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Emerging PACS Opportunities - 1997 - 2000

The latest of three in-depth studies of the medical Picture Archiving and Communications Systems (PACS) was published in mid-November, 1997. This report presents the results of nearly a year's research and analysis of the integrated digital imaging systems that are becoming the mainstream of radiology in the U.S. The primary objective of this study is to provide a source of critical information to guide vendors in the development of strategic plans for the next five to ten years.

The research and analysis shows a rapid growth in the US market for PACS and mini PACS over the next several years - exceeding $1 1/2 billion per year by the year 2001. It is estimated that the US market accounts for less than half of the potential world wide market for PACS.

This rise in enthusiasm for PACS was found to be due to two things. First, the technology has reached a level of development where the storage and networking requirements can be met, and the display of images on CRTs is adequate for virtually all diagnostic purposes. Second, experience with early PACS has confirmed the economic and clinical benefits associated with integrated image management, and has overcome the radiologists' reluctance to abandon film as a primary display medium. The forces driving healthcare reform in the US are accelerating the transition to all-digital systems.

The study summarizes the collective attitudes and expectations of focus groups made up of radiologists and academic researchers who have had experience with a wide variety of PACS installations and experiments.
An extensive direct mail survey was conducted among hospitals and imaging centers. The results are presented in a way that shows the attitudes and expectations of practicing radiologists and administrators, and gives solid information about their intentions to install and upgrade PACS systems.
The competitive environment is defined by reviewing the current and future strategies appropriate for participants in the market, and by presenting profiles of more than 150 of the leading vendors of PACS, components and subsystems.
The study summarizes the changes in healthcare policies and practices brought about by initiatives from government, insurance, and care provider organizations. The study shows the impact these various schemes have on demand for PACS.
The study assesses the recent advancements in the relevant technology placing the Internet and its several components in the proper context with regard to PACS.

TABLE OF CONTENTS

Executive Summary

1. Introduction

2. Evolution of American Healthcare

3. Economics of PACS Ownership

Cost/Benefit Analysis

Film Based Radiology as a Reference

Context of Cost/Benefit Analysis

Cost of PACS Installations and Operations

4. Digital Storage

System Architecture

Requirements

Reduction of File Size

Storage Technology

Summary

5. Display Technology

Acceptance of Soft Display in Radiology

Problems Experienced with Soft Display & Workstations

Display Technology

The Role of Color Displays

6. Direct Digital X-Ray Systems

7. Digital Networks

Network Definitions

Data Transmissions Services and Network Systems

Local Area Networks

Wide Area Networks

Summary of Performance

8. PACS Markets in the U.S.

Market Segmentation and Structure

Supplier Revenues

Provider Surveys: 1994 and 1997

U.S. Market Projections

9. PACS Worldwide

Introduction

Europe

Rest-of-World (R-O-W)

10. Strategies

Users' Needs

Pathways into the PACS Business

Strategic Consideration for the Future

Appendix A: Focus Group Sessions

Appendix B: Results of Direct Mail Survey of Hospitals

Appendix C: Results of Direct Mail Survey of Medical Imaging Centers

Appendix D: Vendor Profiles

LIST OF EXHIBITS

E.1 Purchase Intentions, % by Year

E.2 Market Forecast for Various Kinds of PACS

E.3 Installed Base, Upgrade and Service Revenue

2.1 Relationship Among Healthcare Entities

2.2 Implication for Managed Care for PACS and RIS

3.1 Volumes of Image Data in a 500-bed Hospital

3.2 Annual Cost for On-Call Teleradiology

3.3 Annual Costs for Remote-Site Teleradiology

3.4 Annual Costs for Image Distribution System

3.5 Costs and Savings for an Ultrasound Mini-PACS

3.6 Costs and Savings for a Plain Film Mini-PACS

3.7 Costs and Savings for Full-scale PACS

4.1 PACS Electronic File Sizes as Function of Modality

4.2 Relative Number of Bits to be Managed by Modality

4.3 Minimum Data Transfer Rates for Selected Response Time

4.4 Storage Technology Parameters

4.5 Comparison of Data Rates 4-22

4.6 Nominal Response Times (seconds)

4.7 Nominal Cost of Active Storage Systems

4.8 Nominal Cost of Archival Storage Systems

5.1 Percent of Primary Diagnoses Read From CRT

7.1 The SONET Hierarchy

7.2 Digital Network Performance

8.1 Full-Scale PACS Estimated 1997 U.S. Sales, by Vendor

8.2 Mini-PACS, Estimated 1997 U.S. Sales, by Vendor

8.3 Teleradiology Estimated 1997 U.S. Sales, by Vendor

8.4 Vendors of Web-based Teleradiology

8.5 Image Distribution Systems Est. 1997 U.S. Sales, by Vendor

8.6 PACS Workstations Estimated 1997 U.S. Sales, by Vendor

8.7 Digital Archives Estimated 1997 U.S. Sales, by Vendor

8.8 Computed Radiography Est. 1997 U.S. Sales, by Vendor

8.9 Software Estimated 1997 U.S. Sales, by Vendor

8.10 Monitors Estimated 1997 U.S. Sales, by Vendor

8.11 Film Digitizers Estimated 1997 U.S. Sales, by Vendor

8.12 Image Processing Boards Est. 1997 U.S. Sales, by Vendor

8.13 Interface Devices, Gateways, Framegrabbers Est. 1997 U.S. Sales, by Vendor

8.14 Information Systems Estimated 1997 U.S. Sales, by Vendor

8.15 Local Area & Wide Area Networks, Vendors

8.16 Computer and Software Vendors

8.17 Direct Radiography, 1997 Vendors

8.18 Percent Hospitals Installing On-Call Teleradiology

8.19 Percent Hospitals Installing In-Hospital Teleradiology

8.20 Percent Hospitals Installing Remote-Site Teleradiology

8.21 Percent Hospitals Installing Mini-PACS, by Year

8.22 Percent Hospitals Installing Full-Scale PACS, by Year

8.23 Percent Hospitals Installing Radiology Info'n Systems

8.24 Percent Hospitals Installing Systems (unadjusted survey)

8.25 Respondents Expectation-Percent Imaging Procedures Read on Monitors

8.26 Purchase Intentions, Percent Expected to Buy Various PACS by Year, Adjusted

8.27 Universe Of Institutions Potentially Buying Various PACS

8.28 Average Prices for Various PACS, by Year

8.29 Markets for Various PACS - Adjusted Estimates (units)

8.30 Markets for Various PACS - Adjusted Estimates (dollars)

8.31 Installed Base, Upgrade & Service Revenue

8.32 Use of Digital Archives in Hospitals

8.33 Use of Hardcopy Printers in Hospitals

9.1 Worldwide Medical Devices Market

9.2 Projected Worldwide PACS Market

B.1 Direct Mail Questionnaire Sent to Hospitals

B.2 Ownership and Control of Responding Hospitals

B.3 Size of Hospitals in Sample

B.4 Responding Hospitals, Type of Healthcare

B.5 Site Types Served by Hospital Radiology Department

B.6 Number of Sites Served by Hospital Radiology Department

B.7 RIS Installed Base, Hospitals

B.8 Diagnostic Reporting by CRT

B.9 Type of Digital Archives

B.10 Method of Printing Digital Diagnostic Images

B.11 Current Teleradiology Applications, Hospitals

B.12 Forecast Teleradiology Shipments, % Responding Hospitals

B.13 Teleradiology, Installed Base Estimate

B.14 Distribution of Teleradiology Systems by Hospital Size, 1997

B.15 Estimated Mini-PACS Placements, % Responding Hospitals

B.16 Mini-PACS Installed Base Estimates

B.17 Distribution of Mini-PACS Among Hospitals

B.18 Mini-PACS Vendors Cited by Modality

B.19 Distribution of Mini-PACS/Hospital Size, Circa 2000

B.20 Hospital Owning/Planning Full-Scale PACS by 2000

B.21 Full-Scale PACS Installed Base Estimate, % Hospitals

B.22 Departments & Sites Served by Full-Scale PACS

B.23 Computed Radiography, Installed Base

B.24 Percent Diagnosis on Soft Display, Film-Based Modalities

B.25 Percent Diagnosis On Soft Display, Digital Modalities

B.26 Primary Vendors

B.27 Respondents' Opinions Regarding PACS

C.1 Direct Mail Questionnaires Sent to Imaging Centers

C.2 Ownership & Control of Responding Med. Imaging Centers

C.3 Number of Imaging Procedures/Year, All Modalities

C.4 Responding Imaging Centers, Modalities

C.5 Reported Size of Imaging Center Professional Staff

C.6 RIS Installed Base, Imaging Centers

C.7 Diagnostic Reporting by CRT

C.8 Type of Digital Archives, Imaging Centers

C.9 Method of Printing Digital Diagnostic Images

C.10 Teleradiology Applications, Imaging Centers

C.11 Forecast Teleradiology Shipments,% Responding Centers

C.12 Estimated Mini-PACS Placements,% Responding Centers

C.13 Mini-PACS Installed Base Estimate

C.14 Full-Scale PACS, Installed Base

C.15 Use of CRT for Diagnosis

C.16 Primary Vendors

C.17 Respondents' Opinions Regarding PACS

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