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The transition from conventional film based to filmless operation at the Baltimore VA Medical Center in 1993 was successful and has resulted in a number of clinical and economic benefits. The subsequent integration of the Department of VA hospitals in Maryland into a single network, the VA Maryland Health Care System, resulted in the opportunity to establish a 'virtual' radiology and nuclear medicine department. This integrated department is based upon a wide area network in which outlying medical centers utilize a central HIS/RIS and a central commercial Picture archival and communication system (PACS) as well as a VA 'home grown' image management and communication system, the VISTA imaging system. The creation of this virtual radiology/nuclear medicine department has resulted in additional savings and improvements in clinical care. The benefits of the PACS were made possible, to a large extent, by the high level of integration of the PACS and medical modalities with the hospital information and transcription systems. Our experience suggests that it is absolutely essential to integrate the PACS into the patient's electronic medical record in order to maximize efficiency and clinical effectiveness of the system., (Copyright 2002 Published by Elsevier Science Ltd.)