ASP vendors seek market success amid high costs and lower expectations

Instead of transforming PACS, application service provider offerings are, in many cases, themselves being transformed. They are being retooled and sometimes revamped to meet niche needs. Some influential vendors are focusing ASP efforts on providing long-term image archiving and disaster recovery services.

The reason is simple economics. The telecommunications costs to implement true ASP PACS are too high, according to vendors, at least in the full-service form in which they were once cast. Benefits, such as providing small sites pay-as-you-use PACS and freedom from obsolescence, can be achieved just as easily with equipment leasing deals and contracts that include software and hardware upgrades.

Advocates of ASPs may have simply aimed too high. In their full-service form, these networks were supposed to provide comprehensive information and image management services, allowing radiology departments to focus on their core competency: patient care. Yet despite years of trying, this goal has yet to be attained, even under ideal circumstances, according to Gary Reed, president of Integration Resources, a Lebanon, NJ, consulting firm specializing in PACS and RIS technologies.

“There is no real turnkey ASP PACS available,” Reed said. “The services most vendors are offering are mostly financial, where the equipment and interfaces are stored on-site and paid for on a subscription basis. That can be attractive to hospitals, but don’t confuse it with a legitimate ASP.”

Instead, companies like Siemens Medical Solutions have focused on providing off-site image management services, primarily long-term and short-term archiving. EMed, one of the early champions of ASP services, now characterizes its offering as image management services provided on a subscription basis.

“It’s not a true ASP, which is outsourcing the hardware and the applications,” said Susan Worthy, director of marketing for eMed. “It’s a new model, in which we’re a management services provider. Our customers want to have control over images and reports.”

Customers of EMed still maintain the benefits of the ASP model, such as protection against hardware obsolescence, through planned upgrades as part of the agreement, Worthy said. But the loftier goals are evaporating.

“It all comes back to being more of a financial model as opposed to being a traditional application service provider,” she said.

But not all vendors have given up on the grander goals. In addition to its existing focus on archiving and backup offerings via ASPs, GE Medical Systems Information Technologies is positioning itself to offer full-fledged off-site ASP PACS in the near future. A critical step toward making that happen occurred in August, when GE inked a deal with Qwest Communications International for fiber-optic telecommunications support and image storage and management through Qwest’s data centers.

“We’ve talked to a lot of our customers, and there’s a huge amount of interest in moving PACS off-site and having images managed off-site,” said Vishal Wanchoo, vice president of radiology services at GE Information Technologies. “The deal with Qwest takes our ASP initiative to a new level.”

Instead of the slower, less reliable wide area networks upon which GE depended in the past, Qwest’s fiber-optic lines will allow a more robust and scalable telecommunications backbone. The technology will allow GE to dial up bandwidth as needed per site, making the application accessible to facilities small and large.

“It doesn’t matter whether you are a small imaging center or a health system doing a million procedures a year,” Wanchoo said. “The deal with Qwest allows us to address every segment of the market.”

The cost of providing the fiber-optic infrastructure to support the ASP services will be folded into the per-procedure cost that customers pay, he said. This scenario feeds into other touted benefits of ASPs, such as space saving and eliminating the need for IT support services in a hospital. If GE successfully deploys a full-fledged cost-effective ASP solution, advantages like these may finally attract a vibrant customer base.

In the meantime, vendors such as Siemens are looking for other ways to succeed. Siemens established an ASP beachhead through its acquisition of SMS last year and has developed a two-pronged approach. The company manages an estimated 100 million HIS/RIS transactions daily through its data centers in Malvern, PA, and elsewhere. It has applied similar technology and acumen to niche applications in radiology such as disaster recovery and long-term image archiving, according to Henri “Rik” Primo, Siemens’ director of new business development.

“Since these transactions and data sets are not mission critical, they can move over relatively slow T1 lines, which are much less expensive than what would be needed to support routine image transfer for ASP PACS,” he said. “These are the types of applications that our customers want.”

Another avenue of opportunity lies in supporting hospitals that want to act as their own ASP, Primo said. The company has several customers employing this enterprise PACS model, in which multiple facilities spread across a hospital campus are linked to one on-site data center.

One of the biggest barriers to realizing full-fledged ASP PACS is the high cost of telecommunications, he said. Until those costs can be justified or decreased, the goal of hosting virtual PACS installations off-site may remain elusive. Meanwhile, the company continues to offer customers the spectrum of services.

“Siemens is a market-driven company,” he said. “We listen to what the market is telling us. And it is telling us today that telecommunications costs are prohibitive for doing top-tier ASP PACS in one package. Instead, the market is asking us to deliver backup solutions for primary archives and ASP services for HIS/RIS.”

While ASPs may not be everything vendors expected, at least the concept offers something for everyone. Vendors hawking niche applications and those with grand schemes know that ASPs will not go away anytime soon.

“ASPs are here,” Primo said. “Not as big as we expected, but the technology has been embraced and it’s here to stay. If tomorrow the price of telecommunications comes down, the picture will change. If that happens, ASPs will have a new future.”