PACS veterans debate merits of ASP-powered digital image management

Pro Con

The growing availability of application service provider (ASP) models for digital image management is viewed by many market watchers as a catalyst for broader and cheaper adoption of the technology. But is it really a good deal? PACS consultant Michael J. Cannavo and eMed Technologies vice president of marketing John Strauss take sides on the issue.

ASP model can provide a cost-effective solution for image management
Pro Con Con:
ASPs and PACS: Do your homework before you believe the hype


ASP model can provide a cost-effective solution for image management

By John Strauss

Many PACS vendors are now touting application service provider (ASP) offerings for digital image management, but the scope and delivery of services can vary considerably. Nonetheless, if the concept is understood and the expected benefits are appropriate for the institution, the ASP model can be a preferable solution for implementing image management capabilities.

ASP providers allow an institution to outsource information technology applications management, support, and maintenance. As defined by the ASP Industry Consortium, ASP service is designed to "deliver and manage applications and computer services from remote data centers to multiple users via the Internet or a private network."

Most commonly, enterprise software applications are centrally hosted, delivered through the Web, and, in some instances, the data itself is stored remotely. Customers will pay a monthly subscription fee, and in some cases will pay a small transaction fee. Often, the hardware necessary to enable and run the application at the user site can be included in the subscription fee.

With the ASP model, the vendor assumes all responsibility for integration, maintenance, upgrades, support, and performance. Benefits include faster systems implementation, operational freedom by allowing the customer to focus on core business functions, improved performance, and high reliability based upon the ASP’s experience in providing these services to multiple customers. Customers can also enjoy minimal to no up-front investment, complete obsolescence protection, and reduced internal staffing needs.

In medical imaging and PACS, the ASP model seems particularly suitable for supporting Web-based enterprise-wide image and report distribution, as well as off-site, long-term archiving.

For example, Web sites providing referring physicians with access to images, reports, and other information would be a natural fit for outsourcing of development, maintenance, upkeep, administration, and security. Many of these user sites could be hosted centrally, with the viewing software delivered via a plug-in to Web browsers such as Netscape Navigator and Microsoft Internet Explorer.

The image and report data could be hosted centrally or on servers placed at the user’s locations. The ASP would assume responsibility for the turnkey system, including imaging modality connection, high-speed Internet connectivity, and the physician’s desktop viewing application.

Long-term image archival, with the rapid changes in technology and the high cost of implementation, is also a suitable candidate for outsourcing through an ASP model. Large and secure data repositories provide for feasible recall of archived images for institutions of all sizes. Short-term or online storage of current images can also be outsourced, but the speed of access over wide-area networks becomes a very critical criterion to overall system performance.

A hybrid deployment -- on-site online storage and centralized off-site long-term storage managed fully by an ASP -- may be the most appropriate implementation. For this function, users would typically pay a monthly fee, as well as a transaction fee each time a stored image or study is accessed.

A full PACS network through an ASP model is possible, but PC-based database software and diagnostic and clinical viewing applications will need to be ported to a Web-based platform to enable centralized delivery. Necessary hardware, such as high-resolution viewing workstations, non-standard modality interfaces, and online storage technologies, also usually require on-site implementation.

These components could be purchased as capital equipment or leased from the vendor along with maintenance, upgrade, and support. System integration with HIS/RIS and other clinical information systems unfortunately remains idiosyncratic, making general outsourcing problematic. As more rigidly defined standards or guidelines are defined for systems integration (such as the Integrating the Healthcare Enterprise [IHE] initiative) this problem may be resolved.

Only when PACS can be redesigned as a deliverable application can the adoption of a full ASP PACS be considered. This may soon be feasible, driven by the consolidation of many software applications -- such as database servers, Web servers, RIS gateways, archive servers, and modality interfaces -- onto one computer. As these software processes become less dependent upon hardware, the more easily they can be run from a remote server farm owned by an ASP. Of course, sufficient network bandwidth and speed must be available to make the performance of these applications practical.

Today, there are alternatives for the procurement of traditional PACS that have financial similarities to ASP transaction fees. Although these approaches allow users to reduce much of the initial capital outlay associated with large-scale PACS, they often include items such as end-of-term buyout, additional fees for service, and minimum/maximum procedure-volume limits.

In conclusion, the ASP model is a very attractive paradigm for implementation of digital image management, although caution should be exercised when considering the applications to be performed by an ASP-based service. Also, purchasers should weigh --as is the case with a traditional PACS purchase -- variables such as contract terms, vendor viability, acceptable performance, and reliability metrics.

Mr. Strauss is vice president, marketing for eMed Technologies Corporation. He can be reached at [email protected].

ASPs and PACS: Do your homework before you believe the hype

By Michael J. Cannavo

ASPandemonia has gripped the medical imaging world, with PACS vendors offering new application service provider (ASP) models nearly every day. While there are definitely applications for ASPs in PACS, teleradiology, and other imaging environments, they are far from the be-all, end-all solutions that they have been made out to be. Potential ASP buyers should beware, as an ASP model may not always be the right solution for every hospital or imaging facility.

ASPs have been promoted as a way to adopt PACS with little risk of obsolescence and little capital investment. Under the ASP model, an imaging facility leases the hardware and software required to run a digital image management network. When a facility's PACS technology becomes obsolete, it simply trades up for newer equipment from the ASP provider.

ASP supporters claim that one of the biggest benefits of an ASP program is the elimination of the costs associated with software upgrades, and, depending on how the program is structured, hardware upgrades as well.

On the surface, this seems like a great deal until you consider several factors related to upgrading to new technology:

  • The cost of software upgrades (which is factored into the ASP model) can easily add $250,000 to even a moderate-sized PACS installation.
  • The cost of any associated "forklift" (hardware) upgrades if and when technology platforms are changed can match or exceed software costs.
  • The cost of the upgrade may not be worth the benefits that will be derived from it.
  • The upgrade could have a negative impact on the productivity of both technologists and radiologists.

ASP vendors also typically factor in additional costs like service, systems integration, networking design, testing and implementation, and numerous other up-front costs that an imaging facility may or may not have to absorb. Nearly 70% of the imaging facilities we have worked with recently have opted to go with time-and-materials contracts versus service contracts due to costs -- ASP providers typically include service-contract costs in their per-click fees.

So are ASPs really cheaper and safer? In the case of archives, one can certainly prevent technology obsolescence by allowing the PACS provider to use the most cost-effective storage medium possible, and to migrate data to newer media at the end of the negotiated period.

The caveat here is that costs for the data migration need to be negotiated up front. If migration is, for whatever reason, not elected, the customer needs to be prepared to obtain a reader/jukebox that is compatible with both the ASP provider's hardware and database management software.

This may not be as easy as it seems, especially if the agreement is for more than three years. One complication is that many newer archiving systems may not be able to read older archiving media. You are, in essence, paying once for storage and a second time for data conversion.

The question is, do all image files need to be converted in a move to a new PACS platform? Since 50% of all study retrievals are done in the first six months, and retrieval rates fall into the single digits after year two, the answer, at least globally, might be no. Most PACS networks now only transfer files that have been retrieved within a defined period of time, yet from the medico-legal aspect all files must be available for at least 5-7 years (and in some applications much longer). Therefore, the responsibility falls to the hospital to insure that the data archived are accessible throughout the legally defined period.

Cost savings

Do ASPs really save money? That depends on how you look at it. An ASP reference model with per-study costs ranging from $7-$50 or more per study typically incorporates both tangible and intangible expenses to justify these costs. Tangible costs include filming and film-related costs (distribution, filing, storage, etc.) while intangible costs might include lost physician productivity costs.

While a few would argue that these costs are not real, getting them accepted into a return on investment (ROI) model is much more difficult. Increases in physician productivity constitute the lion’s share of the ROI in many ASP models, yet unless the physicians are direct hospital employees (as found in many university or teaching environment settings) there is little direct financial savings to the hospital by making either physicians or radiologists more productive.

This is not to say that patient care isn’t positively impacted and studies read quicker via PACS. However, direct cost savings to the hospital in terms of ROI reductions have neither been effectively documented nor, more importantly, tied specifically to a PACS network. There are simply too many other variables to take into effect.

In addition, many of the areas addressed in ROI models (staffing levels, storage space, etc.) are fairly fixed regardless of a facility's procedure volume (whether you do 10 patients a day or 30 on a CT scanner, you still need the same FTE level), unless you can schedule all patients in a very defined period of time and allow for no walk-ins.

Even storage-space issues pale when you look at the location of the space and its suitability for other uses. Nine times out of 10, the majority of new space created by a move to PACS is in the basement and is considered "dead" space (although off-site storage costs and space used in the main department most definitely can be factored in as offering potential ROI by turning non-revenue-generating space into revenue-generating space).

Of all the ASP models I’ve seen, few make any more sense than any of the other payment options being offered, including outright purchases and straight-line depreciation. After all, most hospitals neither want nor can afford to upgrade software every time a new release comes out, let alone replace hardware as well.

In addition, virtually every PACS site I’ve been to has computers that are several years old that function perfectly well. The same can be said for most PACS environments, especially since we’re entering a new generation in both computing power and applications software that should last for several years.

The bottom line, at least in this writer’s opinion, is that if you can’t cost-justify a PACS network you probably shouldn’t have it, regardless of how you feel it will be paid for. The old adage "pay me now or pay me later" holds true whether with ASPs, open or closed-end leases, or an outright purchase.

PACS vendors want to make sales, and ASPs certainly hold promise for certain customers. Just understand that no one -- buyer or seller -- intends to lose money, and if an ASP-based deal seems like it’s too good to be true, it probably is.

Mr. Cannavo is president of Image Management Consultants, a division of Healthcare Imaging Specialists. He provides consulting services on the acquisition and assessment of PACS and teleradiology systems. He can be reached at [email protected].

September 19, 2000

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