Cloud computing in healthcare: the question is not if, but when

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From the big technology vendors--Microsoft, Google, IBM, AT&T, et al.--comes the drumbeat of exhortations: "to the cloud, to the cloud!" Some industries have already decided that that's the way to go. But healthcare providers aren't so sure, according to a recent report by KLAS Research.

When you examine their reasons, however, it appears that the only question about cloud computing in healthcare is not if, but when.

In a survey that ran the gamut from small clinics to 1,000-bed hospitals, KLAS found that 55 percent of the respondents already had something in the cloud, whether it was clinical applications, storage, e-mail, or picture archiving and communication systems. Nearly a quarter of this group used remotely served electronic health records.

Another group of respondents--58 percent of the total--said they planned to adopt cloud computing. But only 35 percent of that group actually had solid plans to use cloud-based applications, and many were hesitant to place mission-critical applications in the cloud.

KLAS detected a bifurcation between physician practices and hospitals in this area. The clinics were much more open than hospitals  to having their EHRs and billing systems hosted in the cloud.

One reason is that small practices, in particular, lack the IT resources of hospitals, KLAS Senior Research Director Erik Westerlind told FierceHealthIT. Whereas a good-sized hospital typically has a data center and an IT staff, most physician practices don't. "So they perceive that going to a cloud offering for their EHR is a good move because it extends their IT capabilities," he said.

Meaningful Use is a motivator for both practices and hospitals to go to the cloud, he noted. For clinics, cloud-based EHRs are less expensive and have smaller upfront costs than onsite systems do. Smaller hospitals are also lured by the cost advantage, and the shorter implementation time for remotely served applications is attractive when hospitals are trying to meet the Meaningful Use deadlines. Westerlind cited one community hospital that got its EHR up and running within a year of signing a vendor contract.

On the other hand, many hospitals are hesitant to mvoe clinical and administrative systems to the cloud, the KLAS study found. KLAS attributed this cautiousness, in large part, to doubts about the reliability and security of cloud computing.

The reliability concern is especially prevalent in rural areas, where broadband connectivity is not as good as it is in metropolitan regions, Westerlind noted.

Major urban and suburban hospitals don't have that problem, but they're worried about HIPAA compliance, Westerlind said. That explains why two-thirds of hospitals interested in cloud computing prefer "private clouds" that segregate their data from that of other entities, according to the KLAS report.

Some health IT vendors that host their own systems, such as Siemens and Cerner, understand the security aspect well, he noted. The same is true of third-party hosting companies such as Dell and ACS (a Xerox subsidiary) that have dedicated healthcare units. But not all general hosting firms understand the special sensitivity of healthcare data and the regulatory requirements around it, he added.

On a pure performance level, though, some third-party service firms are now doing as well as software vendors in hosting hospital applications. ACS and Dell have markedly improved their customer satisfaction scores since 2009 and now out-perform Cerner, GE, McKesson and Siemens in this department. Tellingly, ACS and Dell are the only companies that host Epic and MEDITECH, which don't serve their own applications remotely.

Looking over the changes occurring in the market, it appears likely that cloud computing will become the norm in healthcare once some of the technology and security issues are sorted out. This is already happening in the radiological area, where many institutions have moved to the cloud to lower their storage costs and facilitate the exchange of images. It seems probable that the growth of community health information exchanges and accountable care organizations will accelerate the overall trend toward cloud computing.

One further problem remains to be solved: Health IT vendors, by and large, are still not hosting each other's applications, Westerlind notes. That could pose a problem for hospitals that want to put all of their systems from various vendors in the cloud. But it also presents an opportunity for vendor-neutral third parties like Dell, ACS, and Velocity that understand the healthcare space. - Ken