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In this paper, a medical image compression model for efficient transmission of medical images using block BWT–MTF with Huffman encoding and hybrid fractal encoding is proposed. Diagnosis of medical images requires detailed analysis of vital portions of the image. In medical image compression, a small loss in the vital portion leads to wrong interpretation. The proposed compression scheme will eliminate this hindrance by utilizing region based compression which results in the lossless compression of requisite area, where the salient details are stored and lossy compression in the remaining region. In this method, region which contains most required diagnostic features is separated and then encoded without significant loss in diagnostic quality using block based Burrows- Wheeler compression algorithm. Remaining regions are encoded using hybrid fractal encoding algorithm. Finally both encoded region are combined together to reconstruct the output image. The performance of the compression scheme is evaluated in terms of PSNR, CR, space saving and time consumption. The numerical result shows that the proposed method gives better results compared to the conventional methods in terms of PSNR better results obtained for ultra sound and MRI images with average value of 36.166 db and 34.097 db respectively. [ABSTRACT FROM AUTHOR]