Creating Clarity Around the Cloud: A Healthcare Transformation Forecast

Ask any number of people working in healthcare, or any industry for that matter, to define the "cloud" — or cloud computing — and you will likely get a variety of answers with varied degrees of accuracy — not unlike a weather forecast. For many, the cloud has a degree of mystery, as in something that happens "out there," which is essentially correct. Cloud technology enables anyone — or anyone authorized — to use the Internet from anywhere to access computing capabilities and data that are hosted somewhere else, as opposed to onsite. The cloud offers considerable benefits to healthcare, which is undergoing dramatic and essential transformation without the necessary financial or technological means to support the level and speed of change required. The confusion and related reluctance to embrace the cloud stem in part from a misperception that the cloud is a new concept.

History of the cloud

The term "cloud" actually refers to how the Internet has been depicted for years in diagrams and flowcharts — as a picture of a cloud. The concept itself dates back to the mid-1980s, when IBM first began leasing usage of the computing power of its large mainframe systems that, at the time, only the largest and most well-financed companies could afford to own. A decade or so later, smaller application service providers began offering Software-as-a-Service in the cloud to meet very specific business needs. The real advancement in cloud computing came when the technology enabled the major players, such as Amazon and Google, to logically partition their computing capacity in a manner that could be accessed by multiple clients in a flexible, secure and scalable manner.

Creating collaborative networks

Flexible. Secure. Scalable. These adjectives are mentioned most often when discussing the cloud's value proposition, regardless of industry or application. They are certainly enticing attributes for healthcare, which faces increasing technology needs, security requirements and financial constraints. But the ability to create collaborative networks will likely be the most valuable to hospitals and other healthcare organizations.

Consider the need for healthcare providers, both large and small, to be collectively accountable for the care of specific populations, and in turn, to deliver better care at lower costs. At a minimum, to coordinate care for their mutual patients, these organizations need to be able to collect, store and share data with one another, not to mention with other providers if those patients seek care beyond their "medical home." In today's highly mobile, global society, that is increasingly common. The storage requirements for PACS (picture archiving and communication systems) and the implications for meaningful use of EHRs alone are overwhelming for most hospital and health system IT departments. Ideally, clinicians will be able access and analyze large volumes of population health data to help them quickly determine the most effective course of treatment for their patients. This kind of analytical power would require many large servers that are beyond the investment resources of most if not all healthcare providers today. Instead, in much the same way that larger companies utilized IBM a quarter of a century ago, clinicians can harness the power of the cloud to perform these tasks.

Cloud technology can also serve the business side of accountable care. Provider organizations will soon need to handle the administrative complexities of healthcare reform, from value-based purchasing to bundled payments. Collecting, sharing and reporting data from the organizations involved — many of which will not be part of the same legal entity, housed in the same location or share the same technology — adds another layer of complexity, as well as an opportunity for the cloud to deliver value.

Economical and scalable strategy for an evolving environment

Without the prospect of the cloud, these organizations would otherwise have to make the capital investments necessary to build their own technological infrastructure, something few organizations have the dollars or expertise to achieve. The cloud provides a welcome alternative to cash-strapped organizations by giving them the opportunity to access and pay for the use of state-of-the-art (and ever-evolving) computing power when and to the extent they need it. This type of arrangement can also be paid on a subscription basis out of the operating versus capital budget, which is much easier for most organizations. They can also contract for additional usage as their needs grow. They can even make specific cloud usage go away easily if and when it is no longer needed, eliminating costs spent on unused computing power.

Anticipating future needs is one of the biggest challenges for nascent, as well as experienced, cloud users. In far too many healthcare organizations, the cloud is viewed as a project, not a strategy. Viewing the cloud in this manner could cause healthcare organizations to recreate many of the same integration challenges they face today with technology deployed on site.

Think back to the 1980s. IT organizations would deploy enterprise resource planning systems to address processes around order-to-cash cycles; other systems were used to manage customer relations, while additional systems were implemented to manage clinical processes and data. As healthcare has experienced, rather painfully at times, these systems do not necessarily communicate well with one another.

A more strategic approach to cloud technology requires thinking about the wide variety of clinical and business processes it can support and for whom. While clinical needs are essential — that's the business of healthcare — there are other functions with related data and processes that intersect and impact the clinical world. As mentioned previously, the finance department needs to be part of the equation to better understand the total cost of providing care, and to charge and be reimbursed appropriately across the continuum of care. The cloud can also play a role in communicating with patients, to help ensure they are "following doctor's orders" in order to reduce readmissions and improve customer satisfaction, both factors that will impact reimbursement levels moving forward.

The healthcare supply chain: Untapped wealth

Another area that is often overlooked in healthcare is the role of the supply chain. There is a wealth of data in supply chain systems about products used in patient care. While hospitals have typically focused more on the price paid for products, better data capture about utilization and linkages with other systems and data can provide insights into how the products used in patient care impact both cost and quality, which will increasingly determine how providers are reimbursed.

There is also the operational role of the supply chain to consider, which is the second largest and fastest growing operating expense for most hospitals. In other industries, the cloud's ability to facilitate supplier collaboration is seen as a source of operational efficiency and cost reduction. That value is being recognized more in healthcare. According to a 2009 HIMSS study, more than three-quarters of hospitals reported using an exchange, which offers supply chain applications in the cloud, to do business electronically with the suppliers from which they purchase the majority of their consumable products. Efforts are now underway to provide similar functionality and visibility for implantable devices. Given that implantables represent some of the highest priced and most sophisticated products used in patient care, the cloud has great potential to deliver even greater benefits from an operational, clinical and financial standpoint.

Developing a cloud strategy

To achieve many of the benefits outlined above, development of a cloud strategy should not be left to the IT department alone. It needs to be a collaborative effort, involving the highest levels of the organization. Executives responsible for overall performance and functional leaders from clinical areas, finance and operations must be involved in the process. This cross-functional team should consider:

•   What kinds of data do you need now and in the future?
•   How is that data structured?
•   How will you source/access the data?
•   How will you use the data, e.g., to understand profitability and quality of specific service lines?
•   What level of security is required? Remember, it is different for different types of data.
•   Who will you need to share the data with and what is their cloud strategy?

Involving business partners, both internally and externally, in developing your cloud strategy can avoid not only the integration issues mentioned above, but also increase standardization in healthcare. Both clinicians and process engineers have long taught that variation is the enemy of quality. By developing, deploying and agreeing to use the same set of applications and processes in the cloud, healthcare can reduce variation and increase quality in both care delivery and business processes.

What's holding healthcare back?

Certainly, some of the potential applications for the cloud are not fully developed, but they are close. The time to consider future usage is now, not when the organization is already behind the times. There are other aspects that can be deployed and deliver benefits today. With the technology currently available, the bigger obstacles to adoption in healthcare are often culture (getting disparate parties and functions to work together) and caution (particularly around patient information).

When asked, security is often listed as the number one reason why healthcare IT executives do not trust the cloud. If they do not have complete control over the data, they question how they can be fully responsible. But that perception is changing, especially when you consider that most data breaches in healthcare involve data stored in hardware onsite. With reputable and reliable cloud service providers, the onus for security and for disaster recovery is on them, and because it is their core competency, they are better at it than most healthcare IT organizations.

Forecast: Mostly cloudy

Perceptions and comfort levels are changing around the cloud. Recent studies have found that a third of healthcare organizations are already using cloud applications, while nearly three-quarters of those who responded no reporting that they plan to use the cloud in the next three to five years. Those numbers are relatively in line with other industries, and may be lower than actual. For example, many financial and supply chain operations at hospitals and healthcare systems are already using application or SaaS providers for paycheck processing and supply chain e-commerce in the cloud.

As comfort levels increase with these applications, and more security-conscious industries, such as finance, begin to perform mission-critical functions in the cloud, healthcare's usage is expected to increase. The migration will understandably evolve, first with the use of private clouds used only by authorized personnel within specific organizations, but will gradually evolve to more public clouds that can be shared by authorized users from different organizations. Ultimately, as technology continues to evolve, we will see what Gartner Research has coined "cloud service brokerages," which can take on more of the responsibility for managing access and the movement, translation and aggregation of data between multiple clouds. In other words, while clarity around the cloud increases, the forecast is for partly to eventually mostly cloudy. And in many ways, healthcare transformation depends on industry participants parting the confusion around the cloud and finding the most effective use of this technology.

As executive director of industry relations for GHX, Karen Conway works with industry associations, standards bodies, government agencies, analyst firms, academic institutions and the media to identify opportunities for hospitals and suppliers to improve business and clinical performance. Ms. Conway serves on the board of directors of AHRMM, the supply chain organization for the American Hospital Association; the leadership council of the ASU Health Sector Supply Chain Research Consortium; and as co-chair of the HIMSS Supply Chain Special Interest Group.