PURPOSE: To determine the incremental cash flows associated with department-wide implementation of a picture archiving and communication system (PACS) and computed radiography (CR) at a large academic medical center. MATERIALS AND METHODS: The authors determined all capital and operational costs associated with PACS implementation during an 8-year time horizon. Economic effects were identified, adjusted for time value, and used to calculate net present values (NPVs) for each section of the department of radiology and for the department as a whole. RESULTS: The chest-bone section used the most resources. Changes in cost assumptions for the chest-bone section had a dominant effect on the department-wide NPV. The base-case NPV (i.e., that determined by using the initial assumptions) was negative, indicating that additional net costs are incurred by the radiology department from PACS implementation. PACS and CR provide cost savings only when a 12-year hardware life span is assumed, when CR equipment is removed from the analysis, or when digitized long-term archives are compressed at a rate of 10:1. CONCLUSION: Full PACS-CR implementation would not provide cost savings for a large, subspecialized department. However, institutions that are committed to CR implementation (for whom CR implementation would represent a sunk cost) or institutions that are able to archive images by using image compression will experience cost savings from PACS.
PURPOSE: To determine the incremental cash flows associated with department-wide implementation of a picture archiving and communication system (PACS) and computed radiography (CR) at a large academic medical center. MATERIALS AND METHODS: The authors determined all capital and operational costs associated with PACS implementation during an 8-year time horizon. Economic effects were identified, adjusted for time value, and used to calculate net present values (NPVs) for each section of the department of radiology and for the department as a whole. RESULTS: The chest-bone section used the most resources. Changes in cost assumptions for the chest-bone section had a dominant effect on the department-wide NPV. The base-case NPV (i.e., that determined by using the initial assumptions) was negative, indicating that additional net costs are incurred by the radiology department from PACS implementation. PACS and CR provide cost savings only when a 12-year hardware life span is assumed, when CR equipment is removed from the analysis, or when digitized long-term archives are compressed at a rate of 10:1. CONCLUSION: Full PACS-CR implementation would not provide cost savings for a large, subspecialized department. However, institutions that are committed to CR implementation (for whom CR implementation would represent a sunk cost) or institutions that are able to archive images by using image compression will experience cost savings from PACS.