William Keyes, MD (left), senior partner, and Jon Copeland, CIO, Inland Imaging, Spokane, Wash.

Just a few years ago, medicine was foot dragging when it came to computerization and optimizing the power of the Internet (for an assessment of this situation, see Severed Trust by former Journal of the American Medical Association editor George Lundberg). But doctors and their patients are becoming increasingly comfortable online. The ease and reliability of electronic communications are now such that medical people are beginning to demand the electronic delivery of data-and no group of practitioners is feeling the pressure more than?? radiologists. Radiologists, too, are discovering the benefits of soft copy review. For these reasons, and for business reasons as well, some radiology practices today are doing what they would not have attempted a short time ago-they are putting in PACS (picture archiving and communications systems) independently of hospitals or other health care entities that formerly would have shouldered the cost. This is a gamble. But the radiology practices putting in PACS are betting it will pay off. For this story, doctors or administrators in three practices talk about their decisions to install a PACS, and what they hope to gain by being, in a manner of speaking, PACS pioneers.

Inland Imaging

Anyone who has been to Spokane, Wash, knows that it is an island of technology and commerce in an expanse of irrigated farmland. The city is clustered and urban, but its outskirts are decidedly rural. This has advantages. Because Spokane is compact, the city? has been easy to wire, and even competing hospitals are making use of the electronic underpinning by sharing a common HIS (hospital information system), although each hospital retains its own patient database.

Inland Imaging is Spokane’s biggest radiology practice, with more than 30 radiologists. A few years ago, Inland spun off an ASP (applied service provider) arm called Duvoisin and Associates, which markets billing services, medical management, accounting, information technology (IT), and, in an infancy stage, Inland Imaging’s new PACS.

Jon Copeland is Inland and Duvoisin’s CIO (chief information officer); William Keyes, MD, is an Inland? senior partner and neuroradiologist, and one of the lead doctors working with Copeland on the new PACS installation. According to Keyes and Copeland, Inland is outpatient-based and operates five imaging centers. It also has contracts to read at 13 hospitals, including three major Spokane hospitals and several in outlying communities, which total a combined 1,000 beds. Inland, says Keyes, “is impressive in the number of MRI scanners that we read. We read nine. Of those, we own six.” Inland employs about 35 radiologists and reads 400,000 imaging studies annually, counting both inpatients and outpatients.

Copeland says one of the first things Inland did when considering a PACS installation turned out to be one of the most important. “We waited-we studied PACS systems for 3 years,” he explains. “We waited for the technology to improve and for prices to drop. The demand was there for massive online storage. Right now the cost is about 2 cents per megabyte, but just a few years ago it was 10 times that.” Inland had already spent about $1 million for a RIS (radiology information system), and when it found a Web-based PACS vendor it liked, it introduced the RIS company to the PACS vendor, so they could build an integrated product. Inland became an alpha test site for the two manufacturers. After cojoining through Inland, says Copeland, the manufacturers announced an alliance, and they are now marketing a PACS/RIS product together.

The PACS system Inland chose uses a just-in-time or streaming technique to deliver images on demand. The method enables PCs to be linked and for the storage to be handled on “attached storage devices that cost about $25,000 each,” Copeland says, “and that includes the whole computer and drive.” Each such unit can store more than a terabyte of data. The system, says Copeland, does away with prefetching and routing because all the images, old and new, are online all the time.

Once its PACS was capable of distributing images, Inland made images available to referring clinicians inside and outside the hospitals it serves. It did that for a reason.? “We did the external first because that’s where the demand was. Our referrers wanted images. We had to do it first,” says Copeland. “The enhanced work flow in this outreach stage has been hugely successful. Every physician in town is talking about it.” The external distribution was also tackled first because images could be sent to any clinician who had a PC and a Web connection.

Now Inland is working on internal distribution. “All our sites are on a WAN (wide area network),” Copeland says. “We’ve got 100 MB Ethernet connectivity between all imaging centers, although the product is compatible at lower bandwidths and is running effectively in many referring physician offices at much slower speeds.” Inland is now testing high-end workstations designed by its PACS vendor. Internally, it is just now going filmless for CT scans, with other modalities to follow. “It will take a couple of years for this to really come to life,” says Copeland.

Eventually, Inland hopes to lease PACS capacity to its hospitals and even to other radiology groups in the area. In fact, in limited measure it is already marketing PACS capacity. “What makes this installation unique,” says Keyes, “is that eventually we plan a community-wide archive that will be HIPAA (Health Insurance Portability and Accountability Act) compliant but that will allow competing hospitals to use the same archive. It would not matter where a patient comes into the ER, they would have access to all imaging at any time. Likewise, we would have access to all hospital imaging, even though it might not be from a hospital we serve.”

Inland has not begun to recoup the cost of its PACS, which it is paying for through an annual fee-per-study arrangement with its vendor. Keyes thinks the real recouping of the investment will come somewhat from film savings and work-flow efficiency but even more by cutting down on the need to hire more radiologists. “We’re in a radiologist crunch nationwide, and we must be able to do more with less,” Keyes says. “A significant way to make a pro forma breakeven work is just to hire one less radiologist. That will do it in 3 to 4 years. This is extremely important for the financial stability of our group. The motivation is not some neat marketing trick: our livelihood depends on it.”

Beyond the financial benefits of the PACS, Keyes has become a convert-an advocate really-to reading electronically. “Viewing a study on a workstation is not just a faster way of looking at images, it’s a new and better way,” Keyes says. “I’ve been 100% more productive at times and 50% more productive consistently. I have found tumors that I could not see on the film. I would go back and look at the film, and the tumors were not photographed. And I have never had a mistake that was based on the workstation being at fault. It’s simply better medicine.”

Radiology Alliance

Nashville, Tenn, is famous for being the home of country music. Maybe that is why it is surprising to discover that Nashville is home to about 1.2 million people. Country it is not.

Joseph A. Serio is CEO of Radiology Alliance, Nashville, Tenn.

Radiology Alliance (RA) is a major supplier of outpatient and inpatient radiology in the city. It has 57 radiologists on staff, who read at three major hospitals with more than 2,000 licensed beds between them. RA also reads at seven outpatient diagnostic facilities. It provides teleradiology services to a small, rural hospital about 40 miles from Nashville. RA owns only one facility, a small ultrasound outpatient site for women. Joseph A. Serio is CEO of RA. “Everything is hospital-based or at locations where we are providing professional services only,” he says. As of now, none of RA’s clients has a PACS of its own.

Radiology Alliance is so named because it is the result of a merger this year between three mid-sized radiology groups that have made the combined entity one of the biggest in Nashville. It is the merger as much as anything that is leading the group to install a PACS at this time, says Serio.

The motive can be expressed in one word: integration. With doctors from its three former practices still assigned to staffing duties at the hospitals they read for prior to the merger, it is difficult to move them around to gain efficiency, says Serio. This is counterproductive, because greater efficiency is a major goal of the merger. But with a PACS, the new group will be able to send images to radiologists who might be less busy. Specialists at the various sites will also be able to cross-read. Of course, notes Serio, in order to cross-? read, all of the RA radiologists will have to be credentialed at all of the hospitals. This credentialing is an objective, says Serio, that? RA is rapidly trying to get completed. It is just one of hundreds of modifications and changes that result from a merger.

Like Inland, RA wanted to minimize adding staff. “The biggest cost in a radiology practice is the cost of the radiologists,” says Serio. “The PACS allows us to integrate the doctors and enhance productivity, which allows us to read more images with fewer radiologists. It also enhances quality because I can move the images to the most qualified radiologist.”

RA is just now installing its PACS. It chose a vendor offering a Web-based PACS software package. That left RA free to select its own hardware. “What usually happens,” says Serio, “is that a company will come in and sell you both the software and the hardware. But that hardware had to be tested (by the vendor), and that means you are getting second- and third-generation hardware. You are not getting state-of-the-art; it’s an older piece of equipment. You’re much more current and state-of-the-art if you can buy your own monitors and hardware.”

Serio estimates the hardware costs of RA’s PACS to be about $500,000, including maintenance costs to house the archive at RA’s headquarters. The cost of leasing the software is about $180,000 annually, Serio adds. The alliance has also hired a PACS manager, and Serio has himself taken telecommunications classes to enhance his management ability.

Lease-Back Strategy

Integration is one leg-probably the major leg-of the RA PACS strategy, but there is a second motive. The alliance hopes to at least break even on the cost of its system by leasing the archive back to hospitals and outpatient centers. “We want to set up a secondary line of business in addition to radiology, and that is to become an ASP for the archive,” Serio says. That step is now under way, but it contains what Serio calls a catch-22: the hospitals and outpatient centers do not want to commit to leasing PACS capacity and putting in hardware until they can see the system in operation, see if it works. “And,” says Serio, “we have to turnkey it to the point where their monthly cost is very close to or less than what they are currently paying for film and storage and maintenance.”

Luckily for RA, there is one client willing to gamble with them on the PACS installation now. This is a 26-member oncology practice that RA serves and that is moving into a brand-new center. The center will house the Southeast’s first combination CT/PET (positron emission tomography) scanner, says Serio. RA will also handle the PET center’s billing. If this facility does not bring RA to the break-even point on its PACS, then the first marketing thrust will be to hook up the outpatient clinics. Serio estimates that RA will need contracts to archive 30,000 imaging studies annually to break even on the PACS installation. Just three or four of the outpatient sites signing up could accomplish this goal, he says. He is optimistic. The oncology site will serve as the model to demonstrate the PACS to potential clients.

For now, Radiology Alliance is taking small steps on its overall PACS venture, Serio says. “We are doing the install on the equipment for the archive right now, and going live with the oncology group. Then we will work on the outpatient sites, and then we will try to talk the hospitals into at least going filmless with CT and MR-if we can just get them off film.”

Serio says the three big Nashville hospitals RA serves are interested in the PACS, and even are talking with RA’s PACS vendor about integrating their HIS and RIS systems with a PACS. The problem for the hospitals is not desire, it is money, says Serio. “Hospitals have rising costs and decreasing revenues. It is a very tough business. The hospitals purchase a new technology, and as soon as it comes out their doctors are buying the same technology and pulling it back into their own clinical practices. Radiology has the same issue because of specialists providing imaging in their clinics.” That is one reason RA hopes its PACS installation will become a profit center, to offset decreases in business due to nonradiologists installing modalities. If that happens, then RA’s PACS will have performed two big functions beyond its imaging utility: supporting itself and integrating the merged practice. If it succeeds, the PACS will have yet another advantage, concludes Serio. It will cement RA’s relationships with its clients, bind them closer. RA has worked out the business and medical logic and committed itself to its PACS. Will the venture work out as planned? Serio says that remains to be seen. “We are,” he says, “right on the edge of the diving board.”

Modesto Radiology Imaging

Marek Razycki, MD, radiologist and director of information technology, Modesto Radiology Imaging, Modesto, Calif.

Like Spokane, Modesto, Calif, is a city steeped in big agriculture. Modesto Radiology Imaging (MRAD) is similar to Inland Imaging in Spokane in that it is the dominant radiology practice in its central California city. “We’re nearly the only game in town,” says Marek Rozycki, MD, a radiologist who is also the practice’s director of information technology. How does a radiologist become IT director? “I used to be a mechanical engineer before I went to medical school, so at least I know the right questions to ask,” Rozycki explains.

MRAD is a partnership made up of 19 radiologists. It reads for four hospitals totaling about 700 beds and two outpatient clinics in Modesto. “Most of those we see as outpatients are across the board-neuro work, injections, diskograms, and a lot of musculoskeletal MRI. Most of the intervention that we do is neurosurgical,” Rozycki says.

MRAD also reads at its own outpatient facility, which is new. The practice decided to install its own PACS at about the same time it made an even more sweeping decision-it would build its own outpatient imaging center from the ground up. “We could see that some of the MRIs and CTs at the hospitals weren’t giving the best service,” Rozycki says. “There were problems with access, the logistics of registration, patients were getting bumped for ER. We just saw a need for another outpatient center.” The timing on the PACS fit in well with construction. “Our walls were down, so we tied cable into every single room-and into multiple walls in every single room,” Rozycki says.

The two-story center features the conventional array of modalities, MRI, CT, nuclear medicine, ultrasound, and mammography. All of the modalities are digital except for mammography. “The future is filmless,” Rozycki says. He studied about 10 PACS vendors, he says, before choosing a custom installer that would provide both software and hardware. “Their operating system was so user-friendly,”? Rozycki says. “They use off-the-shelf standard hardware. There is not a lot of proprietary hardware involved, which gives us flexibility in maintenance.”

The new imaging center was opened in phases. “We wanted to get the high-ticket items, MR and CT, up and running as fast as we could,” says Rozycki. “Then we installed the PACS, and that took a month. It was a very smooth installation.” The PACS cost about $700,000, and the MRAD partners committed to notes and personal guarantees to finance the implementation. The new center has been open more than a year, and it is already profitable, says Rozycki.

More Work Ahead

MRAD is not finished with its PACS. According to Douglas Werner, MRAD’s manager of information services, a single server and two processors (one of them for backup) run the system out of the newly built center. There are five radiologist’s workstations in the center. MRAD’s center is connected to its outpatient clients with DSL and T1 lines. “As we speak, the two outpatient sites are sending us images in MRI and ultrasound, and within weeks we will be receiving images from the four hospitals. The hospitals will go through the Internet using a VPN (virtual private network) for encryption,” says Werner.

MRAD is still working on several elements of its PACS. It is putting the finishing touches on a Web site that will allow electronic images to be sent to PCs in the offices (or at the homes) of referring clinicians. The hospitals are paying for the hardware necessary to attach their modalities into the MRAD PACS. “They just signed the purchase orders,” Rozycki says. MRAD is not attempting to market its PACS to the hospitals. “We’re just integrating with their equipment-and for now it will be as an on-call system only basically,” Rozycki adds. “If and when they go to PACS (which none of the hospitals now have), then we’ll do it all, but right now it’s just the on-call.”

Werner says MRAD is still struggling to integrate its PACS with a prior RIS. A lesson from this, he says, is that PACS/RIS integration should be planned from the beginning. “At first, we just thought about images,” he explains. “Our RIS is older, and it is not completely HL-7 compliant. We find ourselves in a situation in which modifications made to a patient record in the RIS do not flow into our PACS, and we end up having to modify both systems independently of each other.”

Like the other practices profiled for this story, MRAD hopes its PACS will pay for itself through film savings and greater radiologist efficiency and flexibility. But that is expected only over the long term. Says Chris Capper, MRAD’s marketing/professional relations manager, “We expect our investment to pay off, but not for 5 or 10 years. This is a long-term investment-and it is also a long-term educational experience. You have got to educate your providers, the people who bring you business. A lot of people are used to looking at film, now they are looking at computers. It is a change, so you have got to come into it expecting it to take some time.”

Rozycki has made the switch to the computer screen, and he is glad. “You can window and level and enhance, take a less than optimal image and make it better-the scrolling-the stack mode sometimes helps with vascular structures. Everybody that has used this doesn’t want to go back to film; that says it all.”

Rozycki advises moving slowly in the PACS decision-making process, and he thinks it is wise to hire an outside consultant, even if that consultant only confirms a previous decision. That is what happened after Rozycki had recommended MRAD’s current vendor. “The consultant confirmed what we were going to do,” Rozycki says. “It did not change what we were going to do-it just confirmed to my partners…the decision.”

George Wiley is a contributing writer for Decisions in Axis Imaging News.