Tide may be turning in favor of big installations, howeverThe market for filmless-hospital picture archiving and communicationssystems (PACS) has developed more slowly than expected, much tothe consternation of vendors that have made major
The market for filmless-hospital picture archiving and communicationssystems (PACS) has developed more slowly than expected, much tothe consternation of vendors that have made major investmentsin the technology. Since the early 1980s, experts have predictedthat image management technology was on the verge of taking off.In reality, teleradiology was the only area that showed consistentsales strength, while PACS was limited to a few specialized militaryapplications until about 1994.
The tables are now turning in favor of large-scale PACS installations,according to a new report by the editors of Diagnostic Imagingentitled PACS and Teleradiology 1996: Analysis of Industry Trendsand Purchasing Patterns. Several factors have combined to improvethe prospects for the widespread adoption of PACS, the reportstates. The power and speed of computer technology fundamentalto digital image management have grown dramatically, while pricesof PACS and teleradiology systems continue to drop.
Affordable, broad-bandwidth communications are becoming moreavailable, a trend likely to increase with the advent of the so-calledinformation superhighway. The means for enabling system connectivityis available in the form of the ACR-NEMA's DICOM 3.0 standard.
Perhaps most importantly, digital image management is gettinga boost from the pressures that managed care is exerting on healthcareproviders. The average radiology department's emphasis has shiftedfrom generating revenue to containing cost and improving productivity,thus paving the way for the acquisition of image management systemsthat can increase efficiency. Hospital consolidation and the formationof healthcare alliances also create demands for better image anddata communication. Due to the confluence of these factors, manyvendors and industry experts predict that the growth of the PACSmarket will continue.
Problems remain, however. While the DICOM standard has receivedwidespread vendor support, implementation by most companies hasbeen less than adequate. Also, tight capital equipment budgetsat most institutions render the selling of PACS a tricky proposition.One need only examine the high executive turnover at most PACScompanies to realize that they have not yet seen a return on themillions of R&D dollars poured into this market.
Targeted applications of image management technology still dominatethe PACS market. The biggest winners continue to be teleradiologyapplications -- especially overread networks -- and in-house imagedistribution systems (IHIDS). These subsystems are being soldprimarily because of their ability to augment the productivityof radiologists, referring clinicians, and other hospital staff,rather than provide savings on film costs.
Although customers are starting small, many also want to knowthat the features and performance of their systems can be incrementallyexpanded and eventually integrated into a hospital-wide (or region-wide)image and information management system. This type of phased implementation,or building-block approach, makes long-range planning essentialfor customers. They will therefore want salespeople who can actas consultants to assist them in this approach to image managementsystems.
Market trends. Tracking market developments in the PACS industryis difficult because many firms are privately held and many publiclyheld companies have not disclosed their PACS and teleradiologysales statistics. The market's repeated failure to meet growthexpectations has discouraged vendors from releasing performancedata as well.
Also, until 1991, the PACS market wasn't mature enough to tracksales, and there were too few players to call it a genuine market.Compounding the problem is that there is no clear definition ofwhat the PACS market actually is, and different market analysesinclude different components in their definition of the imagemanagement market.
As the market continues its upward push, more vendors are sharingtheir revenue figures, however. In spite of the difficulty inassessing where PACS has been, the market is growing at a rateof about 15% to 20% per year, and higher in certain applications,with most vendors reporting revenue growth of at least that amount.
Indeed, the U.S. market for teleradiology and PACS has doubledover the last four years, although from a small base. U.S. PACSsales in 1995 totaled $285 million. That figure includes salesof IHIDS, teleradiology on-call and overread applications, modality-clusterPACS, computed radiography devices, archiving systems, radiologyinformation systems, and alternate output devices.
While DICOM acceptance has improved substantially, widespreadimplementation across all levels of DICOM remains elusive formany vendors. Progress was evident at the 1995 Radiological Societyof North America meeting, however, where many vendors took partin DICOM demonstrations. In the future, customers will be ableto choose components from a variety of vendors, allowing themto focus on service and warranty issues rather than products ona single platform. DICOM support has become mandatory, with customerdemand for open systems rendering any proprietary technology adisadvantage in this market.
Another trend is the integration of PACS into hospital-wide informationand image management systems through the use of the HL-7 and DICOMstandards. Many institutions now look at PACS relative to wherethey fit into such systems. In these situations, vendors mustestablish HL-7 conformance.
PCs are becoming the platform of choice for many applications,with battles developing between Unix-based workstations and powerfulPCs using the Windows NT operating system. Many image managementworkstations today run on Windows NT or Windows 95.
The systems integration market has not developed as expected,with many early entries in this market realizing that the taskwas herculean, due to difficulties in integrating equipment fromdifferent vendors. Today, many companies see systems integrationas part of the PACS buying process. Except for limited applications,however, independent systems integrators have gone by the wayside.
Scanner modality vendors are realizing that the world is movingtoward networking, and if they don't provide that networking,they will end up as peripheral equipment providers. But supplyingconnectivity as part of a scanner sale often becomes a biggerservice issue than expected. Therefore, networking efforts frommany companies are coming from the service -- not modality --marketing end of the company.
For more information about PACS and Teleradiology 1996: Analysisof Industry Trends and Purchasing Patterns, contact Bridget Walshat 415/905-2671 or firstname.lastname@example.org.