Information technologies and systems have revolutionised the way people think and act in many spheres of life. Information systems are deemed to be one of the major tools available for business managers for achieving operational excellence, developing new products and services, improving decision making and achieving competitive advantage (Laudon & Laudon, 2009). The domain of information systems is an exciting evolution creating digital content in their products and services and delivering them over digital networks as being practiced widely in businesses, including in the healthcare enterprise.
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In the healthcare industry, information systems have created opportunity to restructure both the operational and architectural aspects in general, particularly in the radiology department (Rostenberg, 2006, p. 15). Perhaps as Jalaludin et al. (2005, p. 56) stated, no other specialty in medicine has benefited as greatly as in radiology with respect to advances in electronics and computers. The transformation of digital radiology will strive on giving way from the expensive and time-consuming endeavour of film and paper based methods to the faster and simpler computer based ones.
As radiology continues to grow and evolve, paradigm changes such as reengineering information storage and delivery, as well as refining the overarching data repositories and access systems that support the healthcare consumer is required in order to be competitive. In keeping with the challenges, a prominent feature of evolution would be the proliferation of enterprise-wide electronic Picture Archiving and Communication Systems (PACS), which has changed the face of radiology by radically altering the core drivers of traditional film-based imaging facilities.
Filmless image management systems will become popular in all hospitals in the near future (Furukawa et al., 2004). Therefore one should investigate the merits & demerits of implementing this system effectively taking into consideration the productivity improvements and cost reductions while providing better patient care.
The purpose of this report is to propose PACS implementation within a radiology department in a public sector medical centre located in Kuala Lumpur, Malaysia, as part of a strategic business plan to create competitive advantage in the ever increasing patient demand. The author will conduct an analysis of the competitive environment and resources evaluating the strategic options in implementing PACS.
Apart from this, an outline of the MIS requirements for the successful implementation of the selected PACS strategy and the associated plan needed to be undertaken will also be highlighted. This will lend a hand in securing funding and to provide a roadmap for its implementation within the timeline of one (1) year. The judicious planning of PACS strategy business plan will aim towards reengineering information storage and digital delivery as part of fulfilling the department’s goals and objectives in creating a filmless environment, thus adding value and improving the business of radiology.
3.0 Organisational and Environmental Audit.
The development of PACS strategy in the evolving field of radiology, as stated by Chan (2002) consists of two main interrelated processes such as:
gaining insight into the organisation and its environment; and
positioning the organisation for sustained competitive advantage
Organisations need to respond to changes in their environment by continuous adaptation, which warrants making decisions on how to adjust and develop their products and services by keeping pace with environmental changes; otherwise they will lose their competitiveness (Chan, 2002). In addition, government regulation such as Health Insurance Portability and Accountability Act (HIPAA) has driven many to demand improvements in the management of the information systems within the healthcare system with PACS being one of the primary components of this requirement (Smith & Hirschorn, 2006, p.157).
As such, it is important to answer three essential strategic questions and develop the framework for PACS strategy, thus focusing on few elements that relatively contribute to sustained competitive advantage (Table 1).
Where is our organisation right now?
Wide range of information is collected.
Where do we aim to go in the future?
Insight developed and options generated.
How do we get there?
Implementation of new strategy.
Table 1: Strategic questions and framework in PACS strategy development (Chan, 2002)
As part of gathering wide range of information to set the framework for PACS strategy development, strategic analysis such as external environment and organisational audit is required as shown in Table 2.
Development in radiology context
Review events and trends that have occurred, occurring or anticipated to occur.
Changes in economic, governmental, technologic, physical, cultural and managerial process.
Mandate the conversion from the analogue paper and film based systems to a purely digital department.
Evaluate the structure, operations, resources and culture of the organisations.
Identify the current capabilities and the availability for the future strategic initiatives.
The support of personnel from all levels will bring it closer to the department goals of going filmless.
Capabilities enhanced through proper training and coaching sessions.
Table 2: Strategic Analysis in PACS development (Chan, 2002)
In addition, it is also imperative to gain information regarding the interrelationships between the two. As such, a simple integrative analysis, known as SWOT is performed to highlight the inherent strengths and weaknesses, as well as opportunities and threats about the organisation and the relevant environmental factors facing the organisation in implementing PACS strategic business plan, as shown in Table 3.
The development of an organisation’s particular set of resources, which leads to sustainable competitive advantage.
Collective organisational learning that results in superior performance, especially in coordinating and integrating new activities and workflows.
New strategy and initiatives fosters new views of the role of radiology in the health care industry, thus adding value to the services rendered.
The resulting strategy may fall out of favour as a result of plans becoming too detailed and cumbersome to implement.
Different divisions may be inflexible in the face of changing business conditions and new competition.
Should this be unsuccessful, the managers and employees who were responsible for the implementation of the chosen strategy may feel disempowered.
Building new capabilities and inventive in the use of limited resources to close gap should there be misfit between available resources and the resources needed for the desired goal.
The push to possess leadership qualities along the new development path and change management.
Room to exercise imagination and creativity throughout the development and implementation of new strategy.
External events or environmental trends that cannot be foreseen by observers could affect or even invalidate the viability of each strategic option that is considered.
High costs of increased government regulations in radiology practices may deter the implementation.
Table 3: Author’s framework of SWOT analysis about the organisation and the relevant environmental factors in implementing PACS strategic business plan
4.0 Competitive Analysis
Once the insight of an organisation and its environment is gained, it is fundamental to undertake competitive analysis. These include a definition of the immediate radiology market, a description of competitors and the status of their PACS implementations (Levine, 2006, p. 37).
In creating the framework to help determine industry competition, arguably the most widely used model will be Porter’s five forces model (Figure 1).
Figure 1: The five competitive forces that shape strategy (Porter, 2008)
According to Porter’s five competitive forces model, the strategic position of the firm and its strategies are determined by competition with its traditional direct competitors and also greatly affected by new market entrants, substitute products and services suppliers and customers (Laudon & Laudon, 2009, p. 107).
A market research conducted by Frost and Sullivan (2010) stated that the radiology markets in Southeast Asia have considerable potential, regardless of their maturity. In addition, the analyst further reiterated that with the decline in costs and advancements in PACS applications, smaller hospitals have begun to implement PACS in radiology and also in various medical disciplines such as the cardiology and dentistry departments that produce medical images too; thus enabling better image management.
Therefore, the strategic plan should note any PACS advertising done by local competitors in order to highlight any potential threat to market share, then perform the market share at risk if PACS is not implemented at this institution to estimate the amount of additional revenue that may be shifted to or from a competitor that has respectively superior or inferior radiology services. However Levine (2006, p. 39) stated that, a potent argument for PACS in the strategic plan will be to compare capacity and productivity gains that can be expected to accrue from the implementation to the future increases in demand for radiological services due to the normal growth and increased market share.
As such, applying Porter’s five forces competitive analysis in PACS strategy would generate a framework as shown in Table 4.
Private medical centres
All radiology businesses
Advances in hardware and software
Breakthrough products in other emerging imaging technology with built-in information systems
Networking only a few workstations together from radiology department to a particular department
Individual hospitals or medical centres
Regional health care networks and integrated delivery systems
Managed care organisations
Information technology providers (HIS, RIS, PACS, Application Service Providers)
Manufacturers of imaging devices and supplies
Table 4: Author’s framework using Porter’s five forces competitive analysis applied in PACS strategy
5.0 Strategic Implications
There are three basic strategic options available to organisations for gaining competitive advantage, according to Porter’s Generic Competitive Strategies model (Figure 2), namely, cost leadership, differentiation and focus, thus developing the “edge”, which brings revenue for the organisation and takes it away from one’s competitor (Mind Tools, 2011).
Figure 2: Porter’s Generic Competitive Strategies model (MBA Knowledge Base, 2011)
With the implementation of PACS, this organisation aims to provide low-cost, thus achieving cost leadership by gaining market share, whilst maintaining profitability and pursue a differentiation-based strategy by offering unique product and services; thus offering a greater ‘value package’ to customers and competitors. In addition, it is imperative to use technology, where possible, to create or enhance customer value and satisfaction.
As such, Porter’s value chain model (Figure 3) can be generalised to the practice of radiology to identify the key value drivers to build customer satisfaction through the implementation of PACS as a new strategy.
Figure 3: Porter’s value chain generalised to the practice of radiology (Schomer et al., 2000)
The model views a series of primary and support activities that add value to the organisation’s products or services (Laudon & Laudon, 2009). In radiology practice, these include four support activities; namely, the organisation infrastructure, human resources, technology development and procurement, which is straightforward, focusing on reducing costs in these areas for both customers and organisation.
On the other hand, the five primary activities, namely, inbound logistics, operations, outbound logistics, marketing and service are quite specific and leveraging using technology, such as the PACS, can often significantly enhance each of these activities. Each activity has an associated cost and therefore the residual margin (black area in Figure 9) will be retained as the shareholder earnings (Schomer et. al., 2000).
6.0 PACS Strategic Plan & Recommendation
What is PACS and why choose this strategic plan in a radiology set-up? PACS include computers or networks with dedicated storage, retrieval, distribution and image management, which are stored in an independent Digital Imaging & Communications in Medicine (DICOM) format (Amber Diagnostics, 2010). PACS can eliminate many of the time-consuming processes associated with film-based medicine and enable the practice of filmless medicine (Figure 4).
This adds value to the radiological services, which not only provides services by generating diagnostic reports, but also expedites the timely delivery of results (Levine 2006, p. 27). PACS completely reengineers radiology practices by enabling ubiquitous availability of images to be electronically viewed virtually anywhere and simultaneously, resulting in improved clinical care and productivity throughout the healthcare enterprise.
Figure 4: Film-based medicine and filmless medicine (Furukawa et al., 2004).
The current set-up of the radiology department encompasses of digital multi-modalities such as, Computed Tomography (CT) Scan, Magnetic Resonance Imaging (MRI), Digital Angiography and others performing approximately 180,000 – 200,000 examinations per year. As part of aiming towards creating a digital environment, besides procuring these digital modalities, the department has also established connectivity to a Radiology Information System (RIS) and Hospital Information System (HIS). The HIS feeds verified patient demographics to the RIS, which in turn is responsible for scheduling orders, capturing relevant clinical information and providing a platform for radiologists to prepare examination reports.
However, currently hard-copy medical images are the only image capture, display and storage medium. Besides radiology, view boxes are found in diverse locations such as wards and clinics in order to view the radiological images. There is usually only one copy of film to be displayed at any one time, thus reducing the efficiency and effectiveness of patient management.
The image management in a conventional environment involves exceedingly complex, high manual and work-intensive processes involving as many as eight (8) different types of personnel performing up to ten (10) different tasks and takes about 1 to 4 hours to generate results [Figure 5(a)]. However in a fully electronic environment, this can be reduced to approximately eight (8) tasks, many accomplished by computers, allowing the number of people involved to be reduced to four (4) and results to be generated within 45 minutes to 1 hour [Figure 5(b)]. As such, the implementation of PACS will foster stronger development of consolidated delivery networks at not only the departmental level but also at the organisational level.
Figure 5: Workflow process from radiological examination request to final report in a (a) conventional environment and in an electronic (b) RIS and PACS environment [distrib. = distributed, Dx = diagnosis, Phys. = Physician, Sched. = schedule] (adapted from Bryan, 2003)
With the need for increased quality, clinical effectiveness and meeting the pressure of market competition in the digital world, PACS is seen as an opportunity to provide patients with clinical services that could never be provided in the analogue world. The scope and benefits of PACS reach beyond the radiology department, whereby, it also greatly expands the exposure, expense and operational impact; hence the need to be comprehensive and include all key players in the decision making process, planning and the development of new strategy is crucial (Chaney & Cotter, 1998).
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Implementing and integrating PACS requires significant planning, workflow redesign, system configuration and training. However a common problem in implementing PACS will be recognising the mix of image generation technologies or modalities and identifying different types of interfaces (Chaney and Cotter, 1998). With regard to this, older equipment already installed in this radiology department may require specialised protocol conversion to “talk” to the new PACS equipment although the established communication standards can be supported by the newer equipment in the market today.
As such, the PACS and modality vendor input is crucial to identify the required number of modalities to be linked and whether any licensing or implementation costs attached to each modality connection will be required. An enterprise-wide strategic planning methodology for PACS, which involves a broad cross section of the imaging and user community, proposed for this medical centre is outlined as in Figure 6.
Figure 6: Development of an enterprise-wide PACS strategic plan (adapted from Chaney and Cotter, 1998)
Once a structured PACS strategy planning process to establish a sound business case has been undertaken, the next step will be developing a Request For Proposal (RFP) and conducting the PACS vendor selection process. The PACS equipment needs and archive size requirements are instrumental in preparing an effective RFP. The RFP will include detailed specifications for the locations and types of required equipment and a high-level project plan in order to specify the installation accurately as shown in Figure 7.
Figure 7: PACS life cycle overview (adapted from Chaney and Cotter, 1998)
In addition, it is also imperative for vendors to be able to specify all devices required during the vendor quotation phase of the project. Finally, establishing connections to the already existing RIS-HIS, computed radiography, digital radiography and results reporting may consume months prior to the roll-out of the system as shown in Gantt Chart (Appendix 1).
7.0 Financial analysis
The financial analysis plays an integral part of the business case development and is crucial to the assessment of the economic viability of the proposed PACS initiative. This would set the stage for the technical and performance specifications prior to the establishment of a procurement exercise.
Lim (2008) stated that the budgets for PACS acquisition project are usually identified as capital budget estimate, which encompasses the probable costs to purchase and implement the technology and recurrent budget estimate that represents the projected future costs of managing and maintaining the system in a sustainable operational state. The capital and recurrent costs descriptive items are as shown in Table 5.
Types of costs
Descriptions of items
Capital purchase costs of PACS
Installation and commissioning costs
Any costs associated with imaging equipment upgrades
Infrastructure costs (e.g. data centre, network, computers for image distribution)
Staff and accommodation
Table 5: Capital and recurrent costs for PACS acquisition project (Lim, 2008)
With regards to the PACS acquisition, Lim (2008) further stated that there are a few financial models to be considered when acquiring PACS, namely:
The traditional purchase, where purchase is outright and owned and managed by the institution, with vendor providing technical support under a service contract agreement, which is a common method in public sector;
Application Service Provider (ASP), where the facility purchases a “service” from the vendor with charges based on fee-per-service arrangements;
Leasing models, which can have some financial incentives in private sector context.
The proposed budgetary costs for PACS implementation recommended for this public sector medical centre is based on a traditional purchase acquisition model, which illustrates how a capital and recurrent budget may be established amounting to costs assumption of RM 3,487,000 presented in Appendix 1. However, calculating the purchase, upgrade and running costs is only half of the budgeting task, the other side of the equation is the cost savings, efficiencies and service improvements that this technology can bring to an imaging facility.
These savings include film and stationery costs such as jackets, chemistry costs, film storage and handling including space and file room staff, processor purchase and running costs. Therefore it is important to undertake a cost-benefit analysis to see whether an individual option has financial or economic merit.
A study conducted by Van Genip et al., (1994, cited in Becker and Arenson, 1994) stated that the overview of data from 15 cases collected with CAPACITY (Cost and Critical Analysis of PACS Indicating its Yield) cost-modelling software suggests that, when the cost of hardware components is allowed to drop 5% to 25% per year, some hospital-wide systems will become less expensive than film in the future with breakeven between 4-8 years, which is applicable for this scenario. As such, with the fast decreasing price of digital storage in the current market, it is deemed that PACS will provide cost and space advantage as compared to film archives. However, a downtime contingency plan, where costs for backup film printing using laser printers is also crucial to support successful implementation.
Cost benefit analysis will provide useful information, but not all the answers. Therefore, one should also consider the intangible benefits such as the service efficiencies and quality improvement that PACS can generate, particularly with fast throughput of images; hence these factors should be taken as part of any economic justification.
The informed decision to select, implement and operate PACS begins with a sound, business oriented approach and judicious planning up front in implanting PACS as a strategy. As such building a documented business case and report is the first step to establish baseline expectation for system implementation throughout the enterprise as well as providing an accountability structure and project leadership as has been presented in this report.
In this age of high information density and the necessity of its efficient and rapid dissemination through the integrated delivery of networks in healthcare, enterprises should see the decision to implement PACS as a necessary step in maintaining their market position. The greater value of a secure and fast repository of images provided by PACS, will improve the detection of disease through improved patient outcomes. These factors will have a huge impact on the way medicine is practiced and the quality of care patients receive. As such it is important for the radiology department to adopt PACS considering the service efficiencies, cost savings and service quality improvements that it can generate; thus creating a competitive advantage in the business of radiology.
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PACS Implementation Strategy Plan Gantt Chart (activities based on PACS life cycle overview presented in Figure 7)
PACS comprehensive planning (business technical, functional)
PACS vendor selection & signing of contract
PACS system implementation, training & testing
PACS implementation system support and enhancement
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