"Why Aren’t PACS Selling Like They Used To?"

Ms. PACS: Who said PACS aren’t selling? Maybe not how they used – true, the strategy has changed – but it is still estimated to be a $1 billion market, and the number of systems installed from 2008-2013 is projected to grow at double-digit rates. So, I don't know if there is still life in you PACSman, but you better bet there is in the PACS market.

No doubt the PACS sector is experiencing consolidation and companies are merging to offer a broader range of IT solutions and combining RIS with PACS. Plus, now that the big fish at the large hospitals have been fried, PACS vendors are targeting medium and small hospitals, outpatient imaging centers and individual practices. This gives smaller PACS vendors a better chance to get in the game with new opportunities in the smaller providers market. Many even credit the DRA reimbursement cuts with boosting the lower-end PACS market because it has forced these smaller facilities to cut the fat and improve efficiencies, and that means implementing a PAC system. Take GE, for example, who saw the writing on the wall and acquired Dynamic Imaging for its web-based solution, perfect for lesser processing and storage capabilities characteristic of ambulatory centers and physician’s offices.

There is also a healthy future for replacement PACS and the PACS service and maintenance business. As radiology more widely adopts advanced 3D visualization, desktop integration, dictation and voice recognition systems and critical test results management systems, these will all have to be interfaced with a current or replacement PACS, not to mention integrated with current RIS, HIS and even EMR systems. This is what typically happens when a site buys a product that is not complete and has to purchase add ons – in the end they get nickeled and dimed to death. It is no surprise that, according to iData Research, as the installed base for PACS increases, more and more of the total market revenues will come from support services. So, yes, the game has changed, but it is still 'game on.'

Here's some more insider information. I know the skeptics – like you PACSman – will say they already tried PACS for radiation therapy (RT) and failed. But I witnessed a resurgence in PACS activity at this year’s ASTRO conference. In fact, Varian showed me a very soon to be launched works-in-progress oncology PACS, and also there were several traditionally-radiology focused storage and data management providers on–hand, offering efficiency in the RT world – well known for its inefficiencies in image data management. So put that in your PACS and smoke it.

PACSman: Lies, damn lies, and statistics…you gotta love ‘em….I also love the prognosticators who still call this a $1B market. When you add anything and everything that can be remotely considered a PACS you might come close to this number…maybe But for the record it was a $1B market a decade ago as well…or so the reports said….Now would the Nostradamus’s of the imaging world sell a $6,000 report with more bar charts, pie charts, Gant charts and every other chart known to man if it said sales are flat or down 15-20% in a soft market? Of course not... So we pretend everything is still grand, picking up flowers for the wife on the way home from the airport only to learn that she moved in with the neighbor while you were away (and no, that is not an example from my life either, MP – it’s just a metaphor).

Sales are down, discounts are up and customers are scared to death to buy wondering if the vendor they want to buy from is still going to be around tomorrow let alone will they still love them tomorrow (someone cue the Shirelles, please)…Net margins on most deals being done today are thinly black or in the red, but hey, look, PACS is a $1B market so things can’t be bad can they? Not. I don’t know what fish fry you’ve been going to but 25% of today’s PACS sales are replacement systems and that is where the big boys are focusing their efforts. I’m also glad you read my article on DRA last year and how it stimulates PACS growth – it’s always a plus to see you educating yourself further.

I don’t think I’d use that vendor as an example. They don’t seem to be able to figure out what they want to be when they grow up in PACS. They bought DI a year ago yet now require a forklift to have their Centricity customers accommodate the 3.0 Linux “upgrade.”

Nickeled and dimed to death? You need kids, MP – it’s more like “Can I hold onto $10 Dad? $20…” or my favorite “It’s only $50…$100….$375.” We recently banned the word “only” in my household…

It’s so easy to say “It’s the economy, stupid” but that’s only part of a much bigger problem. Most vendors simply don’t know how to sell and end users don’t know how to buy – it’s just that simple. I’ve said time and again that PACS has become a commodities market and undifferentiated PACS are just that – a commodity. Yet look at most PACS ads – they all basically say the same thing. Vendors need to understand their own products so they can convey the specific advantages and benefits they offer to the end user, not making broad sweeping generalizations that can apply to just about anyone’s PACS. And end users need to understand what questions to ask to get the information they need to make informed objective decisions….

As for ASTRO…do you plan on buying your PACS from Spacely Sprockets? PACS embraced radiation therapy over a decade ago and RT thumbed its nose at it. There were a handful of companies who lost a small fortune offering remote block cutting via teleradiology as well as embracing other areas in RT. As a software add-on Varian and others might do OK, but sales into this market aren’t going to set the world on fire.

Know I gave up my pipe back when C. Everett Koop was the Surgeon General and advised against it, but whatever you’re smoking in yours I’ll gladly share…and even though it’s been quite a few years, know I plan on both inhaling and enjoying…