Why Are Hospitals Squandering Their Budgets on High-Priced PACS?

Posted by Les Trachtman on Jan 3, 2017 9:00:00 AM

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Hospital budgets today are under siege. Reimbursement cuts and governmental subsidies, often in the millions of dollars, are tightening the purses of hospital administrators across the country — an even tougher pill to swallow as the cost of care and medical professionals' salaries continue to grow.

Despite these constrained budgets, we've found that most hospitals still purchase and maintain expensive on-site, name-brand, picture archiving and communications systems (PACS). Contrary to their budgetary realities, hospital staff aren't seeking out perfectly viable alternatives and considering new opportunities to save substantial amounts of expense on their PACS medical imaging solutions.

So why are hospitals ignoring these expense-saving PACS options, and how can they break out of this line of thinking?

Why Don't Hospitals Want to Switch PACS?

Hospitals that acquire an onsite PACS usually pay substantial upfront and large annual maintenance fees to their PACS vendor. They compound this direct expenditure by having to staff their IT departments to maintain their own expensive on-site data storage and computing infrastructure.

The old IT adage, "nobody ever got fired for recommending IBM" while maybe still true, is a very expensive proposition that hospitals can no longer afford.

Health care executives must begin to realize that they are likely paying a sizable premium to have the large company badge on equipment located within their own four walls, rather than move to a more cost-effective cloud vendor or hybrid (part cloud/ part onsite) system.

Download the Purview GuideThe clear trend in PACS medical imaging today is to move to cloud-based storage, with a a pay-as-you-go model. This model obviates the large capital investment required for on-site alternatives, but perhaps more importantly offloads other personnel and infrastructure costs, combined into a significantly lower total cost of ownership.

Beyond the financial costs, the hospital can also avoid the the risk of technological obsolescence as well as the risk of IT infrastructure failure from ransomware attacks or equipment wear-out. In addition, cloud computing provides a number of accompanying benefits, including accessibility from anywhere at any time, enhanced ability to integrate your PACS with electronic health records (EHR), and easier distribution, sharing and viewing of images.

However, there are likely at least two reasons why many hospitals don't feel inclined to move to the cloud.

First, some hospitals are suspicious of cloud technologies and reluctant to trust their private health information to an external server. Second, many hospital IT staff are risk-averse, wary of potential repercussions for their decisions. By relying on an onsite name-brand company, they hope to avoid liability for anything that goes wrong with the PACS.

The Wisdom of Switching

Hospital IT staff who are reluctant to upgrade their PACS for the above reasons, or for any reason at all, need to think about the potential return on investment that an upgrade would provide. They should study how much it actually costs them to store and maintain a local PACS — and compare that cost against the incremental cost of storing that same set of data in the cloud.

Staff should also consider whether their preference for name-brand vendors is truly rational. Just about every major cloud vendor, including Google, Amazon and Microsoft, use non-name-brand custom built hardware and storage as a more than adequate substitute for the large-company badged equipment that might have cost them twice as much or more. They stand behind their service with service-level agreements providing assurance of their up time and responsiveness enabling your IT department to get more comfortable with the risk. And, if these big named vendors handling many thousands of times more data than even the largest hospital has no issue with this brand of equipment, why should your IT staff?

The other major area of concern for IT is the security of their data. It turns out the security practices of cloud vendors are often times significantly more robust than those of any hospital IT department. Access is secure. Data backup and disaster planning more complete. And facilities more impenetrable.

What's Familiar Is Going to Cost You

If hospital administrators continue to rely on what they know and are familiar with, they will end up spending more money than they need to, worsening their budget issues. To reduce costs and potentially strengthen their security and compliance, they need to remove their blinders and remain open to new technologies.

And in many cases, moving to a PACS in the cloud would significantly increase their flexibility, expand their feature set and cut costs.

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Topics: cloud pacs, PACS, cloud-based PACS

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