Case Study: Savings with PACS Systems in a Hospital

We present a case study conducted at a hospital whose objective was to determine  the differential cost between film-based radiography and a PACS system.

There are numerous benefits to implementing a PACS system in any medical facility, regardless of its size. With the aim of analyzing the monetary benefits in terms of savings and investment in a real-world setting, the National Institutes of Health of the United States (NIH) conducted an eight-year study at a hospital. The hospital wanted to stop using physical film and take advantage of the various benefits of PACS systems.

Once the PACS system was rapidly installed throughout the hospital, film and digital files were converted in a single step. This demonstrated that implementing PACS systems hospital-wide all at once can represent significant cost savings.

This case study attempted to build a model for the large-scale financial evaluation of PACS throughout the hospital, to help formulate implementation strategies. It was concluded that implementing a PACS system represents at least 63% in savings for the radiology department.

Case Study Details

The study was conducted at a government-owned hospital, with 482 beds and 100 physicians available. By 2002, the radiology department had performed 150,000 imaging studies, with a 10% annual increase in the use of this service between 1997 and 2002. 

By mid-2003, this hospital implemented a PACS system in the period from January to March 2004, by which time the following had already been purchased:

• Four conventional X-ray machines.
• One DICOM-compatible ultrasound unit.
• One CT unit.
• One MRI unit. 

In addition, an older CT unit was already converting images into DICOM format through a gateway. As part of the PACS, additional imaging modalities were also purchased, including three high-capacity computed radiography (CR) processors.

The PACS was fully integrated with a hospital information system (HIS) through a radiology information system (RIS). The order information generated by the HIS was converted into a worklist for the DICOM-compatible machines. The modality performed procedure step allows study completion information to feed back into the HIS system.

It was essential to have the support of all hospital medical staff for the process to run smoothly, so everyone had to be trained in its use through an earlier mini-PACS version, allowing them to become familiar with it and ensure the study's ultimate success.

It was decided to migrate the entire physical-film-based operation to digital images in order to avoid the operating costs of dual systems and reduce the cost of laser film, which is more expensive than conventional film.

After installation and training on PACS, the hospital achieved its goal of a 100% reduction in radiographic film in just 2 weeks. However, film use was maintained in the mammography and remote fluoroscopy units.

 The change occurred by area, starting with outpatient care, since that was where radiographic film was used least frequently; it then continued with the emergency room and later with the care units.

Metrics Analyzed in the Study

Some of the assumptions on which this research was based, together with specialists in the field, were:

1. An eight-year time horizon was used.
2. A discount rate of 3% was assumed.
3. If the PACS system had not been installed, the hospital would have had to purchase three film processors in years 0, 4, and 8.
4. The PACS short-term storage holds one year of recent images, and long-term images are stored on a redundant array of independent disks (RAID), purchased annually according to the volume of image files.
5. The annual maintenance cost of PACS was calculated at 5% of the initial purchase cost.
6. The hardware of the PACS workstations used by physicians and radiologists can last four years and will be replaced in the fifth year.
7. The costs of software updates for PACS are included in the maintenance cost.

To carry out this differential cost analysis, the following was taken into account:

1. PACS cost model. This took into account everything from maintenance and the replacement of computed radiography cassettes to storage. By the end of the study, an increase in costs was observed toward the fifth year, when the workstation-related hardware had to be replaced, though this was a cost that had already been estimated. 
2. Film-based cost model. This includes the cost of purchasing and maintaining film processors; the cost of film, chemicals, film sleeves, conventional film cassettes, and film disposal; as well as the salaries of film library staff. Here it could be observed that costs rose by approximately 58% as the number of radiological studies increased.
3. Net present value (NPV). The initial capital for installing the PACS system was USD $699,497, and by the eighth year, the NPV was USD $1,598,698.

Study Conclusions

The cost of operating with physical film and related costs, such as chemicals, storage sleeves, and label printing, represented 58% of total costs, followed by 22% for film processing and related costs, and 20% for archive staff salaries, with an NPV (net present value) of USD $2,083,856.

With this differential cost analysis, it was determined that the net present value for the PACS system was USD $1,598,698, while the NPV for the film-based system was USD $2,083,856, indicating a net savings of USD $485,157; thus establishing a net savings for PACS operation.

In conclusion, installing a PACS system that is well designed, well planned, and implemented with the guidance of experts within a hospital complex benefits both cost levels  and other areas, for example, by reducing patient wait times, improving the management of critical patients, reducing the unavailability of images, increasing the productivity of devices and technologists, enabling online phone consultations, saving time for radiologists, and reducing staffing needs.

On the other hand, the emergency and intensive care units accelerated patient treatment by saving time on film transport. Clinics also saw reduced patient wait times, since studies could be interpreted immediately. 

After implementing the PACS system, in just three years the use of radiology services increased by 82% among inpatients and 38% in outpatient consultations. An additional considerable increase in the number of studies was projected from the eighth year onward, along with further savings from no longer printing film. From a more conservative standpoint, savings of 63% are expected in radiological operations.

Reference: Ying-Cheng Fan et al. “Financial Assessment of a Picture Archiving and Communication System Implemented all at Once”. US National Institutes of Health. J Digit Imaging. 2006 Dec; 19(Suppl 1): 44–51.