2014 Tax Considerations When Purchasing a PACS

Purchasing a PACS system is a big investment. You want to make sure that you purchase a system that will work with your practice for a long time to come. One of the decisions you have to make is whether you want to purchase the PACS outright, lease it, or chose one of many payment options, such as the fee per study option. How you choose to pay for your PACS will impact your yearly taxes.

There are two basic tax classifications for the purchase of a PACS: capital asset or operational expense. If you classify your PACS as a capital asset, then 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 total cost over time. When a PACS is classified as an operational expense, the cost of the system will be paid out of monthly expenses. Any time you purchase cloud-based services, you will classify that as an operational expense.

Capital Asset

If you purchase your PACS outright, you can deduct the cost under Section 179 of the IRS Tax Code. Section 179 allows businesses to deduct the total cost of equipment and software purchased for business use at once, rather than depreciating the cost of the purchase over several years. This essentially allows customers to accelerate depreciation of the equipment and the related tax savings. In past years, Section 179 was a major buying incentive for consumers. Last year, customers who purchased $2 million or less of equipment or software could deduct up to $500,000 on their taxes. The benefit for purchases over $2 million decreased on a dollar to dollar deduction scale. In addition, a depreciation bonus allowed for the immediate depreciation of 50% of the cost of new equipment beyond the $500,000 limit.

However, in 2014, the deduction cap was lowered from $500,000 to $25,000 for purchasing $200,000 or less, and the bonus depreciation expired. This means that, depending on the cost of your PACS, there may not be as high of a tax incentive to buy outright.

Operational Expense

When customers lease equipment or software, or pay for software as a service (SaaS) the total amount of yearly expenses can be deducted as an operational expense. The cloud-based options fall under this classification. Although it may cost you more over the long term, leasing or paying for software as a service may have an increased tax benefit in 2014 and save you more money in the short term. And, since SaaS doesn’t depreciate, you can recognize these tax deductions every year.


Each of these options has advantages and disadvantages, and it’s best to talk to your accountant to see which option is the best fit for your practice. Knowing which option will save you more in taxes may impact your budget and purchasing decisions. 

Using Multiple Data Sources with AccessPoint

AccessPoint provides multiple paths for different data sources to be imported and viewed. When you log in to AccessPoint, the system automatically populates studies that are transferred from the equipment to the database through the DICOM Transfer Protocol. However, you may want to access studies from another data source, such as a CD, USB drive, another network, or from another PACS. The following three data source types may be configured in AccessPoint:


A DICOM path allows you to configure a DICOM directory from removable media, such as a CD, USB drive, or downloaded folder. This data source is commonly used when images are transferred by a referring physician.

Configure a DICOM Path

  1. Click the Tools drop-down menu from the main toolbar.
  2. Click Data Source Manager.
  3. Click the New button to open the Data Source Type dialog box.
  4. Select the DICOM Path radial button to open the DICOM Path Setting dialog box.
  5. Type the display name and path.
  6. Click OK.

Local Network Database

The Local Network Database path allows you to configure data saved on another server. For example, your PACS may be configured to import data from your main office. If you want to access data from a remote office that is set up on its own server, you can use the Local Network Database path to transport that data and keep it in a separate tab from the main office data.

Configure a Local Network Database

  1. Click the Tools drop-down menu from the main toolbar.
  2. Click Data Source Manager.
  3. Click the New button to open the Data Source Type dialog box.
  4. Select the Local Network Database radial button to open the Network Database dialog box.
  5. Type the Display Name.
  6. Select a network from the Network Computer drop-down.
  7. Select a database from the Database drop-down.
  8. Click OK.

DICOM QueryRetrieve

The DICOM QueryRetrieve path allows you to import data from another PACS. This option might be used if a multi-site practice wants to access data from an old PACS and use that data to run AccessPoint reports. This option involves two-way configuration and requires network information to set up. This configuration is usually completed by a network administrator.

Configure a DICOM QueryRetrieve

  1. Click the Tools drop-down menu from the main toolbar.
  2. Click Data Source Manager.
  3. Click the New button to open the Data Source Type dialog box.
  4. Select the DICOM QueryRetrieve radial button to open the Dicom QueryRetrieve Settings dialog box.
  5. Type the input for the following fields:

a)     Display Name
b)     Server Name
c)     Server AE Title
d)     IP Address
e)     Port Number

  1. Click OK.

Benefits of Multiple Paths

A tab will open for each new data source that is configured. Once a data source has been configured, the new tab will appear each time you log in. The tab view separates each study by its data source, so the user always knows which data source the study came from. The system recognizes which data source each study belongs to, and it configures the reporting finalized action based on the data source. For example, if a physician signs a report from a DICOM DIR, the signed report is automatically saved back to the DICOM DIR folder. Contact Technical Support if you have more questions about using multiple data sources.


PAC Systems and Disaster Recovery

Patient care does not stop when a disaster affects data availability. Picture archiving and communication systems (PACS) and electronic health records (EHRs) are a vital component of healthcare informatics. Readily available image data and health records are critical to a facility’s operation. Their protection is also a regulated requirement. This is even more important as more hospitals and clinics share data. 

Traditionally, disaster recovery solutions were a tedious and expensive undertaking. One option was manually backing up information to tapes and sending them offsite. This resulted in a lot of work effort and the potential for longer downtimes. Another traditional option has been to replicate data at an offsite data center. Although this method provides for a more automated process and quicker recovery, it requires a significant investment. Storage equipment must be purchased in large volumes to keep up with the growing PACS and EHR records, and equipment lifecycles must be maintained. In addition, space at a remote data center can be expensive. There is also the concern that the remote data center may be affected by the same disaster. 

Secure cloud disaster recovery and archiving solutions, which are now available with many PACS and EHR systems, make disaster recovery an easier solution for administrators. Information is backed up with every keystroke, so you can ensure that your data is available without manually maintaining your back-up architecture. Cloud disaster recovery solutions have a number of benefits over the traditional model. 

Low Cost of Ownership: Initial costs of cloud disaster recovery tend to be lower because there is no need to make a large investment on equipment, data center space, and expanding tier 1 storage. Instead, cloud services allow you to pay-as-you-go. Cloud storage is easily scalable, so it grows with your organization. In addition, it frees up your organization’s IT staff for other tasks because service providers often offer 24-hour service and support. 

Automated DR: Virtualization provides automated recovery, reducing the risk of errors in a manual recovery process. Automating disaster recovery through virtualization increases standardization, which results in more reliable and repeatable recovery procedures. It is a more dependable solution than a traditional DR model because the entire hosted cloud, including servers, software, network configuration, and security, are replicated to an offsite disaster recovery cloud.

Rapid Recovery: Another cloud disaster recovery solution benefit is the ability to rapidly restore systems, databases, and applications, reducing recovery times after a disaster.

Security: Disaster recovery solutions are available with secure SSL data encryption and HIPAA-compliant security levels.

Of course different cloud-service PACS and EHR service providers have their own service offerings, and it’s important to choose a vendor that is right for your organization. Make sure that the vendor will sign a business-associate agreement for HIPAA compliance, and ensure that the vendor provides necessary data encryption and security levels. Then, look at how the data is stored, how quickly data can be accessed and retrieved, and how often data is duplicated. The more highly available your data is, the more it will cost, so look for a service level agreement suitable for your organization.


cPac Pro Case Study

What Happens When a Multi-Site Cardiology Practice Chooses cPac Pro for Digital Image Management? 

Time for a New PACS
The 14 physicians at a multi-site cardiology practice were tired of shuffling outmoded image records. They ran seven study types using nuclear and ultrasound imaging from different manufacturers. The doctors wanted to have access to every digital image from anywhere. They needed a multiple modality, HIPAA-compliant Picture Archiving and Communications System (PACS) that fit their practice.

So the team made a wish list:

  • Off-line data access for review and re-measurements
  • Customized reports that meet accreditation standards and personal preferences
  • Off-site backup
  • Automated EMR integration


Just What the Doctors Ordered: cPac Pro
One of the cardiologists discovered cPac Pro from Freeland Systems. They chose a configuration with three parts: AccessPoint, BacPac, and freelandsystems.net. Each one gave the practice new tools to streamline processes, saving time and money.

First, the cardiology practice installed AccessPoint, the basic software engine that drives cPac Pro. It provided point of use functionality for technologists and physicians. They could prepare preliminary reports in the imaging room without having to log into the web. Instruments from different manufacturers fed images into AccessPoint’s digital viewer where they could be manipulated. The doctors could finally print and fax customizable reports right away, and they could securely export diagnostic quality DICOM images into various healthcare systems and EMR environments.

AccessPoint also allowed the physicians to download studies and continue their work offline. Now, when the physician’s were traveling between sites or were in places with no internet connection, they could still access image data and continue working.

BacPac, a temporary local storage appliance, was loaded at each of the three client locations. BacPac created an atmosphere of collaboration by synchronizing the data between sites using their existing Local Area Network. BacPac automatically populated AccessPoint and EMRs with every measurement the doctors took. BacPac also included Nuance’s PowerScribe interface for easy dictation. And with data stored in other places, there was an off-site backup in case of a disaster.

cPac Pro came with freelandsystems.net, a client web portal that provided the physicians access to data from anywhere. It also included administrative functions like user management. Senior doctors could assign physician, tech, and administrator privileges. Even rural partners and contract clients uploaded studies for review. Finally, usage statistics helped senior staff improve internal processes.


The Outcome
Overnight, the cardiology practice became savvy and streamlined. Data entry was automated and records were synchronized. cPac Pro’s technical support helped the doctors troubleshoot problems to keep the office running. The doctors collaborated in ways they didn’t know were possible. They spent more time with patients rather than managing workflow. The cardiology practice cut costs and delivered results faster, all because they invested in cPac Pro.