Adoption of alternative financing strategies to increase the diffusion of picture archiving and communication systems into the radiology marketplace

The objective of the study was to evaluate current marketplace conditions a nd strategies employed by major picture archiving and communication systems (PACS) vendors in the creation of alternative financing strategies, to enh ance the diffusion of filmless imaging. Data were collected from the major PACS vendors in the forms of survey questionnaires and review of existing l eases. Topics evaluated in the survey included current financing options av ailable, foreseeable changes in PACS financing, role of third-party financi ers, and creation of risk-sharing arrangements. Generic leases were also re viewed evaluating the presence or absence of several key variables includin g technology obsolescence protection, hardware/software upgrades, end-of-te rm options, determination of fair market value, functionality/acceptance te sting, uptime guarantees, and workflow management consulting. Eight of the 10 PACS vendors surveyed participated in the data collection. The vast majo rity of current PACS implementations (60% to 90%) occur through direct purc hase, with conventional leasing (operating or capital) accounting for only 5% to 30% of PACS installations. The majority of respondents view fee-for-l ease arrangements and other forms of risk sharing as increasing importance for future PACS financing. The specific targets for such risk-sharing arran gements consist of small hospital and privately owned imaging centers. Leas es currently offered range in duration from 3 to 5 years and frequently off er technology obsolescence protection with upgrades, multiple end-of-term o ptions, and some form of acceptance testing. A number of important variable s frequently omitted from leases include uptime guarantees, flexibility in changing financing or vendors, and incorporation of expected productivity/o perational efficiency gains. As vendors strive to increase the penetration of PACS into the radiology marketplace, there will be a shift from conventi onal financing (loan or purchase) to leasing. Fee-for-use leasing and other forms of risk sharing have the greatest potential in smaller hospitals, wh ich do not have the financial resources to pursue conventional financing op tions. Potential PACS customers must be cautious when entering into these a lternative financing strategies, to ensure that appropriate safeguards are incorporated, in order to minimize downside risk. Copyright (C) 2000 by W.B . Saunders Company.