on a limited number of high-volume procedures. Among them will be brain MR exams, chest CT exams, nuclear cardiology exams, ultrasound extremity scans, and bone density studies.
The following abbreviated example of procedures shows the percentage loss in dollars when compared with its estimated cost:
- 71260TC, CT thorax w/dye (46%);
- 71275TC, CT angiography, chest (37%);
- 70553TC, MRI brain w/o & w/dye (39%);
- 72193TC, CT pelvis w/dye (49%);
- 75552TC, heart MRI for morph w/o dye (25%); and
- 78494TC, heart image, SPECT (75%).
ABCs of DRA: HOPPS versus MPFS
Imaging performed in physician offices or independent imaging facilities is reimbursed using a formula called the Medicare Physician Fee Schedule (MPFS). Imaging performed in the hospital outpatient setting is paid through the Hospital Outpatient Prospective Payment System (HOPPS). But the DRA turns this paradigm on its head.
The DRA mandates that the technical component for imaging performed in physician offices and independent imaging centers be reimbursed at the lesser amount of either the MPFS or HOPPS rate. HOPPS rates are generally lower than the MPFS because HOPPS takes into account inpatient revenue, among other things. This disparity will result in a 25% to 45% reduction in revenues for nonhospital imaging.
