PUBLISHED R E S E A R C H AU G U ST 2 0 1 0 BY SCOTT DONAHUE VICE PRESIDENT, TRIPLE TREE, LLC CAN CLOUD COMPUTING HELP FIX HEALTHCARE? Few topics have dominated the political news cycle over the past year more than healthcare reform. The recently passed Patient Protection and Affordable Care Act is aimed at improving the quality, cost, and accessibility of healthcare in the United States – an indisputably massive but much-needed undertaking.MINNEAPOLIS | BOSTON WWW.TRIPLE-TREE.COM 1
C A N C LO U D C OMPUTING HELP FIX HEALTHCARE ?Aside from political debates in Washington, the wasted. While it is impossible to point to any singletechnology industry continues to buzz about breakdown contributing to the waste, it is clear fromcloud computing. It may seem, at first glance, the study’s findings that this is an industry that hasthat healthcare reform and cloud computing are significantly underutilized technology to improveunrelated, but TripleTree’s research and investment efficiencies.banking advisory work across the healthcarelandscape are proving otherwise; the linkage with Healthcare reform has mandated that it is timecloud is actually quite significant. for healthcare information technology (HIT) to be modernized. The Health Information Technology forOur viewpoint is that cloud computing may end up Economic and Clinical Health (HITECH) Act includesmending a healthcare system that has largely let $18 billion for hospitals and doctors to digitizea decade of IT innovation pass by and now finds medical records in a format known as an Electronicitself trapped in inefficiency and stifled by legacy IT Medical Record (EMR). The thinking behind the pushsystems. to medical record digitization is that once medical records are digitized and information can be moreHEALTHCARE IT easily shared, duplicative tests will be eliminated and Consumers andAT 30,000 FEET patients will have greaterIt is not controversial to state that patients have ver y control and access to their medical information. Withhealthcare IT lags most other verticals little transparency billions of dollars up forby at least 10 years. Most healthcaresystems are built on workflows that on health plan grabs, hospitals and doctors are quickly prioritizing theirconsist of paper medical records, costs and covered IT activities around EMRduplicated test results, non-digitized ser vices, and implementation.images, handwritten notes, fragmentedIT systems, and silioed information. health insuranceInformation sharing across providers EMRs–is inefficient and data portability is Web sites providerare. Consumers and patients have ver y little clarity. A GOODvery little transparency on health plan STARTcosts and covered services, andhealth insurance websites provide very little Digitized health records are just a component of theclarity. Physicians still rely on pagers as a primary more efficient IT infrastructure vision trumpeted bycommunications tool, and coordinating care the HITECH Act. Most healthcare IT infrastructuresschedules and other administrative processes are need a massive upgrade to more easily capture andcumbersome. share information, and to make their organizations more intelligent, and the data manage moreA 2009 PricewaterhouseCoopers Health Research actionable.Institute study found that nearly half of the $2.2trillion the U.S. spends each year on healthcare is Several EMR vendors are offering their solutions asMINNEAPOLIS | BOSTON WWW.TRIPLE-TREE.COM 2
C A N C LO U D C OMPUTING HELP FIX HEALTHCARE ?As a result, general IT cloud computing environmentsmay not be suitable for many healthcare applications. A HEALTHCAREAs the notion of private cloud computing is catching CLOUD REVOLUTIONon, healthcare must go one step further – theformation of hCloud environments that specifically IS OCCURRINGaddress the security and availability requirements hClouds are providing one of the most promisingfor healthcare. opportunities to reduce technology and treatment costs within healthcare. Consider the followingJust as cloud computing offers multiple benefits examples:for enterprise computing environments, hCloudprovides an infrastructure that allows hospitals, • athenahealth has become a fast-growingmedical practices, insurance companies, and HIT vendor by offering SaaS-based practiceresearch facilities to tap improved computing management and EMR software. Acceptanceresources at lower initial capital outlays, thanks of this cloud-based solution brings about atto the on-demand nature of cloud computing. least two distinct advantages over existingAdditionally, hCloud environments will lower the systems: 1) low upfront fees since littlebarriers for innovation and modernization of HIT to no technology is installed onsite (i.e.,systems and applications. “affordable”), and 2) a living database of insurance payment rules that is continuallyInformation contained within a hCloud can also updated based on the denials of its clients. If abe better analyzed and tracked (with the proper requirement changes for submitting a claim,information governance) so that data on treatments, athena can apply that knowledge across itscosts, performance, and effectiveness studies can entire client base (i.e., “adaptable”).be analyzed and acted upon. Facilitated by hClouds,patient information can be shared among authorized • All states and many municipalities arephysicians and hospitals, providing more timely establishing health information exchangesaccess to life-saving information and reducing the (HIEs), which are cloud-based informationneed for duplicate testing. clearinghouses where information can be more easily shared between hospitals, A 2009 health systems, physicians, and clinics (i.e., “open”). There are dozens of vendors Pr i c e waterhouseCoopers and service providers building cloud HIE He a l t h Research Institute solutions, and multiple HIEs are now live. Though it is early to assess the true value St u d y found that nearly of an HIE, the concept should improve h a l f o f the $2.2 trillion patient care by making information sharing more timely and efficient. Many t h e U. S. spends each year pharmacology vendors including Eli Lilly, o n h e a lthcare is wasted. Johnson & Johnson, and Pfizer are starting to tap the cloud to improve research and 4 MINNEAPOLIS | BOSTON WWW.TRIPLE-TREE.COM
C A N C LO U D C OMPUTING HELP FIX HEALTHCARE ? drug development (i.e., “scalable” and Partial solutions will not win over industry resistance. “affordable”). Commercial cloud vendors, hCloud solutions from vendors that understand including Amazon, IBM, and Oracle have healthcare nuances can build winning solutions. developed pharma-specific clinical research TripleTree is watching closely to see if hCloud activity cloud offerings with the goal of lowering the takes root in private or hybrid clouds (because cost and development of new drugs. of security and other industry nuances) rather than public cloud infrastructures. Regardless, the • Hospitals and physicians are starting to see enormity of challenges facing healthcare requires cloud-based medical records and medical innovative solutions. image archiving services (i.e., “open” and “portable”) coming on line from the likes of We have long espoused that innovation in healthcare HP, GE, and Iron Mountain. The objective is needs to come from outside of the industry. Today, to offload a burdensome task from hospital the likes of Amazon, Dell, Google, IBM, Intuit, and IT departments and allow them to focus on Microsoft have built early visions for cloud computing supporting other imperatives such as EMR and see a role for themselves as healthcare solution adoption and improved clinical support providers. We are convinced that traditional HIT systems. vendors will benefit from aligning with these groups such that their domain-specific knowledge can • Early successes of cloud-based physician attach itself to approaches for cloud (public, private collaboration solutions such as remote and hybrid), creating a transformational shift in the video conference physician visits are being healthcare industry. trialed. Extending such offerings to a mobile environment for rural telehealth or disaster response is becoming more real with ABOUT THE AUTHOR broader wireless broadband and smartphone Scott Donahue is a Vice President at TripleTree, LLC, adoption. There will be many intersections by an independent investment bank and strategic advisor the adoption of mHealth (mobile healthcare) providing growth companies in healthcare and other and hCloud (i.e. “portable”). tech-enabled verticals with M&A, private capital, and principal investing services. These are a few early examples of where cloud computing is successfully benefiting an industry Having served both in operational, investment, that is hypersensitive to information security, wary and advisory roles during his career, Scott has of disruptive IT retrofits, and highly risk-adverse. built deep knowledge in IT operations and services Successful adoption and implementation of hCloud delivery approaches including: utility computing; heterogeneous data center operations; storage technologies will help win over healthcare CIOs who, infrastructures; telecommunications and wireless as a whole, have taken a more skeptical view of operations management/OSS; and service-oriented cloud computing than colleagues from other industry architectures. verticals. 5A R E P R I N T F R O M “CLOUDBOOK” | AUGUST 2010
This article is featured in the August 2010Issue of the Cloudbook Magazine. To down-load a PDF of the full issue, click here.