IBM and Agfa best other PACS players in winning military's DIN-PACS awards

January 1, 1998

IBM and Agfa best other PACS players in winning military's DIN-PACS awardsMilitary purchasing could total $1.25 billion over five yearsThe long wait is over. The Department of Defense has finally issued its awards for the Defense Imaging

IBM and Agfa best other PACS players in winning military's DIN-PACS awards

Military purchasing could total $1.25 billion over five years

The long wait is over. The Department of Defense has finally issued its awards for the Defense Imaging Network-Picture Archiving and Communications Systems (DIN-PACS) project, a massive effort by the U.S. military to install PACS technology at its hospitals. The DOD tapped consortia led by Agfa and IBM as recipients of the awards, meaning that these companies will be the military's authorized vendors of PACS technology for as long as the next five years.

The DIN-PACS project is part of the military's desire to make more effective use of its healthcare resources via medical image and information management. Through PACS, the military hopes to create a worldwide network that supports transmission of medical data between its far-flung healthcare enterprises, such as from remote sites to luminary hospitals.

DIN-PACS is widely seen as the successor to the Medical Diagnostic Imaging Support (MDIS) project, an ambitious effort launched in the early 1990s to install PACS at Army and Air Force hospitals. MDIS succeeded in bringing a number of pioneering military hospitals into the filmless age in advance of their private-sector counterparts. The project suffered from a number of pitfalls, however, such as a reliance on a single vendor-Loral/Lockheed Martin-and a proprietary architecture that hampered the expandability of the system.

Determined to improve on the MDIS concept, the DOD's Defense Personnel Support Center (DPSC) in March issued a massive 350-page request-for-proposal that detailed the specifications the military would require for DIN-PACS (PNN 6/97). The RFP focused on creating a PACS network based on established standards like DICOM 3.0 and off-the-shelf computer hardware and software, such as Windows NT-based workstations. The DOD was also asking for a high level of integration between the system's PACS and RIS, and the capability to communicate with the military's legacy HIS, the Composite Health Care System (CHCS).

The specifications were so demanding that some companies bowed out of the process, while others reconsidered their involvement, according to Ruud Kroon, managing director of Applicare Medical Imaging, a Dutch PACS firm that is part of the IBM team.

"In the beginning we were quite dismayed. We said, 'We shouldn't make an effort, because nobody can deliver this,'" he said. "The issues were not so much in the viewing technology, (but in) the integration, the complete PACS concept, including off-the-shelf technology. The RFP described something that could be on the market three years from now."

The specifications were so rigorous and the project so far-reaching that vendors formed consortia to apply for the bids. In addition to IBM and Agfa, other PACS companies involved in separate teams included GE Medical Systems, Imation Cemax-Icon, and Siemens Medical Systems. A series of benchmark tests were conducted, with each team setting up a prototype DIN-PACS installation.

When the bids were announced on Nov. 19, few were surprised that PACS market leader Agfa was one of the winners. Agfa is the prime contractor on its team, with Cerner supplying the RIS, Mitra performing RIS integration, and Cabletron offering network components.

The selection of IBM was a bit more intriguing. The computer giant's bid was led by its Global Government Industry division in Bethesda, MD, which got its feet wet in PACS in 1996 through a collaboration with Brit Systems to install a PACS network at the VA Medical Center in Dallas. In addition to Applicare, other IBM team members include Brit for archiving technology and DeJarnette Research Systems for connectivity products. ADAC Laboratories is providing the RIS component, Imation is supplying its DryView laser printers, and Eastman Kodak and Science Applications International (SAIC) are also involved.

IBM believes that it won the bid in part because its Global Government Industry division has a long history in providing systems integration for government clients, with much of its experience involving the integration of complex products from multiple vendors, according to Bill McGarvey, proposal manager for the division.

In addition, by selecting Applicare as its PACS partner, IBM was teaming with one of the earliest adopters of the Windows NT platform for medical imaging workstations. The partnership dovetailed perfectly with DIN-PACS, because the U.S. military intends to base much of its PACS implementation on NT, according to Applicare's Kroon. Applicare became involved in the DIN-PACS process after DOD representatives doing preliminary DIN-PACS research in 1996 told the company that its Windows NT medical imaging software was more advanced than that of U.S. PACS vendors, Kroon said.

Spending the money

It's still unclear exactly how much the military will spend on PACS. Three hospitals were listed in the RFP as candidates for DIN-PACS installations, but no specific awards were made as part of the DIN-PACS announcement. Companies participating in the process believe that the DOD will probably make one DIN-PACS award to each team, but military hospitals will then be free to choose products from either consortium.

The DOD reports that the project has a spending ceiling of $250 million in its first year, an amount that will cover purchases from both the IBM and Agfa consortia. The contract includes four one-year option periods, which could bring the potential value of the contract to $1.25 billion over the next five years. There are indications that the DOD has ambitious plans for DIN-PACS: A DPSC representative said that the U.S. Surgeon General intends to have DIN-PACS installed in every Defense medical treatment facility in the next five years.

DIN-PACS could have an impact on private-sector hospitals as well, in the same way that MDIS influenced the commercial market. Although the scale is different, the military's healthcare network is not much different from the large healthcare enterprises that are springing up as a result of consolidation among hospitals. There may be a trickle-down effect as technologies developed for DIN-PACS make their way into the private sector, according to Robert Cooke, director of image management systems at Agfa.

"The model that the military has in terms of all their distributed facilities is in many ways very similar to an integrated healthcare network," Cooke said. "The ability to tie in all these disparate facilities with different information systems is clearly a requirement that the end-user communities have as well. The private sector will certainly benefit from the concepts and technologies associated with DIN-PACS."

What impact will the loss of DIN-PACS business have on companies that didn't make the cut? It's impossible to say: $250 million in one year is a lot of money, but there's no guarantee that the military will purchase that much PACS technology.

Indeed, one vendor, GE, pulled out of the process just weeks prior to the awards announcement (PNN 12/97). The Milwaukee company made the move because of what it said were two requirements set by DPSC that the company was unable to meet. GE did not divulge the specific nature of the requirements, other than to say that they were not consistent with the company's desire to build its commercial product line.

Executives at Imation Cemax-Icon tell a similar story. Although the DOD's approach was initially based on off-the-shelf hardware and software, late in the DIN-PACS process the government set new requirements that did not have widespread commercial application, according to Brad Sauer, CEO of the Fremont, CA-based Imation subsidiary. Unlike commercial PACS products, which are moving toward automated work flow, the DPSC wanted a system with a strong manual routing component, a configuration that Imation Cemax-Icon believes has little application in the private sector. Imation Cemax-Icon decided to remain in the process, but the company's hopes for winning the award were dimmed.

"Our entire approach is based on trying to deliver automated work flow in a PACS. That is what the market wants, those are the underpinnings of how our system is designed," Sauer said. "The government demanded that there be some very manual work-flow-type elements in the system that frankly we thought were absolutely inappropriate for what the market wants. Given that our whole approach is automated work flow, it would have meant a redirection of our technology and our efforts."