The purpose of the study was to evaluate the effects of lossy compression on grayscale ultrasound images to determine how much compression can be applied while still maintaining images that are acceptable for diagnostic purposes. The study considered how the acquisition technique (video frame-grabber versus directly acquired in digital form) influences how much compression can be applied. For directly acquired digital images, the study considered how text (that is burned into the image) affects the compressibility of the image. The lossy compression techniques that were considered include JPEG and a Wavelet algorithm using set partitioning in hierarchical trees (SPIHT).