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"Meaningful use" spells trouble for PACS market

by Glenda Fauntleroy, DOTmed News | February 17, 2011
The radiology industry should brace for a significant dip in sales and market size for picture archiving and communication systems, radiology information systems, and cardiovascular information systems as the 2009 American Recovery and Reinvestment Act continues to shift hospital IT budgets away from these traditional software tools and toward the use of electronic health records, according to a new report.

Millennium Research Group, a Toronto-based global provider of medical device market research, reports that ARRA's negative impact on sales for PACS, RIS and CVIS will likely extend until 2013, when these systems are also expected to become eligible for ARRA funds. Millennium Research estimated the 2010 U.S. market for these systems was about $1.8 billion.

"We expect intense competition between vendors for a share of a shrinking pie," said Basim Mansour, market research analyst at Millennium Research Group, in the release. "Significant price discounting of systems as well as a shift in focus toward the less-penetrated small hospital segment is expected over the next few years."
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According to the Centers for Medicare & Medicaid Services, ARRA provides incentive payments to eligible professionals, hospitals and critical access hospitals that are "meaningful users" of certified EHR technology in order to expand the use of EHR as part of the necessary health care system reform. Eligible professionals can receive up to $44,000 over five years under the program.

The Radiological Society of North America, however, reported that while more than 90 percent of all radiologists are considered eligible for some of the more than $20 billion in incentives from CMS, the provisions are not directed at the specialty. The group is urging federal agencies to revisit the recommendations.

"Radiologists have a big hill to climb in qualifying for incentives under the current rules," said Keith Dreyer, vice-chair of radiology for informatics at Massachusetts General Hospital, in an interview with RSNA News. "Because the first phase of the provision does not apply to radiology in any meaningful way, we requested a number of changes that we hope will redirect the focus of meaningful use as it applies to the daily practice of radiology."

Phase I of the incentive program launched on January 3, and the next phases are expected to begin in the coming years.

"It is a very critical moment in time right now, where health care professionals and vendors need to voice their opinions and lobby to get PACS, RIS, and CVIS incorporated into Phase II and Phase III of the ARRA," said Mansour.

Click here to read a special report on PACS.