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An Easy and Foolproof Method of Vendor Selection

April 17, 2008
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OK, so that headline is a teaser. You certainly didn’t think I was going to suggest that there was such a thing, did you?

I may be especially cynical right now, after spending the last several days trying to make sensible economic comparisons between two PACS vendors whose offerings are like apples and pastrami.

If you compare our organization to similar ambulatory facilities, I think of us as well ahead of the technological adoption curve. The one place where we’re laggards is in the area of PACS.

This in spite of the fact that we do plain film imaging at eight different locations, mammography at five, CT and MRI at three and have radiologists reading at two. We did about 85,000 billed procedures last year (which, by the way, is not the same as the count of PACS “exams”, as I’m learning.)

In addition to reading all the stuff we do, our radiologists also read for a local hospital. This hospital doesn’t have PACS yet either, so a couple of years ago, in the spirit of cooperation, the greater good of mankind, and not ticking off the radiologists, we undertook a joint effort to select a common PACS system.

For a number of reasons (none of which I’m bitter about), that effort ended badly. By the time we got out from under some other projects our PACS initiative was delayed by a year or so.

We came out of that whole experience with strong positive feelings about Philips, who had acquired the old Stentor iSite product. We had advocated for them pretty vigorously as the vendor of choice for the joint PACS.

We also liked an innovative little company named Dynamic Imaging, even though I had never heard of them when we first started shopping.

If you’ve read some of my earlier posts you might remember that we have an important vendor relationship with GE- subsequent to their purchase of IDX. We use their Centricity Business (Flowcast) practice management, and their Centricity RIS/IC radiology information system.

Prior to Philips’ acquisition of Stentor and GE’s acquisition of IDX, IDX and Stentor were in bed together in the PACS space. In fact, to this day the iSite product that Philips sells sits on top of an IDX-developed relational database.

Philips is in the process of rewriting that whole backend; the “de-IDXed” product is already on the street in Europe, but they won’t release it here until it shakes out a bit. Their plan is to convert all their customers eventually- your guess is as good as mine when that might happen.

The thing that most differentiates Philips in the PACS market, however, is their pricing/delivery/support model. They have adopted Stentor’s strategy of providing only turnkey systems (with the exception of reading stations), providing all the hardware support and upgrades, and charging for it on a per click basis- $X.XX per “exam”.

There are points of that approach that are clearly attractive. Initial capital outlay is reduced, future costs are fairly predictable and tied directly to their related revenue sources, etc. But assigning an accurate valuation to those benefits is NOT easy. (“But did you make a GOOD DEAL?”)

Uncertainties notwithstanding, we had a certain emotional investment in Philips left over from the abortive joint PACS venture with the hospital. It would have been really easy to just take the path of least resistance and slide them through the selection process.

But remember that other little vendor I mentioned, Dynamic Imaging?

Our radiology manager was the first one to bring up their name. I’d never heard of them, so, of course, I was skeptical. Try as I might to discount them, however, they just kind of grew on me.

Part of the attraction was that the system platform is one that we’re very comfortable with. It’s a browser-based application that runs on top of a Microsoft SQLServer database. They are hardware agnostic, so we could use the HP devices that are our standard. Structurally, the system reminds me of our Allscripts EMR.

Throw in the facts that DI got good rankings from the independent evaluators, was attractively priced, and we liked their people, and suddenly you’ve got a horse race.

So why hadn’t they made the cut when we were working with the hospital?

There were probably some politics involved. As we would learn, the hospital really wanted to keep their main vendor in the mix as long as possible.

Then there was the uncertainty. What happens to small, private, innovative vendors that are gaining market share and making a name for themselves? They become part of some behemoth’s strategic plan. (Like, maybe, Stentor and Philips…)

When you don’t really have a dog in the fight, none of your key vendors have a product that fits what you’re looking for, and you’re forced into the best of breed approach, it’s sure easier to lean toward the product that has the clearer road forward.

But consolidation giveth and consolidation taketh away.

Barrington, IL and Allendale, NJ, October 11, 2007 - GE Healthcare, a unit of General Electric Company (NYSE:GE), today announced that it has completed the acquisition of Dynamic Imaging, LLC (“Dynamic Imaging”), a leader in Web-based image and information management.

What’s it do to your thinking when one of the “best of breed” vendors gets acquired by one of your key vendors? Does that change the calculus a little?

Now, I’m not naïve enough to suggest that this is suddenly an “integrated solution”. (I’m not a McKesson customer.) But one has to believe that this product is likely to grow closer to the GE family as time goes on, in contrast to Philip’s stated intent to diverge from that family.

We can debate about how positive that GE influence is likely to be, and we have. I suspect that most of you have something of a love-hate relationship with the vendors you work with everyday. It is easy to give extra points to the devil you don’t know.

The long and the short of it is that now we have a decision to make. I have my own inclination, but I’m trying to play my cards close to the vest in hopes that the other constituencies will independently come to the same conclusion, based on the sheer logic of the situation.

Essential to that, however, is making a clear and dispassionate analysis of the options. Which brings me all the way back to shopping in the produce section versus the neighborhood deli.

I’ll be sure and let you know how it comes out.

In the meantime, I’d enjoy hearing any of your stories about picking a vendor or about how consolidation has effected your world. Does anyone have a better consolidation case study than this one? Feel free to comment here, or send me email at mharvey@holzerclinic.com.

Finally, and totally off-topic, my teaser headline reminded me of something you might appreciate.

When I first got into healthcare IT, I worked a lot with a consultant named Bob Shafran who was a real mentor for me. One day he asked me, “Do you know why it’s so hard to make a system foolproof?”

I thought a little and said, “No, I don’t.”

“Because fools are so creative,” he replied.

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