VA turns to image management to cut costs as system consolidates

Government facilities conduct leading-edge work

Teleradiology and PACS vendors are enjoying a major upsurge inequipment purchasing by hospitals belonging to the Departmentof Veterans Affairs healthcare system. VA medical centers, likethose in the private sector, are hoping that digital image managementcan help them come to grips with pressures to cut costs and consolidate.

In the last year, VA hospitals in Houston, El Paso, Detroit,and West Palm Beach, FL, have purchased PACS equipment. Numerousother VA facilities, including those in Milwaukee, Iron Mountain,MI, and Palo Alto, CA, are in the planning stages to develop linkupswith VA clinics in their areas. Other facilities, such as hospitalsin Nashville and Houston, are also purchasing equipment and settingup what will eventually become regional teleradiology and telemedicinenetworks.

"Since the VA operates 172 hospitals and over 700 facilities,it is only natural to share resources, off-hours coverage, andexpertise," said Dr. Eliot Siegel, chairman of radiologyat the VA hospital in Baltimore, which was one of the first hospitalsin the country to go completely filmless.

The desire to pool resources is so strong, in fact, that theVA is consolidating its medical network into 22 regional hub facilities,also known as centers of excellence. Under a reorganization plansubmitted to Congress last year, the VA is working to establish"veterans integrated services networks" that will focusprimarily on technology management and assessment. The networksare also intended to help consolidate healthcare delivery servicesand eliminate duplication.

"Most of the emphasis is at the network level," saidMichael Hughes, technology assessment director of radiology servicesat the VA in Washington, DC. "We have empowered people torun the hospitals within their networks, and they are writingbusiness plans and doing performance contracts."

The VA is also moving toward a capitated system, he added,with a big push toward automated clinical records.

"We see the adoption of all this as a five to seven-yeardevelopment period," Hughes said. "The technology isthere, but the costs are still prohibitive."

Some of the VA hospitals, such as Boston and Baltimore, arealready operating as hubs; others, such as Houston, are rampingup to take on this role. In fact, Baltimore and Boston have spentthe last two to three years establishing hospital-wide digitalimaging and information-management networks and are now linkingwith other medical facilities in their regions to share resources.Baltimore in particular has been a test bed for much of the technologyand processes now being adopted by other VA medical facilities.

"What we are recommending is that the VA consider havinga limited number of hubs and then developing spokes that shareresources," Siegel said. "The best approach would befor one hospital in five or 10 to purchase a PACS and then sharetime with other centers so they don't have to buy their own PACSequipment. This would be a good model for the VA or any largehealthcare system to maximize the efficiency of the network."

Moving to commercial solutions. Although the VA has its owndecentralized hospital computer program (DHCP) and HIS and iscurrently beta-testing a PACS developed in-house, there is a growingconsensus among PACS and teleradiology vendors and the hospitalsthemselves that it has become difficult to compete with commerciallyavailable technology, in terms of both price and performance.Thus, the VA is looking increasingly to outside vendors for solutions.

One of the biggest players in the VA market is Loral MedicalImaging Systems of Hoffman Estates, IL, which, along with itsparent company Loral Corp., agreed to be acquired by LockheedMartin earlier this year for more than $10 billion (SCAN 1/17/96).

LMIS has a leg up on many of the vendors in this market becauseof its long-standing relationship with the Department of Defenseas prime contractor on the Army's medical diagnostic imaging support(MDIS) project. This project is also being adopted by the VA.Last November, for example, LMIS won three contracts worth a totalof $7.8 million from the Department of Veterans Affairs to installVantage PACS at VA medical centers in Florida, Michigan, and Texas.

Another company doing well in the VA market is E-Systems MedicalElectronics of San Antonio, TX. Among other things, the companyhas a two-year, $2 million contract with the Boston VA to enhancethe hospital's imaging capabilities using PACS and teleradiology.So far, E-Med has installed a WAN that links four remote siteswith the hospital. Using E-Med's system, the remote sites candigitize film and do direct image capture, then send the datato a large file server at the Boston VA, where it is distributedto viewing stations throughout the hospital for consultation.

Several other components of the contract are also under way,according to Chris Mohen, senior accounts manager for E-Med. Forexample, the hospital now has the ability to link all imagingmodalities directly via digital DICOM interfaces. There is alsoa DICOM link into a filming network in the hospital, with accessto DICOM and non-DICOM modalities.

In addition, the company is in the final stages of testinga bidirectional interface to the information systems that enablespatient demographic data to be pulled from the DHCP system intothe PACS and clinical (not diagnostic) images to be passed backto the DHCP system. A computed radiography system that will beintegrated into the PACS is also being installed.

"Compared to our involvement in the commercial world,this is very leading-edge work," Mohen said. "Not manycommercial accounts are looking this aggressively at the technology.In fact, this may be a case where government needs to lead industryin that direction. And it would be government funds well spentbecause it would be helping to improve the healthcare deliveryprocess nationwide."

E-Med, which also has a PACS contract with the Houston VA,is now competing for another contract to expand that system andhelp the Houston facility implement a fully filmless, DICOM-basedimaging environment.

Other companies involved in this market include Hewlett-Packardand Lockheed Martin, which have formed a strategic alliance toprovide information system integration and service to the PhiladelphiaVA. This contract is part of the medical center's Hybrid OpenSystems Technology Program, designed to manage data processingat each VA medical center. HP will provide its CareVue informationmanagement product, while Lockheed will oversee project integration.Vendors supplying related equipment to the VA hospitals includeFuji, Agfa, and Polaroid.

"There is no doubt in my mind that everyone is going tobe running imaging departments digitally and without film,"said Siegel of the Baltimore VA. "The technology is here,the costs have dropped two- to three-fold, and we have demonstratedhere in Baltimore that it makes sense from a quality standpoint,a physician satisfaction standpoint, and an economic standpoint.The bottom line for us is to be able to bring the experts to thepatients rather than transport the patients to the experts, andto use the technology of the 1990s to do it."