Straight Talk From the PACSman: Ignoring the obvious

By Michael J. Cannavo, contributing writer

May 14, 2014 -- At times I think Howard Beale in the movie "Network" had the right idea. Let's all get rip-roaring drunk and bemoan the fate of the PACS industry, go on the air, and call it like it is while watching the audience ratings spike.

Then, in one impassioned diatribe, we galvanize the Radiology Nation, persuading end users and vendors alike to shout out of their windows, "I'm as mad as hell, and I'm not going to take this anymore!" That would just be so awesome. Sadly, it's something I do here almost every day, so much so that the neighbors don't even notice and the dog sleeps through it.

Michael J. Cannavo
PACS consultant Michael J. Cannavo.

PACS has come light-years from its start in the early 1980s, and it has advanced dramatically in the past decade. That said, PACS still has a very long way to go. The technology has pretty much kept pace with the needs of the marketplace. Those who provide the technology (vendors) and those who use it (end users) are the ones who drive me mad, though.

Now is one group worse than the other? Not really. Neither understands the other's requirements, nor do they ask each other about their needs. Sales reps talk when they really should be listening, and end users talk but leave out crucial information.

I experienced a perfect example of this the other day when a friend asked me to pick up a copy of Taber's Cyclopedic Medical Dictionary for her. No sweat, I thought. After all, how hard can it be to get a book? Once I started looking, though, I realized I had more questions than answers. Paperback or hardcover? Which edition? How far back could I go without compromising the integrity of the book? Indexed or not indexed? With or without the DVD?

Had I just picked up a Taber's as requested, I could have gotten it very wrong. Instead, I asked all the right questions to ensure I got what was both wanted and needed. Sadly, many end users just buy whatever they're told they need, and never ask the right questions.

Even worse is using a general consulting firm that has limited knowledge of PACS instead of someone who truly understands the technology and the role PACS plays in the global scenario of an electronic health record (EHR). That's like using a general practitioner instead of a neurosurgeon for a brain tumor because both have the letters "MD" after their name. This happens time and again.

Saying that money is tight for purchases in radiology is probably the understatement of the decade. PACS hardware that should be replaced after five or so years is being kept in service seven to eight years or longer, and it's replaced only when necessary for reasons such as unsupported operating systems. Windows XP is a perfect example: Even though technically it doesn't need to be replaced, it should be for safety's sake (and to ensure there are no inadvertent security breaches that might cause a HIPAA violation).

While software updates are often included in service agreement costs, the charges for the professional services related to the update are often so high and benefits of the upgrade so marginal -- at least relative to the needs of the facility -- that sometimes even this is deferred. Upgrades often require at least partial hardware refreshes and are usually done at best every four years or so.

Getting minimal value

What's upsetting to me is that all too many end users spend what little money they have on things that will provide them with minimal value. Why? Because most have no idea what they really need. Just like people wait to go to a doctor until there is a problem, so, too, do many put off taking a closer look at their PACS from both a technical and operational standpoint until a problem develops.

Sadly, by then it's often too late or there is no money to fix the problem before it becomes a major problem. Most systems allow proactive monitoring via PACS dashboards, yet few end users avail themselves of these and the data they provide. Most companies that provide PACS also provide some form of consulting services where someone comes in and does a full system assessment. While that is sometimes beneficial, a site might also just need a simple oil change instead of a major engine overhaul.

Neither vendors nor end users have fared well with the changes that have gone on with healthcare reform in the past few years. While meaningful use, ICD-10, health information exchanges (HIEs), regional health information organizations (RHIOs), accountable care organizations (ACOs), and other related acronyms are affecting the way healthcare operates, someone apparently forgot to tell the leadership at most PACS providers. They seem to ignore the realities of the healthcare marketplace and continue to hold fast to year-over-year quota increases that are virtually unattainable by sales.

This tends to forces sales reps to promote products that end users really don't need, or to divert resources when other priorities with PACS should take precedence. Sadly, consumers are so busy wearing the additional hats they, too, are tasked to wear, that they often don't have time to research what they are being told. They buy on trust and blind faith.

Now, I loved the music of Blind Faith in the late 1960s, but I never, ever have bought on blind faith. As for trust, a decade ago I wrote an award-winning article titled, "Trust your mother, but get it in writing" -- so you can see where I stand there as well.

Despite the shift away from "do more with more" occurring just a few years ago, the adage "do more with less" is now considered old school. Now it's simply "do less with less."


The federal government spent more than $500 million establishing HIEs in all 50 states, with one of the key promoted benefits being that they would act as a clearing house for previously performed imaging studies. The benefit here is to eliminate repeat studies that incur additional costs as well as unnecessary radiation exposure for patients. That is why insurance companies are all over HIEs, even though the first ones haven't begun to show a return on investment -- and, realistically, probably won't. Good concept, lousy execution.

A recent article in Information Week brought home this point well:

The majority of stakeholders in health information exchanges (HIEs) believe that public HIEs have flawed business models and fail to provide "meaningful connectivity," according to a Black Book survey conducted in the second half of 2013.

Most provider and payor executives believe that private HIEs -- which are operated by a single business entity or network -- are a better choice than public exchanges for accountable care organizations (ACOs). And with six in 10 operational public HIEs dependent on federal funds that have mostly run out, 72% of the respondents predicted that by 2017, as few as 10 of the current public HIEs will still be around.

A key element in this sober assessment is the attitude of payors, which stand to gain the most from effective HIEs that can reduce the cost of care by reducing the number of redundant tests, repeated procedures, and avoidable readmissions. Despite these potential advantages, health insurers participate in just 30% of public HIEs, and 86% of payor respondents said they refuse to pay the annual fees of public exchanges.

The article continues on to state that "HIE use increased 69% from 2012 to 2013. But 89% of private practices and 73% of nonsystem hospitals remain unconnected to any kind of HIE."

One of the great things an HIE does do is expand the market for vendor-neutral archives (VNAs). That is a positive. What it doesn't address, though, is having everyone wanting to play well with others. That is a huge negative.

Radiology groups are very concerned -- and rightfully so, in many respects -- that if they allow access to studies they have read for groups they are contracted with, it may increase competition for their already beleaguered business from other groups. Long gone are the days where boundaries were respected.

Instead, we are seeing hired teleradiology guns coming into town and challenging anyone and everyone for business. I wrote about the potential of this happening way back in 1995, and, true to form, radiology has become the equivalent of the Wild West in recent years. It's a sad reality, yet everyone is doing everything they can to protect their business, especially because there is less and less of it to go around -- and there may be less still in days to come.


Radiologists are also being tasked with doing less as well, although not officially yet. The American College of Radiology (ACR) has established what is called Appropriateness Criteria for radiologic studies. These are evidence-based guidelines to assist referring physicians and other providers in making the most appropriate imaging or treatment decision for a specific clinical condition.

The potential exists somewhere down the road for scrutiny of additional data compiled from the patient's EHR to determine if a radiologic study can, or even should, be performed and, if so, which study. If it doesn't meet the study criteria or an equivalent study has been performed previously, then insurance won't pay for a new study.

So what constitutes appropriateness? ACR has adopted this definition: "The concept of appropriateness, as applied to healthcare, balances risk and benefit of a treatment, test, or procedure in the context of available resources for an individual patient with specific characteristics. Appropriateness criteria are designed to provide guidance to supplement the clinician's judgment as to whether a patient is a reasonable candidate for the given treatment, test, or procedure."

An assumption when assessing appropriateness is that the ordering healthcare provider has not yet determined whether a radiological procedure is clinically useful for the specific situation. Recommendations may be made that no radiological procedure is appropriate for a specific clinical scenario. In those instances where more than one radiological procedure may be appropriate, additional guidance or clarification of the issues will be provided.

Why is this important? Again, citing ACR statistics, more than 1 billion radiology exams are performed each year in North America. The overall cost of diagnostic imaging is estimated at well over $100 billion annually in the U.S. alone --more than 10% of total healthcare costs --and estimates suggest that more than 10% of these exams are either unnecessary or duplicative.

Even worse, physicians who own their imaging equipment are two to seven times more likely to order an imaging test, according to research conducted by HealthLeaders-InterStudy. In a nutshell, everyone everywhere is looking to cut costs, and everyone has different ideas on how to do it. This means that in the not-too-distant future it will simply not be enough to have an imaging study ordered by a primary care physician. It will have to be justified, just as PACS purchases have to be justified as well.

Cost justification

That brings us to the last point: cost justification of purchases. It used to be that if you could justify it, you could have it. Today, the decision to buy or not to buy is much more complex than in years past.

The problem with most return-on-investment analyses is that they need to be tailored to who pays, not just to who benefits. Nearly every piece of third-party software used in PACS benefits the radiologist, but if improving the radiologist's productivity doesn't translate into revenue for the facility in the form of additional technical fees, an administrator is going to be hard-pressed to justify the purchase.

Cost avoidance can be considered as well (eliminating the need for additional full-time equivalents, etc.), but revenue generation is usually the No. 1 thing considered, along with the total cost of ownership (TCO) and a payback period of three or fewer years.

Many facilities are also starting to look closely at service and support costs in this way. Most are asking, "What are we getting for what we are paying?" -- especially since service is based on a flat percentage of list price that can equal 40% to 50% of what the site initially paid for the software.

Several of the larger facilities and health systems are looking into ways they can take on more service-related tasks in return for a reduction in service costs. Even a 2% to 3% reduction in service costs can translate into tens or hundreds of thousands of dollars annually. Will the vendors bite? So far almost none have, because 65% or more of a vendor's profits come from service-related billings.

This is similar to selling an ink-jet printer at below cost, yet making up any losses on ink purchases. Again, we can't ignore the obvious: Facilities have less money to use and have to use it wisely. Everyone's needs are different, so service and support should be tailored to meet those needs.

As an industry, we need to keep our eyes wide open as to what is going on and react proactively, not reactively, to changes in the healthcare market. Then, and only then, will the most obvious and cost-effective solutions become evident.

Michael J. Cannavo is known industry-wide as the PACSman. After several decades as an independent PACS consultant, he spent two years working as a strategic accounts manager with a major PACS vendor. He has now made it back safely from the dark side and is sharing his observations in this Straight Talk From the PACSman series.

His healthcare consulting services for end users include PACS optimization services, system upgrade and proposal reviews, service contract reviews, and other areas. The PACSman is also working with imaging and IT vendors developing both global and trade show-specific marketing programs using market-focused messaging. He can be reached at or by phone at 407-359-0191.

The comments and observations expressed herein are those of the author and do not necessarily reflect the opinions of

Copyright © 2014

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