The cost effectiveness of teleradiology at the Women’s and Children’s Hospital in Adelaide, South Australia

Dr Tina Hayward, Chief, Division of Medical Imaging, Women’s and Children’s Hospital, Adelaide

John Mitchell, Managing Director, John Mitchell & Associates, Sydney

Paper presented at TeleMed 99, London, 1 December 1999

Acknowledgement: Article published in Journal of Telemedicine and Telecare, Vol. 6, No.1, 2000, The Royal Society of Medicine Press Limited

The cost effectiveness of teleradiology was a focus of a major trial conducted by the Women’s and Children’s Hospital (WCH) in Adelaide, South Australia, from February 1998 – February 1999. The project demonstrated that, with the large distances between remote hospitals and metropolitan hospitals, the cost effectiveness of teleradiology in comparison with retrieving remote patients can be dramatic. The research also demonstrated that a new form of cost justification is required for teleradiology for tertiary hospitals providing second opinions in special cases. A series of compelling case studies have proved the economic and social value of teleradiology at the WCH.


The South Australian Department of Human Services provided funding for the Women’s and Children’s Hospital (WCH) to conduct a teleradiology trial at the WCH from February 1998 – February 1999. The primary aim of the project was to evaluate the advantages, limitations, benefits and costs of a teleradiology service provided by WCH for selected country and Northern Territory locations. An evaluation was conducted over the twelve months (Hayward et al, 1999) and the main outcome of this trial is the permanent establishment of teleradiology at WCH.

The project involved the installation of a teleradiology receive site at WCH, compatible with the equipment used by the three, private radiology Practices in South Australia. Regular teleradiology links were made to private radiology Practices’ sites, particularly at Port Augusta (400km from WCH), Mount Gambier (430km) and Alice Springs (1,600km). The teleradiology images can be transmitted either over a standard 64kbps telephone line or a 128kbps ISDN line.

Teleradiology has been shown to be cost effective for radiology Practices that have a high volume of radiology images to transfer between distant sites (e.g. Bergmo, 1996). However, the WCH is a tertiary level hospital that offers a second opinion on radiology images from remote sites, in exceptional cases. There is almost no mention in the literature of radiology sites such as the WCH. The cost justification for such second opinion sites may need to be presented differently to the arguments put for first opinion teleradiology sites.


During the teleradiology project, both qualitative and quantitative data were collected and analysed and formative and summative evaluations were undertaken. A total of 14 objectives were evaluated during the project and reported on in a final report on the project (Hayward et al, 1999) in June 1999. Twenty seven teleradiology cases were recorded and formally analysed in the period from September 1999 to February 1999 (Hayward et al, 1999) and many others have been recorded at the WCH since the end of the formal project in February 1999.

Cost effectiveness concerns the relationship between project inputs, such as equipment costs and transmission costs, and project outcomes, ‘where the outcomes are not monetary, and cannot readily be converted into dollars’ (Dept. Finance, 1994, p.11). Cost effectiveness analysis is particularly useful ‘where benefits are difficult to quantify, such as … health programs aimed at improving the quality of life’ (Dept. Finance, 1994, p.11). A case report on a link between the WCH and Alice Springs (Hayward & Mitchell, 1999) demonstrated the cost effectiveness of using the teleradiology technology, together with videoconferencing, to review the management of five child patients in Alice Springs, some two hours by air from WCH.

With regard to cost effectiveness, McDonald et al (1998) identify the costs of five main inputs in telemedicine: (1) project establishment costs, (2) equipment costs, (3) maintenance costs, (4) communication or transmission costs and (5) staffing costs. Each of these cost categories was monitored and evaluated (Hayward et al, 1999) during the 1998-99 project.


In this section, we discuss the factors that influence the cost-effectiveness of teleradiology, as derived from a literature research (e.g. McDonald et al, 1998) and from the experiences of the 1998-99 trial. This analysis shows that the standard measures of the cost effectiveness for teleradiology do not suit the WCH context. We then provide the outcomes of teleradiology case studies that are not easily quantified, but do assist cost justification.

  1. Costs of Equipment

Of the five cost components of teleradiology cited by McDonald et al. (1998), the cost of the equipment is probably the most important. Variations in the requirements which different radiology Practices have of their teleradiology systems correspond to large variations in the costs of equipment.

As the WCH needed to use the same teleradiology equipment as the three private Practices in South Australia, equipment costs were not controllable.

  1. Reductions in Transport & Accommodation Costs

The reduced need for a radiologist to travel to rural hospitals is a commonly cited benefit of teleradiology in discussions of its cost-effectiveness.

This was not relevant to the WCH project, as the staff radiologists do not travel to country sites.

  1. Reduced Film & Clerical Attendant Costs

Reductions in film-related costs represents another potential contribution to teleradiology’s cost effectiveness.

The small number of teleradiology images received at the WCH does not provide strong support for the above argument.

  1. Patient Workload

The number of cases to be managed via teleradiology emerged from the literature (e.g. Bergmo, 1996; Duerinckx et al, 1998) as a critical variable for cost-effectiveness. Whilst some object to the prospect of “radiology sweatshops” (Tilke, 1997, p. 17), Davis (1997) suggests that a single expert reader could interpret 10,000 cases annually.

These studies are not relevant to the WCH, as it is not attempting to provide a first opinion service similar to the three South Australian Radiology Practices.

  1. Personnel-Related Costs

Cost-effectiveness is enhanced if radiology services do not need to train staff to use teleradiology equipment, thus avoiding the direct financial and opportunity costs of having to do so.

The findings at the WCH on this matter were that at least one-two hours of intensive training as well as practice is required by staff who are computer literate.

Clinical cases

The above discussion of five variables affecting the cost effectiveness of teleradiology (McDonald et al, 1998) did not provide a solid basis for justifying expenditure on teleradiology at WCH. However, the project revealed that individual cases do provide compelling support for teleradiology, albeit often in intangible ways.

Many clinical cases have occurred since the teleradiology equipment became operational in mid-1998. As an example, a young girl with an Xray of a possibly malignant bone lesion in her leg was seen by a WCH paediatric orthopaedic specialist during one of his routine visits to a country hospital. Using teleradiology to link to the WCH whilst the consultation was in progress, the specialist could discuss the radiographs with the paediatric radiologist in WCH. Further investigation and treatment was then coordinated before she was transferred to WCH.

In mid-1999, another child was discharged from WCH following brain surgery. At her country hospital, she was thought to have a serious complication necessitating re-transfer. Review of the local CT scan by teleradiology at WCH, which involved both the neuro-radiologist and paediatric neuro surgeon, provided reassurance and she was treated locally. As well as inappropriate transfer being avoided, there was immediate reassurance for the family.

A pregnant woman was scanned at a remote country hospital and thought to need urgent flight transfer and premature delivery of her baby for a malignant mass in the fetus. Using teleradiology, the images were reviewed by the WCH obstetric radiologist and discussed at a multidisciplinary meeting. The likely diagnosis was changed and the patient was followed up locally, with a coordinated care approach also involving WCH specialists. In this case, not only was emergency transfer and surgery prevented, but future care at the primary site was facilitated. Teleradiology performed a major role in the assessment of further pregnancy scans and assessing the baby following birth.


In our consideration of the outcomes of the teleradiology system, we utilised the categories developed by McDonald et al (1998) who divided the outcomes of telemedicine services into (1) benefits to patients and families, (2) benefits to medical providers, (3) benefits to participating hospitals and (4) benefits to society. As cost effectiveness analysis is particularly useful ‘where benefits are difficult to quantify’ (Dept. Finance, 1994, p.11), we have identified both “tangible” and “intangible” benefits in our summary table below.

Tangible benefits Intangible benefits
Benefits to patients and families Reduced costs of travel and accommodation

Reduced costs where teleradiology prevents surgery/other medical procedures

Reduced need for childcare when travelling

Reduced time off from work

Faster management of medical problems

Reduced anxiety where second opinion is rapidly provided and, on occasions, surgery or other procedures are avoided

Equitable access to specialist level opinion

If patient transfer is necessary, can be fully coordinated and planned beforehand

Future management at the primary site can be facilitated

Benefits to medical providers Reduced time and cost of travelling

Better management of patients

Cash flow to rural centres due to retention of patients

Increased competency of interpreting radiologist (due to large case load, exposure to more rare conditions)

Increased exposure to expertise for rural staff

Staff retention in rural areas by improved peer and specialist support

Increased satisfaction that management at the primary centre is appropriate following rapid expert advice

Enables tertiary site to develop a more organised approach to second opinion referrals

Benefits to hospitals/teleradiology providers Wider delivery of services – increased revenue

Decrease in unnecessary patient transfer

Reduced need for clerical attendant staff

Reduced costs of film

Remote pre-admission – increased efficiency

Reduced length of stay

Improved care and health outcomes

Facilitates recruitment of medical staff for more remote areas

Benefits to society Less time off from work – improved productivity

Decreased burden of illness on society

Great equity in quality, efficiency and access to medical care

Reduced morbidity and mortality

Aids appropriate allocation of overall health resources

Less social disruption as continuity of care is facilitated locally

Table 1: Tangible and Intangible Benefits of Teleradiology identified in the WCH Project

The above table reinforces the argument that, for a tertiary hospital providing second opinions in selected cases, a new form of business justification is required for teleradiology. The justification would include an emphasis on the justice and equity in providing patients in rural areas, who present with less common pathologies, with the ability to be provided quickly with a second opinion from a specialist at hospitals such as the WCH. The justification should also include the improved support provided to doctors practicing in rural and remote areas by the provision of teleradiology.


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Contact details for the authors:

Dr Tina Hayward, Chief, Division of Medical Imaging, Women’s and Children’s Hospital, Adelaide

John Mitchell, John Mitchell & Associates, Sydney