d03a.jpg (15331 bytes)Stretching Your 19th Century Budget into the 21st
So you’ve decided that digital X-ray is the way to go. Welcome to the 21st century.

But how do you afford a 21st century technology when you’re funded with a 19th century budget? And what unforeseen pitfalls are lurking around corners in the budgeting cycle? No one needs to be told that managed care has limited the spending on big-ticket items in recent years, but proper budgeting can make seemingly unaffordable technologies more affordable. And digital X-ray is a perfect place to test that theory.

Phasing It In
Phases. That’s the key word to remember when budgeting and implementing digital X-ray – including computed radiography and CCD and flat-panel digital radiography units. With few exceptions, today’s healthcare facility simply cannot afford to convert all of its radiography rooms to digital rooms at once, so facilities need to evaluate the possibility of replacing them one at a time and prioritize the necessity. That prioritization will allow a more detailed budget to be developed.

“If a facility is making the strategic decision to go digital, it will probably involve some sort of strategic plan where they implement over time with transition planning,” says Mark Wilson, director of equipment planning at TriBrook Healthcare Consultants (Chicago). “You’re talking about something that is fairly expensive and involves how the facility operates.”

According to Bill Kooiman, a PACS and DR consultant with Parallel Solutions Inc. (Phoenix), facilities are moving to certain areas of the hospital first with digital technology.

“A lot of facilities are considering CR right off the bat to get them into the early phases of acquisition in departments that are remote – ICU, ER, OR, and avoid the cost of acquiring DR right away,” says Kooiman. “It’s an in-between step to get them into that DR environment. Then they can work on the connectivity of everything else because DR acquisition is so expensive [$350,000 to $500,000 per room] at this time.”

However, new technologies can be alluring to some clinicians, whatever the price tag. Clinicians in the radiology department typically want the new technologies as early as possible, while hospital administrators are more likely to balk at the early price tags and prefer a multi-phase implementation process. And we know who usually wins.

Finding out the specific goals of both clinicians and administrators is a valuable first step before deciding how to budget for those goals.

“We start by polling the wants and needs of the user groups and see where they are at, then give them value engineering options,” Wilson says. “We try to give them options all along the way. ‘You can save so much if you postpone this or if you combine two factors into one you can save more dollars.’ Later, we try to bring the price to the table and let the user get the financing they need. They’ll give us the overall budget goal before the process.”

How far in advance does a facility need to budget for the purchase of a digital X-ray system and what are the first steps in that purchasing process? The answers differ but most experts feel that a minimum three-year budget cycle is required to gear up for the move to a digital environment. And the implementation period has to be considered in that budgeting cycle. The idea that a CR or DR system is taken out of the crate and plugs-and-plays is naive, to say the least. Installation and adequate implementation can take much longer than anticipated and a facility needs to be fiscally prepared for that eventuality.

Code red
Accurately budgeting for the move to digital X-ray requires more than finding money to acquire a CR or DR system. Depending on the type of facility, unforeseen costs and unexpected obstacles can put large projects over budget in a flash – often more so than other technologies.

One of the major factors is whether the facility is a new project or a renovation. While constructing a new department or facility, infrastructure issues can be dealt with well ahead of time and problems avoided. Facility planners can ensure that certain rooms have the required ventillation and power supply as well as the networks capacity for a DR or CR unit. And all of those issues can be addressed in the original building project budget.

But placing a unit in an existing department can mean tearing out walls to address power and cabling issues, installing ventillation and air conditioning systems and reorganizing the department to make best use of the workflow benefits afforded by a digital system.

Defining the RFP Guidelines

Once the purchase is budgeted and a facility begins shopping for a DR system, it’s time for a request for proposal (RFP). PACS consultant Michael Cannavo, president of Image Management Consultants, made some interesting points on RFPs in a presentation at the HealthTech ’99 conference in Baltimore.

“Here’s a big myth: The more technical your RFP is, the better it is. I’ve seen some RFPs that made the Gideon bible look small. I’ve seen RFPs that were three and four inches thick and you don’t need that.”

Who develops the RFP? Cannavo says that team has to include both radiology and non-radiology staff members, including the nursing staff – an oft-overlooked team member.

“A doctor is not going to worry about how to pull up the files when they’re making rounds. They’re going to do what they’ve always done – ask the nurse for the files,” Cannavo says. “So we make sure that the nursing staff knows the graphical user interface. When we do in-house demonstrations, we make sure the nursing staff and primary-care physicians get to see it and make sure they can use the system.”

Cannavo also calls a Request for Information (RFI) from a vendor basically a waste of time and money. A healthcare facility is much better off to send a person to a tradeshow such as the Radiological Society of North America (RSNA) and get information from all of the vendors at once.

According to Kooiman, many facilities underestimate the cost of redesigning the layout of a facility to optimize a digital X-ray system’s filmless capabilities.

“There are those operational issues that people overlook as well as the facility design and layout issues that need to be determined from the standpoint of where the most of the work and flow is going to take place,” Kooiman says.

Consultant Michael Cannavo of Image Management Consultants (Winter Park, Fla.) feels things like lighting, power, and HVAC need to be addressed in the design budget before they creep up at the last minute during installation. For example, indirect lighting is essential for a digital X-ray reading room.

As for HVAC requirements in a digital reading room, Cannavo says, “If you live in Minnesota and lose the heat in January, go to the radiology department where they have three or four four-screen, 2K monitors and turn them on. The room will be like a sauna. You have to make sure you have the proper AC requirements.”

Learning from experience
Dean DeMaster can speak to the advantages – and sometimes the unpredictability – of moving to digital X-ray during a reconstruction process. As the director of radiology at Mt. Auburn Hospital (Cambridge, Mass.), DeMaster planned on using a major radiology department renovation project as a chance to replace three 20-year-old X-ray rooms with DR systems. The hospital approved the move and alloted proper funding for the purchase of the trio of systems under the construction project budget. Yet, its vendor, Sterling Diagnostic Imaging (now Digital Radiography Corp. of Newark, Del.), could not deliver the DR systems in time and thus brought in one retrofit system. Mt. Auburn was left with no choice but to fill the other two rooms with CR systems from Philips Medical Systems North America (Shelton, Conn.), which are upgradeable to fully digital systems. While the solution transformed Mt. Auburn’s rooms to digital radiography solutions, the change set the budget way off course.

“Initially, we planned the budget to install all the DR systems and then bring CR in for portables later,” DeMaster says. “But having not built any darkrooms, we needed a digital acquisition system [when DRC couldn’t deliver]. That was a big difficulty in the budgeting cycle. We had to use the money from the project budget to buy the CR systems and later we’ll have to find money for the DR systems in those rooms.”

DeMaster says funding for the purchase of the DR systems will have to come from the capital budget in the coming year, which means something else will have to be eliminated.

But all in all, DeMaster says Mt. Auburn was lucky to be able to implement DR in the midst of a major renovation project.

“We were fortunate in that we had a project budget for the entire renovation project which included money for the equipment,” says DeMaster. “A lot of the equipment came out of that and we didn’t have to deal with the yearly cycle of capital budget.”

Crash Cart
While some facilities like Mt. Auburn have to go through such nail-biting experiences, the good news is other facilities can learn from those mishaps.

“Probably the biggest budgeting surprise is in the cost of the hospital’s network capability and carrying power for all of this information,” Wilson concurs. “The files generated are huge and will choke an undersized network and affect the entire facility. We try to get MIS involved early when we’re looking at something like this and we try to get a good explanation of what the network carrying power currently is. If it’s in an institution that’s just going to renovate, that could be tough because institutions rarely carry drawings of what’s been done previously. It’s more like, ‘Let’s open that wall and see what’s back there.'”

DeMaster says Mt. Auburn is going through that now. Despite installing what they thought were adequate networks for exchange of DR and CR images, the radiology department is now realizing it will have to budget for networks upgrades before other modalities are brought digital.

“We’re finding as we get experience with DR and CR images that our initial calculations for network capacity and delays in sending digital X-rays to the reading station from several locations might cause some delays in the network,” DeMaster explains. “Then we have to go through a recovery process and resend. We’re only reading X-rays now. When we throw CT, angio, and ultrasound on the network, you really have to worry about the speed and capacity.”

Cannavo has seen the effects of not budgeting for and installing adequate infrastructure. He relates the tale of an ill-fated facility (not his client) that jumped the gun in moving to a digital environment.

“They wanted to get a CR system from a now-defunct vendor and they didn’t want to spend the money to put it on a dedicated backbone,” Cannavo explains. “They had a straight 10-megabit Ethernet backbone running at about 65 percent capacity and the vendor wanted to sell the CR system at all costs. So they put it on the existing backbone. The first 2K x 2K x 12-bit image they put on the backbone brought the whole hospital network down. At the same time everyone got on the phone and brought the phone system down. Needless to say the radiology administrator was in hot water, the IS manager had a new job and the PACS vendor is now out of business.”
Another common myth Cannavo hears from facilities budgeting for digital radiography is that the savings in film costs will totally offset the purchase price of a DR or CR system. He says that when PACS equipment – including DR and CR – is totaled up with service contracts included, the cost justification models may not be what they appeared to be.

While the film savings may not be a factor, increased throughput – and thus more revenue with the same number of FTEs – can help offset purchase costs. That revenue will increase even more if the U.S. healthcare system takes after its Japanese counterpart and allows hospitals to charge more for a DR or CR exam on the basis that it is not the same exam as a conventional radiograph.

DeMaster agrees that cost justifications with DR alone are difficult but feels the vast workflow improvements cannot be ignored and need to be considered when budgeting for the purchase of a DR system.

“It’s almost a hopeless case to look at radiology in isolation in hopes of justifying the cost,” DeMaster says. “I’m taking 24 minutes per exam and 12 minutes is room dead time or non-exam time printing films, etc. My turnaround time from entering the order to digital images available and interpreting is 12 minutes. That’s five exams per hour.”

Doing the homework
Budgeting for a DR or CR purchase means having a detailed knowledge of the list prices for the technologies your facility is interested in and getting a handle on the minimal amount of discounting being offered in the marketplace. Doing your homework in this area is a must before budgets can be nailed down.

“I think the clinicians are well aware of the costs of DR systems,” says Kooiman. “When you start talking to the financial officers and the administrative groups that are planning for the project, they may not have the background and experience to realize what the costs will be. And they typically have not done a good job at budget estimation.”

DeMaster says he witnessed some of the same things at Mt. Auburn when hospital higher-ups balked at DR’s cost without knowing its capabilities.

“It was fairly obvious we could function more efficiently if we didn’t have to handle the cassettes but administration was skeptical,” says DeMaster. “We solved that by taking the vice president of administrative services – who was in charge of the hospital renovation project – to the RSNA meeting and showed him and let him meet with the vendors.”

Freeing up the funds
Wilson says the Y2K issue that tied up some hospital budgets in the past two or three years, but most facilities are (hopefully) done spending money on that problem. With Y2K no longer on the budget, Wilson feels more hospitals will be freed up to budget for equipment like digital X-ray systems.

“All those MIS dollars that went into Y2K planning are going to go back into the general cue,” says Wilson. “Then radiology will fight it out with other departments for money. Typically radiology usually gets between 25 and 50 percent of the medical equipment component of the capital budgets simply because of the expense of the individual items.” end.gif (810 bytes)