A Vulnerable PACS Market - Cover

A Vulnerable PACS Market

Over 30% of the organizations we talked to for our 2022 PACS report either responded that they were actively planning to replace their PACS or said they say they wouldn't choose their PACS again if they had the option.

As you can imagine, these results are evidence of a pretty volatile market. There are three primary factors behind this volatility. One factor is that a large number of healthcare organizations using legacy platforms are currently making go-forward decisions. The second factor is staffing shortages. Staffing shortages are a consistent problem across many markets, but staffing shortages are especially affecting imaging. In looking at the data, we see that shortages on both the vendor and the provider side are heavily impacting the customer experience. Many vendors’ support scores are starting to drop. Low support scores can indicate that a vendor will be replaced. That said, we have also seen vendors try to step up to support providers in creative ways despite their limited resources.

The final factor contributing to the current volatile market is high expectations for innovation. Amid challenges, healthcare organizations continue to have high expectations for their vendor partners to innovate and bring new technologies to them. Many organizations that we talked to for our report expressed that their vendors' current pace with innovation was slower than they would like. As a result, a number of organizations that are not on legacy platforms are also exploring other options to see whether anything better is in the market. These organizations also want to know whether other vendors can partner with them to expand their enterprise imaging strategy.

These three factors have combined into a perfect storm to make this PACS 2022 report very relevant for anyone making decisions in this arena.

Acquisitions and Performance Scores

When you look at the report, the first chart shows the trending data from our last PACS report. You will notice that most of the arrows are pointed down, and some of them represent pretty significant drops over the last few years.

vendor performance score trending and respondent sizing large and small volume customer base

This report sheds light on what is causing these score drops—even among some very strong performers—and highlights the handful of vendors that have managed to improve amid the current challenges in the market.

Various acquisitions are causing some shakeups in the industry. Merative is a newly formed company from Francisco Partners, who purchased a number of products from IBM Watson Health, including Merge PACS. UnitedHealth Group recently finalized their acquisition of Change Healthcare. Finally, over the last two years, Intelerad has acquired several imaging solutions. We look at the early effects and customer perceptions stemming from those acquisitions in this report. There is more to come as KLAS continues to watch these acquisitions closely.

Large Versus Small Volume

It is important to note that in our last PACS report we focused more on the large volume side and tried to answer the question of which vendors could really scale. That said, KLAS still gets a lot of questions on the small volume side. So, for this report, we tried to differentiate how vendors are performing with large volumes versus small volumes as much as we could. This enabled us to highlight some cases where we have started to see gaps between small and large volume performance.

This year, we've updated and made some changes; we're only accepting evaluations from sites handling 50,000 or more studies per year, whereas the cutoff used to be 20,000 studies. As a result, this report gives insights to help almost anyone in the PACS market, from smaller sites doing between 50,000 and 300,000 studies per year to larger sites exceeding 300,000 studies annually. We want to make sure that we can answer the question of which options are good for small sites and large sites.

A Report for Making Decisions

The insights in this report were only further validated when we attended the RSNA annual meeting and spoke with providers there. In years past, it felt like there were more high-level conversations around the options in the PACS market. But in 2022 it felt like there were much more serious discussions happening around shopping for solutions.

Not everyone has a big budget to allow them to go and make changes right now, but in the near future, I think we will continue to see growing dissatisfaction and appetite for change in some customer bases, especially around legacy solutions. On the other hand, those vendors who are engaging with their customers will likely see more solidifying of their customer bases.

The PACS 2022 report is one of the most interesting reports that I've worked on at KLAS because there has been so much movement both in scores and in provider outlook. For this reason, the information in the report is very relevant for those who are trying to make decisions. For more in-depth details, please take some time to read the full report.