The head of the NHS’ £5bn IT modernisation programme has again warned suppliers of Picture Archiving and Storage Systems (PACS) to cut their prices, or be subjected to ‘radical surgery if they don’t come back with lower bids.

In an interview with the Financial Times, NHS IT director-general repeated his warning, first reported by E-Health Insider on 23 December, that PACS suppliers must "respond to treatment" or the NHS would look at alternatives such as building its own PACS system.

The warning echoes previous messages to electronic patient records suppliers in 2003, who were similarly warned to accept commodity pricing of their software or risk the NHS sidestepping them and possibly developing its own software.

On 23 December Granger told EHI:  "PACS will benefit from some further discussion with suppliers.  The pricing arrangements for PACS are something that concerns us.  There are always options: you can buy from elsewhere, build your own – PACS suppliers might want to bear that in mind."

In a 5 January FT report Granger, repeated this warning, stating that negotiations had secured big cuts in the prices for electronic patient records, servers and other infrastructure. "We now need to see the same for picture archiving systems. If we don’t get that we will subject the suppliers to radical surgery."

PACS has been identified as an early win by the National Programme for IT, one which can rapidly deliver very clear economic and clinical benefits.  Though growing numbers of hospitals now generate digital diagnostic images, relatively few yet have the systems in place to let them be viewed, stored and shared.

Approximately 50 NHS trusts have installed PACS systems over past decade, another 150 hospitals are thought to be in need of new PACS systems over the next few years.