Five Tips for Pricing a PAC System

Pricing a PAC System can be complicated, so we’ve compiled a list with five key tips to use when comparing the options. These tips will help you understand, compare, and contrast bids and hopefully lead to the best fit for your practice.

1. Standardize the pricing format
It’s a good idea to construct a spreadsheet that shows each vendor’s pricing data on a single worksheet for a side-by-side comparison. In developing the standardized pricing form, create separate sections for hardware, software, and options and request pricing to the line-item level. Fill the sheet in as you receive quotes so you can see how they stack-up side by side.

2. Standardize features comparison
As with the pricing, you should create a spreadsheet to list each of the features from the different vendors. With making a check-box style of worksheet it will make it easier to see what you are getting for your money. Taking the time to create this will show you who has the features you need and who is coming up short.

3. Analyze per-unit costs
Another way to compare your options is to use a per-unit cost basis. Take the total cost of each system and then divide that by an estimated number of studies for a fixed period of time. Looking at the entire life span to determine a per study cost over the course of two or three years can help put the costs in perspective.

4. Determine how to weight the pricing model
As covered above, the way you classify the system can have real tax and financial ramifications. Going with a fixed cost system where you own the hardware can allow for write offs while fee-per-study vendors will only allow you to classify it as a monthly expense. Make sure the accounting method you are going to use is factored into the long- term price.

5. Compare services and training
Research has found that one of the biggest sources of frustration after a PACS purchase is the lack of training and education about the system. The support and training you receive is critical to the launch and continued success of your PACS. This is relevant both at the initial launch and with ongoing support. Both of those line items should be addressed and weighted as you make a decision. Items such as the level of onsite project management, length of time the project manager will be engaged, the number of clients he/she is supporting simultaneously, and the budgeted number of project management hours will directly affect how much you get from your PAC System.

Two Tips when Budgeting for a PAC System

Expense Classification Considerations
One of the first considerations to identify in the purchasing process is how you plan on classifying the expense. The two primary ways a practice can classify their investment in a PAC System are as a capital cost or as an operational cost. When using the capital cost method, the PACS is purchased outright with the cost being amortized over time and treated as a write off. This method is ideal if you have a set amount of cash on-hand and want to lower your tax burden over time. When a PAC System is classified as an operational expense, the cost of the system will be paid out of monthly expenses. This could be due to the pricing structure of the PACS vendor (fee per study method) or an internal accounting method.

Each of these methods has advantages and disadvantages and it’s best to talk to your accountant to see which method is the best fit for your practice. Knowing which method you plan to use will help guide the budgeting process and help you review estimates.

Tax Considerations
When considering the cost of your new PAC System for your practice, remember the significant changes that have recently been made to Section 179 of the IRS Tax Code. Essentially, Section 179 now allows businesses to deduct the cost of all the capital equipment and other assets purchased for business use in the same year the equipment is purchased.

So, instead of having your practice go through the process of depreciating the cost of your major equipment investment over a number of years, you can write off the entire purchase price in the year you purchase and rollout your new PAC System. The total amount you invest, up to $500,000 per year for business expenses, can be deducted straight away. In addition,”50% bonus” depreciation in the tax code allows businesses to take a deduction for equipment purchased beyond the $500,000, with a maximum combined deduction of $2M for a tax year.

How Much Does a PAC System Cost?

How much does a PAC System cost? It’s a simple question that often requires a complicated answer. A simple system for a small practice can cost around $5,000 while a complex system for a large medical group can easily top $100,000. PAC Systems, even from the same vendor, are rarely the same. Even standardized, web-based systems require a level of customization so it’s almost impossible to compare apples-to-apples.

A typical PACS computer system that you purchase (or lease) will, at the very minimum, consist of: computer hardware, system software, and some form of storage. The five basic functions it should be able to perform are: image acquisition, network communication, image display, image storage/retrieval, and a patient data interface. These different functions are what vendors will use to develop your price.

The actual cost of your system will vary widely depending on a few key factors.

1. The size of your practice
PAC Systems come in all shapes and sizes and can be designed to fit the needs of a wide range of practices. More than anything, the size of your practice will shape the cost of your PAC System. A large, multi-physician group can expect to pay more for their system due to the sheer volume of data, workstations and users the system will require. A bargain price may mean you are getting a system that is stretched to meet your needs. Conversely, spending a lot of money does not mean you are getting a better system. You could be purchasing a much more complicated and cumbersome system than what you practice truly needs. Ask your vendors what size practice their PACS is designed for and make sure it’s a good fit for you.

2. How you plan to use the system
Some systems are limited in their scope while others are 100% customizable and can do whatever you want. Once you receive your quotes you’ll need to think through what you really need from the system. These could be:

  • Customized reporting
  • Off-site access
  • Large number of users
  • Patient access
  • A specific purchasing option
  • DICOM imaging
  • Off-site storage

Obviously, the system you choose will need to meet that requirement but considering the features this way can help to prevent spending resources on unnecessary features that will rarely be used.

3. Vendor Considerations
Each vendor you receive a quote from will be different and will have specific advantages and disadvantages. Their experience, level of quality and availability will all play into the price you receive. There will be variations in the way they charge, implement and maintain the system. Your practice may require a particular specification that only one or two vendors provide.

Planning for a PACS Implementation – Three More Tips

Here are three additional tips to keep in mind when planning your PACS Implementation. Keep this in-mind are you are researching which PAC System is right for you and get in-front of any issues that might occur during implementation. 

System Training
If possible, opt for more scheduled systems training upfront vs. when issues arise. When negotiating your PAC System with your chosen vendor, be sure to have your contract include formal and comprehensive training on the system for you and the designated users on your staff not only during its rollout, but also, again – after several weeks of actually using the system. If you get this component right the first time, it will ensure smooth, patient-centric workflow at your practice, enable you to fully optimize all the PAC System has to offer, and avoid unnecessary stress or frustration. Securing formal, organized training and addressing and answering staff questions and concerns during that organized training process will ensure user success. As with any new technology, the more you learn and understand, the better you will be at utilizing all it has to offer. Taking the time at the onset to learn the new technology will save you time and money in the long run.

In addition, after the system has been implemented for a few months, the second phase of the scheduled training should take place. This will allow for further questions to be addressed that could not have possibly come up before a user actually started to work on the PACS.

Storage Considerations
It’s important to research and select the options for your back-up and storage needs while evaluating the PAC Systems. These two elements should work hand-in-hand so plan on implementing both during the conversion. You will need an effective back-up system for your files and there is no better time to implement this component of your PACS than when you first initially implement all its hardware and software. At the time of purchase, be sure you have the resources necessary to fully implement your backup network. Research has shown that waiting to select and implement a back-up and storage system long after your PAC System has been launched will take more time, energy, and frustration than including that very necessary component as part of the whole package upfront.

Require Your PACS Administrator to Create a Test Environment
When you are implementing a brand new PAC System for your practice, you have to integrate your current workflow processes into this new system. By having the implementation done with segmented “test scripts” along the way (that can then be updated and reused for subsequent upgrades), there is less likelihood issues will arise during the actual full-scale rollout. Instead of waiting for the first day to start to implement the system, having everything in order first and ensuring all your current programs and equipment are compatible will reduce the amount of time for the rollout. Testing and documenting each segment of the process will save you time both now and in the future when you may want to upgrade or add more solutions to your system.

Tips for a Successful PACS Implementation

The time it takes to fully implement and launch a PAC System depends upon several key variables and differs from client to client. Nonetheless, there are specific integral elements regarding the PACS implementation process that, when identified and included at the onset, will help to ensure a successful and smooth implementation of your new PAC System.

A Great Install Team
To reduce the stress associated with a system install, be sure your vendor provides a great install team. It also helps to have members of your staff who are knowledgeable about IT be a part of that team. Let your vendor know that the installation process is critical to your selection process. This will help to ensure they provide the best technical support team to meet your needs.

Look at Everything In Your Practice Consider all the locations, patient rooms, offices, and even offsite locations where you are planning (or could possibly) view images or patient files. By doing so ahead of time, you’ll be able to budget for necessary upgrades or replacement of all the computers, memory, and monitors in your practice. 

Collaboration is Key
Launching a PAC System involves a financial investment, but it also requires an investment of time as well. It’s important for the vendors bidding on the system to assess your needs and the particular set- up requirements before implementation begins. This can take time but it’s critical that they get as good of an understanding about your practice as possible.

It’s important to include employees who will be using the system from the onset so everyone involved will take ownership, have confidence in utilizing it, and will be able to address and express any concerns or questions along the way. If this is done before you purchase your PACS, the installation process will be much smoother.

PAC System Storage Options – Security and Timing Considerations

One of the largest components to consider regarding your PAC System is how to store all your patient digital images and related data. What are the three components of an ideal storage solution? Capacity. Reliability. Security. When choosing which storage option is best for your needs, keep these three components in mind.

Security Considerations
Whichever solution you choose to handle your storage needs, you want to be certain that all the files, images, and information are protected at every step in the process. The security measures provided should meet or exceed all standard healthcare requirements, including the requirements of the Health Insurance Portability and Accountability Act (HIPAA). You also want to be sure that the transmitted data is encrypted using Secure Socket Layer (SSL) and that all web connections are encrypted using https: protocols.

Length of Time to Store Images and Patient Files
As you know, you must keep a complete, contemporaneous, and legible medical record of each adult patient over the age of 21 for no less than 7 years from the anniversary date of the last treatment provided. If a patient is under 18 when last treated, you need to keep the record until he/she reaches 21 or for seven years after the last date of treatment (whichever is longer). For medical and legal reasons, you cannot destroy medical records that relate to any civil, criminal, or administrative proceedings if you know the proceeding has not yet been resolved formally; thus, for legal reasons, it’s safest to keep them indefinitely. If you have the right storage solution, you’ll have plenty of storage space to keep all your patient files in a consolidated, secure, and easy-to-access format.

PAC System Storage Options – Virtual Storage

One of the largest components to consider regarding your PAC System is how to store all your patient digital images and related data. What are the three components of an ideal storage solution? Capacity. Reliability. Security. When choosing which storage option is best for your needs, keep these three components in mind.

Virtual Storage
The virtual storing of files internally is called thin or dynamic provisioning. A virtual storage solution can eliminate the cumbersome and complex back-end storage route by offering a highly efficient way to store images and data in a “virtual” environment.

Dynamic provisioning does not require projected growth of a volume to be fully allocated, but rather – only the capacity actually being used. As a result, a virtual pool of shared capacity can be larger than the actual amount of physical storage available. Thin provisioning reduces wasted allocated capacity and improves performance. The right virtual storage should allow you to do more with less complexity, risk, and costs.

Electing to utilize virtual storage technologies for your PAC System storage needs can save you a considerable amount of money on both capital and operating expenditures. Using virtualization technology enables you to consolidate multi-vendor storage resources into one single pool of storage.

Storage virtualization is performed in several ways, including host- based, controller-based, and appliance-based. Vendors that offer storage controller-based virtualization typically separate the storage controller from the disk storage system. With virtualization storage embedded in the controller, the scalability is extended significantly.

PAC System Storage Options – Cloud Based Storage

One of the largest components to consider regarding your PAC System is how to store all your patient digital images and related data. What are the three components of an ideal storage solution? Capacity. Reliability. Security. When choosing which storage option is best for your needs, keep these three components in mind.

Cloud Based Storage
A cloud based storage solution utilizes an off-site, on-line method of housing your data. The remote storage and image viewing option enables users to store and review patient files via the Internet. Typically, a cloud-based option is provided by your PAC System vendor, so the software and storage are designed to work together.

Incorporating cloud-based storage into your PACS has several benefits. It can remove upfront mitigated maintenance costs, improve the collaboration process, enable upgrades with minimal downtime, and provide enhanced security. Further, cloud-based storage eliminates the need for courier services to deliver the media copies to referring physicians and the constant worry of file corruption.

Cloud based storage is an easy, efficient, and ideal way to make back-up copies of your patients’ EHR, or electronic health records. These patient files are automatically streamed into the cloud as they are being created. If you choose to have this done on-line via the Internet, you must be sure the images are first encrypted for patient privacy before they are automatically transmitted to their back-up file location. Of course, the accessibility and ease of this option is dependent upon both the upload bandwidth and the volume of images. Some back-up systems also support images being stored locally and remotely on various off-line media.

Most cloud based storage plans adhere to HIPAA standards and can be used, as part of your disaster recovery plan, to back-up for all your patients’ files and medical images.

PAC System Storage Options – Local Storage

One of the largest components to consider regarding your PAC System is how to store all your patient digital images and related data. What are the three components of an ideal storage solution? Capacity. Reliability. Security. When choosing which storage option is best for your needs, keep these three components in mind.

Local Storage
Local storage refers to an array of hard drives that provide quick access to your patient files and enables you to store all your images onsite via your local PACS. In this non-virtualized, onsite storage option, your server connects directly to your storage component.

Traditionally, digital medical images and all related data have been stored locally on a PAC System’s server for quick and easy retrieval. Opting for this client-based server storage solution (in-house and locally) requires the implementation, at your physical location, of a PACS server and all the related hardware and software. While this is convenient and cheaper than any other source of storage, two factors must be considered before opting for this method exclusively:

1 How many files, images, and storage can your PAC System’s server hold and manage; (what is its raw capacity for storage)

2 In the event of an unpredictable event (flooding, short circuits, vandalism, fire) that may cause a permanent breakdown of your PAC System, what plan-of-action are you going to implement to retrieve and recover all those files and images that were stored only in your local PAC System’s server?

You can choose to back-up your files locally on various off-line media, including tapes, optical media, DVDs, hard drives, or other removable media separate from your PACS hardware. Systems can allow for hard drives to be attached to the PAC System’s server via Direct-attached Storage (DAS), Network-attached Storage (NAS), or a Storage Area Network (SAN). If you choose to attach this additional storage option, the drives should be configured as Redundant Array of Independent Disks (RAID.) A RAID configuration will provide both faster disk access and protection against the failure of disks. Storing files on tape and other off-line media then requires the back-up files to be physically transferred to a designated off-site storage location.

One of the downsides to utilizing this environment for your storage is that a specific server expects complete ownership of the physical device, with an entire disc drive tied to that one single server. Since this traditional storage method uses a centralized server to manage a disk array, it can create dependency and multiple points of failure within the storage system.

Onsite Storage with an Application Service Provider (ASP)
An ASP option involves a vendor installing and managing (for a per- procedure fee) all your storage archives onsite. This option enables you to have onsite image archives without the expense (initially) of having to also invest in archive hardware. By keeping everything onsite, you are not relinquishing control of your images to an offsite location. By acquiring your own onsite archive, your “ownership” costs are spread out over a longer period of time vs. having to pay for the service all at once. In addition, when choosing this option, try negotiating with the ASP vendor to have them take responsibility for implementing, maintaining, and upgrading the onsite archive.