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Cloud Technology - Future in Healthcare February, 2014 BLOG POST


Cloud Technology – Future in Healthcare Healthcare remains a risk-averse industry; when it comes adopting transformative technologies like cloud computing. It is not an unfounded and cautious behavior, given serious security concerns associated with using cloud technologies in healthcare as compared to other industries. Healthcare data comprises the most sensitive, and private patient data, and organizations and their business associates can face heavy fines if the data falls into the wrong hands. . However, with other industries leapfrogging with the state-of-the-art technology, healthcare organizations are are ready to take the risk and go the ‘cloud’ way. According to surveys of healthcare executives, healthcare organizations are opening up to cloud computing in recent times. These organizations are beginning to move to cloud-based platforms, despite the common belief that compliance and security issues would hinder the shift. Healthcare organizations are more willing to store personal health information (PHI) in the cloud than they were in the past. In 2012, cloud computing was used by only 9% respondents, small number compared to 30% in 2013. Of those using the cloud, 40% were storing PHI in 2013, compared to 9% in 2012. A recent study by CDW found that, 30% healthcare providers favored cloud applications for meetings, while 25% practices were already using cloud-based email.

Why is cloud computing being preferred in Healthcare? In an industry, certain drivers need to be present for new technologies to be adopted. For many years, these drivers have been minimally present in the healthcare industry, resulting in a reluctance to change, but the current scenario is changing with respect to the following points: • • • •

Most health care organizations are moving to cloud computing to reduce operational costs, a powerful motivation that will overcome the overblown security and privacy concerns. Health care organizations are getting a much higher return on investment than other sectors have had from cloud adoption. Cloud computing applications for the healthcare industry are typically less expensive than the legacy applications that they replace. As the amount of digital information increases, the ability to manage this data becomes a growing problem in the healthcare industry. A popular solution to the need for high capacity storage is cloud storage, which tends to cost a lot less, and the data is safely stored off-site.

What is holding back Cloud adoption in Healthcare? Though there are myriad benefits from transferring applications to cloud, healthcare providers are held back by issues related to security of patient information, interoperability and compliance with government regulations, which in turn has slowed the growth of this market. • •

Regulatory and security concerns have held back the health care industry from widespread adoption of public clouds Most IT organizations in the health care sector do not have the talent required to move their systems safely to cloud-based platforms, and they may not understand the compliance and security issues as well as they should

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Regulations such as the electronic health record guidelines on meaningful use and the Health Insurance Portability and Accountability Act (HIPAA) impeded health care adoption of public cloud systems, which are hosted by third parties Problems in making IT systems interoperable have also delayed cloud computing growth in the health care industry

Cloud Computing in Healthcare Healthcare industry is advancing rapidly and the cloud technology is playing a vital role in its advancement. Market Size The global cloud computing market in the healthcare industry was valued in the range of USD 1.8 - 2 billion in 2012 and is expected grow in the range of USD 5 – 7 billion by 2017. The market is expected to grow at a CAGR of more than 20% from 2012 to 2017. The healthcare industry is witnessing an upward trend in adopting cloud computing technology, which will enable healthcare organizations to deliver improved services in a cost competitive manner. The market size is also influenced by increasing IT spending from the healthcare sector. The market possesses high attractiveness in terms of future prospects as HCOs (health care organizations) need to cut down their costs in IT spending and have started adopting cloud computing for their IT solutions. Market Segments Cloud technology in the healthcare market can be segmented by applications; Clinical Information Systems (CIS) and Non Clinical Information Systems (NCIS). CIS includes EMR, CPOE, PACS, RIS, LIS, PIS, and others while NCIS includes Revenue Cycle Management, Automatic Patient Billing, Cost Accounting, Payroll Management, and Claims Management. Servicing Models Private, public, and hybrid clouds are the three deployment models across the healthcare industry. The industry has been slow to adopt public clouds due to its highly regulated nature, where-as it shows a higher affinity for the private and hybrid cloud models. The healthcare cloud market by service models is further classified into Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-aService (IaaS). The market is dominated by SaaS providers such as Carestream Health, Inc. and GE Healthcare (U.K.). Pricing Models Cloud computing is a utility based or pay-per-use type of service, and the market can be categorized by two types of pricing models offered by service vendors - the pay-as-you-go model and the subscriptionbased or spot pricing model. Geographic Analysis and Major Companies North America accounts for the majority of the share in the cloud computing market with the US being the largest contributor to this region. The large market size of the region is supported by the presence of a large number of biopharmaceutical companies which are active in R&D and use IT support to optimize their processes.

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The healthcare cloud computing market is a fragmented, with no player having a share of more than 5% to 10%. This is due to the existence of many cloud service providers, dynamic and versatile requirements of HCOs, department specific cloud needs and more. Top players in this market are CareCloud (US), Carestream Health, Inc. (US), Merge Healthcare, Inc. (US), GE Healthcare (UK), and Agfa Healthcare (Belgium).

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