Pulmonary fibrosis is suggested by a history of progressive (worsening over time) shortness of breath with exertion. Sometimes, during examination of the lungs with a stethoscope, the doctor can hear crackling sounds in the chest. These crackles have a very characteristic sound and are very similar to the sound heard when Velcro is pulled apart. These are often referred to as "Velcro crackles (or rales)". The chest X-ray may or may not be abnormal, but a special X-ray test called a high resolution CT scan will frequently demonstrate abnormalities. This type of X-ray provides a cross sectional picture of the lungs in very detailed resolution. The classic findings in idiopathic pulmonary fibrosis show diffuse peripheral scarring of the lungs with small bubbles (known as bullae) adjacent to the outer lining of the surface of the lung, often at the bases of the lungs.

Lung function testing is distinctly abnormal. The volumes of the lungs may be reduced as may the airflow, but the characteristic finding is a reduction in the diffusing capacity. The diffusing capacity is a measure of the ability of the lungs to exchange gases (oxygen and carbon dioxide) into and out of the blood stream.

The diagnosis can be confirmed by lung biopsy. An open surgical biopsy, meaning that the chest wall must be surgically opened under general anesthesia to remove a portion of lung tissue, may be necessary to obtain enough tissue to make an accurate diagnosis. The most common type of biopsy in this situation is by a video assisted thoracoscope. Basically, this involves placing a small tube into the chest cavity through which biopsy samples can be obtained. Often, if the clinical situation is very classical in presentation, a biopsy may be unnecessary. The biopsy specimen is examined microscopically by a pathologist to confirm the presence of fibrosis.

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