The purchase of medical imaging equipment is a major investment that is rightly approached with care by hospitals and diagnostic treatment centres. Medical imaging equipment and Picture Archiving and Communications Systems (PACS) have become highly functional machines, with user interfaces that are increasingly easy to master.
However, they are a daunting proposition for hospital clinical engineering departments when they break down. Vendors of medical imaging equipment realise this, and have responded by offering comprehensive professional services to support their equipment. These services are designed both as means of securing a sale and as a relationship builder.
In radiology, where the full-scale integration of equipment is ongoing, hospitals are starting to turn to vendors to provide a complete managed radiology service solution. This type of solution is now shaping the service offered to hospital end users.
In the past, a basic service was offered by imaging system vendors to guarantee the functionality of their hardware over its life. And, of course, timely response to technical problems is still an essential part of the more comprehensive services now being offered. Equipment downtime is a disaster for hospitals whose resources are already at full stretch. Patient rescheduling causes disruption and delay. Above all, the patients suffer.
Traditionally, medical equipment services worked on a Time and Materials (T&M) basis, where repairs were carried out on an ad hoc basis as faults arose and charged for labour and materials required. While T&M is still offered by medical imaging equipment vendors, it is increasingly out of favour with end-users and service suppliers alike.
End users now prefer to have all maintenance costs covered by a Full Service Agreement (FSA), paid for on an annual or monthly basis, allowing the end user to budget properly. This type of service is popular with hospital CFOs seeking cost stability and to mitigate capital investments risks without incurring unexpectedly high T&M costs.
This concern has become more acute with the huge increase in the installed base of CT and MRI systems in hospitals in the last decade. When these systems develop faults, they are extremely costly to repair. FSAs act as a form of insurance.
T&M is something that leading vendors in the PACS field are looking to eliminate from their services portfolio, as its ad hoc nature is inconsistent with an integrated and planned services strategy. FSAs have a number of advantages for vendors. When an annual FSA contract is signed, a vendor has an overview of the revenues they will receive, which makes budget planning and forecasting much more reliable.
T&M revenue is much more sporadic. As the reliability of medical imaging equipment has greatly improved, an FSA is a real source of profit for vendors, as the likelihood of any major incident occurring – in a scanner, for example – is minimal.
Also FSAs allow for advance resource planning. This is of great value to vendors. The majority of FSAs will include the installation and integration of medical equipment and the provision of training.
This can stretch a vendor's resources to the limit, so watertight logistical planning is vital.
Remote services, a recent innovation, are helping vendors meet these logistical demands. Remote diagnostic infrastructure automatically monitors PACS configurations and notifies the vendor's service centre if any equipment shows signs of failing. This allows the vendor to employ a minimal number of engineers and solve minor problems before they have had a chance to develop.
Remote services are vital to hospitals in remote locations that would otherwise have to endure unacceptably long response times. Remote diagnostics, despite a heavy initial outlay, deliver long-term cost savings for vendors, which no longer need to spend so heavily on dispatching engineers to the repair site. These savings trickle down to the end user, so that service contracts become less expensive and more attractive.
MANAGED CARE SERVICES
The vendor investment required to provide such service value is making the medical imaging and PACS services market extremely difficult for Independent Service Organisations (ISOs) – third-party organisations that offer T&M and project management for hospital radiology departments and diagnostic treatment centres – to compete in. These companies are usually much smaller operations that lack the infrastructure and resources to match the major industry players.
This problem is compounded by the fact that advances in high-end
technologies, such as CT and MRI, increasingly incorporate proprietary, networked technology. Scanners are now so complex that they can only be serviced by scanner manufacturers. Scanners use software for image acquisition and processing that needs regular upgrading if it is to cope with the latest developments in medical imaging. Again, this is a capability that ISOs are unable to provide.
Where ISOs do succeed however, is in offering a simple and less costly managed service. This harms the modality manufacturers, which try to charge a premium in the pursuit of high profits.
ISOs have also succeeded in providing hospitals with full managed services for their radiology departments. This type of service is popular with head radiologists looking for a single point of contact for outsourcing the department's administration.
A managed services approach fits well with PACS services. PACS, which digitally link modalities to each other and a central archive for the transmission and storage of images, demands nothing short of a full professional service, a service that goes beyond fixing problems as they arise. PACS must be integrated and networked into the department, and their installation must be accompanied by consultation and project management services.
Creating a digital environment through PACS is a daunting prospect for the hard-pressed IT resources of hospitals. As a result, professional services are now recognised as so integral to PACS that vendors have abandoned the traditional division between products and services. In its place has developed the concept of PACS solutions.
As technological progress allows third-party vendors to provide hardware capable of delivering PACS functionality at low cost, vendors' profit margins on hardware have dropped dramatically. Vendors have responded by offering PACS software and workstations, along with a clearly defined and marketed services portfolio.
The result is a solutions package based on flexibility of service and open architecture that responds to customer demands by providing a fully customisable solution. Such a solution might be a completely new, state-of-the-art centre of excellence or a wider network built around a hospital's existing legacy PACS components. In this brave new world of PACS solutions, the vendor's know how and expertise provide value, not its products.
Designing workflow solutions that meet the latest standards requires vendors to be comfortable working with competitor products. Vendors ideally offer one-stop shop turnkey PACS solutions. However, the increasing influence of the hospital IT department on PACS installation has made this less prevalent.
Heads of IT are more aware of the archiving and networking possibilities of PACS from a technical perspective than heads of radiology and are more likely to opt for a multi-vendor, best-of-breed approach to realising the hospital's clinical workflow goals.
The next logical step for the PACS solutions model is the application service provider (ASP) model. This strips away any remaining concept of product ownership. Vendors provide both expertise and personnel for networking and archiving, often via a remote server.
End users pay an annuity-based monthly fee for both the PACS service and equipment. The advantages of this are clear. It removes the obstacle of high initial capital investment, it frees up hospital space and it provides an archive large enough to accommodate the expanding needs of image generation.
With these advantages one might expect this model to have been widely adopted in Europe. Unfortunately, a lack of sufficient broadband infrastructure, concerns over data ownership and security, and a reluctance to relinquish the capital investment model have limited its widespread acceptance to Scandinavia.
The increasing complexity of radiology department systems and infrastructure coupled with the greater demands being made upon it in the wider hospital environment have led to an increasing emphasis on services in radiology. Radiology and IT departments need an increasing level of guidance and expertise if they are to operate effectively in the modern hospital, leading to increased value being placed on managed care and professional services.
Meanwhile, in a marketplace where there is a tacit acknowledgement of the essential similarity of the main products, services are becoming the new differentiator. As a result, vendors will continue to refine their service and product offerings into what they hope will be indispensable solutions.
This is something to be welcomed by the ultimate end users: patients. In future, they can expect increasingly efficient treatment from their healthcare provider.