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March 7, 2005

What Will Your DICOM Warehouse Look Like?
By Laura Gater
Radiology Today
Vol. 6 No. 5 Page 22

Hospital and imaging center PACS teams need to weigh a variety of factors when choosing between buying (or leasing) and maintaining their PACS archive or paying an Application Service Provider (ASP) to tackle the job for them. Cost, time, and information technology (IT) personnel all play into how to best store and manage DICOM images.

“Radiology departments and imaging centers both need to take a careful look at what problem they are trying to solve,” said Lenny J. Reznik, director of enterprise image management solutions for Agfa HealthCare. “Are they looking at their primary online PACS archive, a near-line PACS archive, a secondary archive for disaster recovery, or a secondary archive for business continuity? After that, they need to consider what financial, operational, and technical resources they have available to them.”

Dave DuPont, senior vice president of sales and marketing with storage provider Plasmon, agrees with Reznik that a few basic questions need to be answered before determining which choice is best. “What kind of information do they need to keep and for how long?” DuPont asked. “How many images? How big are they? How quickly do they want to have access to their images?”

Obvious and Hidden Costs
Maintaining one’s own DICOM archive can involve a lot of hidden costs, according to Shri Shrivas, regional vice president of professional services for InSite One, a San Diego-based archiving ASP. Shrivas said storage technologies are constantly changing, so there will be additional costs to upgrade software and equipment and to maintain it. Contracting with an ASP would result in eliminating those hidden costs because everything is included. The ASP vendor bears the responsibility of upgrading software and equipment and maintaining it.

“The biggest cost difference is that there is a larger outlay of cash up front if you maintain your own DICOM storage,” said Keith Solinsky, a consultant and manager with The Coker Group, a national healthcare consulting company based outside Atlanta.

The cost to properly house the equipment is one element of capital investment to consider carefully. A facility needs a climate-controlled room large enough to house one or more servers securely. The facility’s infrastructure must include bandwidth capable of supporting a large volume of high-speed and large-image transfers. It must also contain enough memory to facilitate such transfers as well as storage.

“It will be different for each customer and potentially for each solution,” Reznick said. “For an ASP, customers must look at the initial setup costs, ongoing telecommunication costs, ASP storage vendor costs, and minimal internal resource costs. That must be compared to the model for owning their own DICOM storage network with up-front equipment costs, ongoing service and maintenance costs, internal resource costs, and finally media costs. It comes down to what level of service is available between the two options and at what cost.”

Tax issues can also factor in to the decision. ASP payments are immediately deductible as business expenses, while purchases are depreciated and deducted over time.

Bert Verdonck, PhD, radiology IT marketing manager for Philips Medical Systems, advised radiology departments to carefully consider the total cost of ownership: Can the initial capital investments be made? Is the ASP model cost-efficient in the long term?

“An ASP provider is able to provide storage at a lower cost due to the economies of scale,” Verdonck said. “However, this benefit will be outweighed by the profit the ASP provider needs to make on its operations—at least partially. And there are additional costs for a high bandwidth connection between the hospital and the ASP data center.

“Managing a storage network oneself is in principle less expensive, as long as a competent and cost-efficient IT department is available. But, especially for smaller institutions, the overhead costs of a good functioning IT department may be too high,” he added.

Shrivas explained that the cost difference between maintaining one’s own DICOM storage and contracting with an ASP can be “anywhere between 20% and 40%.” He noted that a small imaging center that performs 15,000 exams per year or fewer and doesn’t have an internal IT staff to manage storage needs will realize the highest savings by utilizing an ASP. Staff salaries to maintain the archive also need to be taken into account when figuring the cost of operating a DICOM storage archive.

“The cost efficiency [of maintaining one’s own DICOM storage vs. contracting with an ASP] is dependent on the ratio between the IT overhead costs and the total business of the department,” agreed Verdonck. In many facilities, the presence of a capable IT staff—whose cost is already built into the overhead structure—determines which option proves cost-effective.

DuPont pointed out that although monthly fees vary by ASP, no large up-front costs are required. That low entry cost advantage may or may not be offset over time.

“A combination of these monthly bills, over the years, will add up to more than what you would have spent if you maintained your own DICOM storage,” he stated. “The costs of additional personnel needed to maintain the DICOM storage is also a factor, along with costs to maintain or upgrade software and hardware.”

Eric Pearce, manager, Americas Marketing for GE Healthcare, concurred that many small hospitals don’t have the resources to invest in supporting their own archive and that the general argument is that “the larger you are, the cheaper it gets to store your own images.”

IT Personnel Availability
The capability of a hospital or radiology center’s IT staff is absolutely vital to the decision of whether to outsource DICOM storage. “People don’t realize the amount of staff it takes to maintain their own DICOM,” said Solinsky. “The reality is that when a physician wants to view an image, he wants it now. You need to have someone there 24 hours a day. If the computer system goes down, technical support personnel need to be available. When I managed a hospital radiology department, we hired our own DICOM support staff because the hospital IT department was not prepared for the time commitment to maintain the DICOM. I would say that ASPs are more in tune for smaller hospitals that don’t have the people resources to manage those functions.”

The ASP model is attractive to many facilities because of the savings in personnel costs. When a capable IT department is already in place, it allows a radiology department or imaging center to maintain full control of its archive, according to Verdonck, but when the IT staff is small or nonexistent, the ASP solution meets storage needs immediately with minimal start-up costs.

“Installing your own DICOM storage network can be very cost-effective, especially in facilities that have the existing infrastructure and support staff,” Reznik said. “It offers flexibility in financial models, usually offering both capital and operational models, and eliminates telecommunication issues, which can be complex.”

Safety, security, and recovery are vital archiving issues. An imaging facility must have access to all its stored images and needs the security of knowing that the images are safely backed up in case of a disaster at the main site. Management also needs to know that the images can be obtained from the ASP if the contract is terminated or even if the ASP goes bankrupt.

The reluctance of hospitals and imaging centers to relinquish control of their images to someone else has caused ASPs to go out of business, DuPont noted. Customers did not want to trust their information with a third party, despite some obvious advantages in cost and security.

Security & Recovery Issues
“The most important thing, I think, is the safety and security of the ASP and the format that the data will be stored in,” Pearce said. “Are you entitled to get the data back if you switch ASPs or terminate the contract? Know the format that the data is in and if you can get it back. Make sure you really understand the offering [contract] and how it will affect you. What are the costs of leaving the ASP? Read the fine print to understand all points of the contract.”

Verdonck stated that ASP providers may have better disaster recovery capabilities or duplicated data centers than hospitals. He also advised learning about the ASP before committing to it.

“What is the long-term survival expectation of the ASP compared to the hospital’s IT department? What happens in the case of bankruptcy of the ASP provider?” asked Verdonck.

A facility that maintains its own image storage would also have the responsibility of ensuring that it is all backed up and maintained in a safe place, and most likely would even have to pay for off-site backup maintenance. Backup and disaster recovery protection add to the costs of a facility’s investment.

Insite One provides both an on-site and off-site DICOM archive. One to two years’ worth of exams/images are stored on-site and all exams ever produced by the site are stored on DVD archives at the company’s primary data center in Connecticut. All data can be recovered “in no time,” according to Shrivas.

GE has two on-site storage models that are replicated, and off-site data storage is provided. Pearce noted that most hospitals that contract with GE to provide ASP service also maintain short-term, on-site storage. “Storage is becoming so cheap that most hospitals just keep everything online,” he added.

ASP Does All the Work
“When maintaining and updating a DICOM storage network, the hospital or imaging center has to be aware of the software and hardware upgrades as well as obsolescence issues that may affect the health or workflow of the imaging system,” explained Reznik. “Hospitals and imaging centers that use an ASP vendor rely on that ASP vendor to maintain and upgrade the system that will occur during day-to-day operations of the ASP facility. This relieves the hospital of the detail tracking and personnel required to accurately handle this task.”

Shrivas called the ASP solution a “predictable equation” in that everything is included in the cost. The capital expenditure required to contract with an ASP includes hardware and software upgrades, maintenance, and storage, including disaster recovery. Newer imaging technologies, such as the 64-slice CT scanner, produce larger volumes of data, often bigger than 400 megabytes per exam. An ASP provider typically contracts based on study volumes, so the file size does not directly affect storage price.

“Now more people are realizing the benefits of an ASP model and are quickly changing to it,” said Shrivas.

Solinsky cited these advantages of utilizing an ASP: 24-hour customer service, multiple redundant storage sites throughout the country, less space requirements, less personnel costs, and the ASP manages the storage process, not the radiology department manager or director.

“Philips leaves the ASP choice to its customers and advises them regarding the pros and cons of both solutions,” Verdonck said. “But so far, and globally speaking, in most PACS projects, hospitals have chosen to manage their own DICOM storage network. We see that smaller institutions often team up with larger hospitals to share IT services—for example, IT departments of the larger hospitals play an ASP role to the affiliated centers.”

Using an ASP allows customers to benefit from the company’s technical expertise. “As a service, the ASP storage model puts the burden of the daily and routine service up to the service provider,” Reznik said. “With staffing shortages and all the other issues care providers must face today, this is one concern for which they can rely on someone else. ASPs also easily allow for an operational model, saving precious capitol dollars for other projects,” concluded Reznik.

A large organization can more readily justify having its own DICOM storage network, according to DuPont, and it will most likely have the funds for the required capital expenditures to implement it. It will also have an IT team or staff in place to maintain the DICOM.

“Over time, having your own DICOM storage becomes less expensive,” he reiterated. “You also have control of it. You’re not choosing your options from a menu that the ASP provides.”

Pearce noted that for most radiology departments and imaging centers, like other aspects of healthcare, decisions are budget-driven, defined by the difference between operating expenses and capital expenses. The same holds true for archiving. A facility must weigh its own costs and benefits of maintaining its own DICOM vs. outsourcing it.

— Laura Gater is a freelance writer based in Indiana.

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