PACS' financial returns seem elusive, but benefits are solid

August 14, 2003

It wasn't long ago that PACS as a path to improved profits was a mantra in the radiology informatics community. Run a Web search, and you'll find dozens of articles devoted to the proposition that over the course of three to five years, PACS can return

It wasn't long ago that PACS as a path to improved profits was a mantra in the radiology informatics community. Run a Web search, and you'll find dozens of articles devoted to the proposition that over the course of three to five years, PACS can return its initial investment and start generating profits for those wise enough to spend the money. Vendors and consultants reinforced this idea. Radiologists who wanted the new technology attended courses and lectures that coached them on the CFO mindset and the fine points of return on investment.

Sadly, it didn't always work out to be true. In some instances, PACS turned out to be a money loser, and the radiologists and information technology execs who championed digital management of images paid a price in credibility.

It was a breath of fresh air when a hospital executive told attendees at the Society for Computer Applications in Radiology annual meeting that seeking a safe return on investment from PACS can be futile, and they might consider other reasons to spend money on the technology.

"PACS is not a return on investment. It's not a project that will make money on its own," said David Kirshner, CFO at Children's Hospital Boston.

Instead, PACS should be considered an infrastructure investment fundamental to operating a hospital, he said.

This is not an entirely new idea. Three years ago, Dr. James H. Thrall, radiologist-in-chief at Massachusetts General Hospital, wrote in Diagnostic Imaging that hospitals needed to implement PACS or risk being left behind (Perspective, June 2000, page 35). At the time, there was a debate about whether PACS should be justified in terms of its return on investment or be considered a fundamental "staying-in-business" expense.

Kirshner touched on this issue at SCAR: Without PACS, Children's was falling behind within the high-tech Boston medical community. And without PACS, the hospital faced increasing challenges in its ability to recruit the best residents and physicians and expand its presence among referring physicians.

It has become apparent that the increasing adoption of digital storage and management of medical images is making PACS more of a staying-in-business expense. This puts PACS and the larger electronic information management systems that medical institutions are now acquiring in more or less the same category as telephones, lights, scanners, beds, and the bricks and mortar that make up the facility's structure.

Certainly, some of the more intangible benefits of PACS can bring about system efficiencies and may in fact enhance revenue or reduce costs. But, as pointed out in the SCAR session at which Kirshner spoke, quantifying these revenue gains may be impossible. Every accounting system is different. What is vital to one operation may be icing on the cake to another. A template that projects enhanced revenues or cost savings may work at one facility but not at all.

It is also becoming apparent that the radiology community is recognizing these subtleties. We have conducted an online survey at the PACSweb Web site ("PACSpoll" at diagnosticimaging.com/pacsweb/) that asks respondents to choose one of six factors as their primary reason for purchasing a PACS. With 216 votes as of early July, 34% had selected improved patient and referring physician satisfaction as their primary reason. These are not factors that one can easily attach a number to, but they are clearly important to the imaging community.

Obviously, a facility can't turn a blind eye to the PACS cost question. But it's gratifying to see that factors other than return on investment are playing a more important role in the decision to move to soft-copy imaging.

What are your thoughts on this topic? Please e-mail me at jhayes@cmp.com.