Barton F. Branstetter MD, Abstract Co-Author: Nothing to Disclose

Matthew B Morgan MD, Presenter: Nothing to Disclose

Duane Falk, Abstract Co-Author: Nothing to Disclose

Paul Joseph Chang MD, Abstract Co-Author: Nothing to Disclose

When picture archiving and communicaiton systems (PACS) were first introduced, early adoptors expected a quick return on investment (ROI) based on reduction in film costs. Later analyses of PACS ROI suggested that the PACS might never pay for itself, but would be justified by increased efficiency. Until now, all ROI analyses that have documented a break-even point have relied on “soft” cost savings such as radiologist and technologist efficiency. The purpose of this study is to report the PACS ROI analysis for a large university hospital system, using only documented cost savings.

Our health care system consists of 20 hospitals: a large academic hospital and 19 community and specialty hosptials. In April 1996, we introduced our first PACS system. In July 2000, we began a transition to a second-generation, enterprise-distributed PACS. This transition was completed in April 2002. Each year following the initial capital investment in the second-generation PACS system, we analyzed out cost savings to determine when we had achieved a return on our PACS investment.

Our second-generation PACS required a capital investment of $13.5 million, and operating expenses of $11.2 million/yr for the entire hospital system. Our film costs per case dropped 72% at the main university hospital (360,000 studies/yr), and 46% across the system (1.2 million studies/yr) with the advent of PACS. These cost savings were progressively realized only as hospitals successfully eliminated film and film distribution requirements. We achieved a break-even point for the capital investment after 3.5 years. Sensitivity analysis shows that this break-even point is highly dependent on a large central hospital with high film distribution costs. The implementation of enterprise distribution is also critical to the cost savings.

Despite recent concerns about the cost justification of PACS systems, large centers can achieve a rapid return on investment. The economics at smaller hospitals may be substantially different, and further work should be performed to establish whether these smaller centers can justify PACS on financial considerations alone.

P.J.C.,B.F.B.,M.B.M.: Stentor, Inc; NIH; NLM; DARPA; US Air Force -- laboratory support

Branstetter, B, Morgan, M, Falk, D, Chang, P, Cost Justification for PACS: Realized Return on Investment in 3.5 Years.  Radiological Society of North America 2004 Scientific Assembly and Annual Meeting, November 28 - December 3, 2004 ,Chicago IL. http://archive.rsna.org/2004/4407071.html