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Interest in PACS solutions is burgeoning in the NHS.
This is particularly so amongst the many clinicians who rightly view it as a rare example of an IT solution that gives real pay back in terms of helping to improve clinical care.
However, this has come, quite literally, at a high price. PACS solutions have typically been bought by hospitals in the NHS as a turnkey solution from a PACS supplier.
The PACS vendor subcontracts many of the more generic components such as servers, storage and monitors, and then incorporates these alongside the specific PACS software that it produces itself. Initial thinking amongst the recently appointed LSPs was similar - to obtain a PACS turnkey from a PACS supplier and simply pass it on to NHS. The end result is that the undeniable benefits of PACS have come at a high cost, given the inherent margin hierarchies and the absence of any real price leverage.
At time of writing the National Programme for IT is pushing LSPs very hard to improve PACS pricing so that the discounts are comparable with other National Programme for IT (NPfIT) solutions. Two obvious ways by which LSPs can achieve this are by using their buying power and by planning in volume terms - cluster-wide implementations would be one example. However, a third and perhaps most significant opportunity is for LSPs to price PACS based on an 'unpacked' set of components.
An unpacked set of PACS components could comprise digital image capture devices, interfaces with the image capture devices, data storage/archive, database management software, image display devices (including sophisticated PACS diagnostic workstations) and interfaces to/integration with other information systems such as the PAS and RIS. If unpacked, there is the opportunity to deliver each component via the most cost-effective route and so rationalise the supply chain hierarchy.
What this could mean for LSPs is that the generic PACS components could be provided directly by the main consortium members at commodity prices. For example, most consortia include companies that supply disk storage, servers and PCs. Even where they cannot be provided by consortium members directly, the consortium could negotiate a contract with, say, a server supplier to supply servers for PACS across the whole cluster at an attractive price.
A further implication for LSPs would be that coordination and integration of the various components would be handled not, as is traditionally the case, by the PACS vendor but by the LSP. LSPs of course may argue that this is placing them with too much risk. However, PACS is a mature technology that is now highly standardised (e.g. DICOM, HL7) and well supported (e.g. IHE, PACSNet), and as such delivery risk within this model should be relatively low.
What this approach could mean for the NHS is significantly cheaper total prices for PACS. LSP consortia companies are bound to be able to supply the commodity items more cheaply than the PACS companies, who have to source them from their own suppliers and pass on a reseller margin. Also, volume discounts should apply given the potential for cluster-wide commodity item contracts. And finally PACS supply on a community-wide basis with common supplier sourcing provides opportunities for innovation in delivering resilience (e.g. through shared infrastructure), workflow redesign, training and spares/maintenance, resulting in further revenue savings.
The Next Steps
This approach has been suggested by NPfIT to LSPs as one possible way of reducing prices, and at time of writing we are awaiting to see whether this has been achieved via the NPfIT PACS pricing review. But it is also worth noting that, although this approach is clearly well suited to PACS, it is by no means limited to it. It could just as easily be applied to other traditional multi-component turnkey solutions such as document management and pathology systems.
If you have any questions about the subjects covered in this white paper or you would like to find out more about how Oakleigh Consulting could help your organisation, please contact us on 0161 835 4100 or email us.
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