Can digital pathology result in cost savings? A financial projection for digital pathology implementation at a large integrated health care organization

Background: Digital pathology offers potential improvements in workflow and interpretive accuracy. Although currently digital pathology is commonly used for research and education, its clinical use has been limited to niche applications such as frozen sections and remote second opinion consultations. This is mainly due to regulatory hurdles, but also to a dearth of data supporting a positive economic cost-benefit. Large scale adoption of digital pathology and the integration of digital slides into the routine anatomic/surgical pathology "slide less" clinical workflow will occur only if digital pathology will offer a quantifiable benefit, which could come in the form of more efficient and/or higher quality care.

Aim: As a large academic-based health care organization expecting to adopt digital pathology for primary diagnosis upon its regulatory approval, our institution estimated potential operational cost savings offered by the implementation of an enterprise-wide digital pathology system (DPS).

Methods: Projected cost savings were calculated for the first 5 years following implementation of a DPS based on operational data collected from the pathology department. Projected savings were based on two factors: (1) Productivity and lab consolidation savings; and (2) avoided treatment costs due to improvements in the accuracy of cancer diagnoses among nonsubspecialty pathologists. Detailed analyses of incremental treatment costs due to interpretive errors, resulting in either a false positive or false negative diagnosis, was performed for melanoma and breast cancer and extrapolated to 10 other common cancers.

Results: When phased in over 5-years, total cost savings based on anticipated improvements in pathology productivity and histology lab consolidation were estimated at $12.4 million for an institution with 219,000 annual accessions. The main contributing factors to these savings were gains in pathologist clinical full-time equivalent capacity impacted by improved pathologist productivity and workload distribution. Expanding the current localized specialty sign-out model to an enterprise-wide shared general/subspecialist sign-out model could potentially reduce costs of incorrect treatment by $5.4 million. These calculations were based on annual over and under treatment costs for breast cancer and melanoma estimated to be approximately $26,000 and $11,000/case, respectively, and extrapolated to $21,500/case for other cancer types.

Conclusions: The projected 5-year total cost savings for our large academic-based health care organization upon fully implementing a DPS was approximately $18 million. If the costs of digital pathology acquisition and implementation do not exceed this value, the return on investment becomes attractive to hospital administrators. Furthermore, improved patient outcome enabled by this technology strengthens the argument supporting adoption of an enterprise-wide DPS.