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NEW YORK (
TheStreet) -- The cloud computing market has been touted as one of the key, emerging growth areas for the world's largest software giants as enterprise marketing and information technology departments flock to cheaper, faster and more efficient ways to manage, organize and analyze massive quantities of data. Within this budding area of lucrative business opportunities is a sweet spot garnering more and more attention thanks in part to a key, fast-approaching October healthcare implementation deadline mandated under President Barack Obama's Patient Protection and Affordable Care Act (ACA): healthcare cloud computing.
"It's what our clients demand and what the marketplace is demanding," Barry Mason, vice president at
IBM's(IBM - Get Report) Global Healthcare Payers division said over the phone. "Our clients want to shift their financial structures away from capital-based investments to where they can really increase their returns on investment. The market tells us this is about speed and flexibility at a reduced cost and that yesterday's way of developing IT systems and functions no longer cuts it in the market. We're enabling the business service and infrastructure changes needed to make that shift happen and to support what payers and providers see for implications."
"We're finding them literally flocking to the cloud," Bill Crounse, MD, senior director of
Microsoft's(MSFT - Get Report) Worldwide Health division commented by phone. "We're having really good conversations with healthcare customers today. They're interested, really excited about this new era of devices and services in cloud."
Starting October 1, the most central aspect of Obamacare's program requiring all Americans to get signed up for health insurance kicks into full force. Health insurance marketplaces across the country will be opening themselves up to enrollment with coverage becoming effective January 1, 2014. This is also being accompanied by the increasing movement towards so-called "accountable care organizations" since the ACA was signed into law more than three years ago, encouraging the tight coordination between healthcare providers and payers and the shift in payment models to a "fee-for-value" rather than "fee-for-service" approach. All the new integration and payment models mean the healthcare industry will be inundated with new and existing medical records in the hundreds of millions. These records need to be stored, organized, analyzed, and instantly accessible all at minimum administrative costs; that's where cloud technology comes to the rescue. Through a cloud-based computing model, all this healthcare information is easily and instantly delivered from one end to another with little fuss and without being tied down by the heavy costs of investing in the installations of complicated healthcare software and technology infrastructure and of being burdened by the costs of security breaches. Cloud providers must comply with many privacy standards such as HIPAA (Health Insurance Portability and Accountability Act) before they can extend their services.
The U.S. is part of a global shift in the healthcare industry to the convenience of the cloud. Dolita Kumari, an analyst with
market research firm MarketsandMarkets projects that the healthcare segment of the global cloud computing market will grow to $5.4 billion at a compound annual growth rate (CAGR) of 20.5% through 2017, from $2.1 billion in 2012. Within the overall healthcare cloud market, clinical information systems (CIS) used by healthcare companies to help oversee the storage, organization and verification of medical records is expected to grow even faster, exceeding the growth rate of non-CIS applications at a CAGR of 27.1% to $2.2 billion in 2017. Kumari expects CIS cloud needs will mostly be driven by electronic medical record and medical imaging applications, growing 29.5% to $649 million and 28.6% to $990 million through 2017, respectively. Kumari anticipates that the growing popularity of smartphones and mobile devices will only accelerate the embrace of the cloud structure in healthcare and allow healthcare professionals and authorized patients to easily tap into the cloud to access important files and data.
The growth rate in the healthcare cloud computing market is impressive, but the overall opportunity remains relatively small compared to the large number of companies. That means established cloud companies have an advantage in leveraging this area to feed bottom line growth. MarketsandMarkets data indicates that the cloud computing players most likely to gain strong traction in the healthcare industry are
Microsoft(MSFT - Get Report),
IBM(IBM - Get Report),
Microsoft's Dr. Crounse said he believes that Microsoft is far ahead of its competitors in healthcare cloud computing, if not winning the race because the company has been going above and beyond in giving its clients assurances that the firm makes it a primary mission to be vigilant about taking excellent care of all personally identifiable health information in the public cloud. Crounse said that Microsoft has been particularly advanced in becoming HIPAA compliant.
"One of the reasons I believe we're winning in the cloud with health and healthcare is I believe to date in terms of the large purveyors of public cloud services, Microsoft is the only one that is signing business associate agreements with healthcare organizations across the U.S., something that has to be in place if you're going to do business with healthcare," said Dr. Crounse. "And because Europe often looks to what's going on in the U.S. on privacy and security in healthcare law, we've had major success in Europe as well."
Microsoft said that it is working very closely with payers, employers and hospitals to give them the powerful, user-friendly tools they need to analyze data to help generate crucial predictors in the face of healthcare reform on patient return rates for instance, where patients with the highest likelihood of returning to hospital care are identified.
Amid Microsoft CEO Steve Ballmer's shift to full gear into the cloud, Microsoft's total technology research and development budget is about $9.6 billion a year. More than $3 billion of that goes towards cloud infrastructure, with a good portion of it dedicated towards healthcare. Today, Microsoft cloud platform Windows Azure has nearly 250,000 customers, with the customer base for Azure growing at a rate of 1,000 customers a day.
IBM is another serious player in healthcare cloud computing. Over the last three years since Obamacare was signed into law, IBM has either grown or acquired a number of software platforms that serve as a connection point between the cloud, mobile and the Affordable Care Act. One of them is Unica, a business campaign management platform that marketing departments use not only to run retail market-based campaigns, but now increasingly use as well for sophisticated healthcare consumer-based campaigns that enable the wide-scale presentation of healthcare offerings and the management of these contents.
Another example of IBM's advances in this field is Cúram, which specializes in managing and knitting together multiple health and social services functions to the benefit of individual households, and now for a growing audience amid the increasing number of accountable care organizations and shifts to value-based healthcare payment models.
One of the most fascinating, however, is IBM's Jeopardy-winning computer, Watson. IBM has been for instance training Watson to deliver through the convenience of the cloud copious amounts of the most up-to-date information about cancers to doctors at the Memorial Sloan-Kettering Cancer Center in a way that helps them diagnose a number of very specific forms of cancers and assign the proper sequences of treatments.
As for the crossover between mobile and the cloud, IBM earlier this year launched MobileFirst, a portfolio of offerings including analytics, app development software and cloud-based services to help companies become more mobile-focused. The portfolio is armed with the security and privacy services required for use in the healthcare industry.
A growing number of newer and emerging companies are also trying to get in on the cloud healthcare IT action.
InsightsOne, a cloud-based predictive intelligence solution company and IBM big data partner is also looking at the healthcare industry as a key business target as providers and payers look to predictive analytics to cope with the tactical and strategic implications the Affordable Care Act is having on their businesses. One of the company's healthcare clients is Independence Blue Cross (IBC), a health insurance provider for the southeastern Pennsylvania market.
Since becoming HIPAA compliant with the help of a special HIPAA task force, independent third-party consultations, and IBC's audits of InsightsOne's solutions and processes, IBC has been using the InsightsOne Virtual Private Cloud platform to for instance dissect and make sense of healthcare call-center notes. The companies report IBC experiencing a six-times improvement in identifying at-risk Medicare customers, or those with complaints or issues, after using the InsightsOne Virtual Private Cloud platform. Corresponding data on the customer acquisition targeting side shows IBC seeing a 40% increase in member applications while using the Virtual Private platform to analyze member data.
InsightsOne is also starting to work with IBC on shoring up its managed care services. Although their collaboration in this area is still in the very early stages, the expectation is that IBC eventually will be able to use InsightsOne to predict which members have a higher likelihood of hospitalization so that IBC would be able to carry out preventative measures instantly. InsightsOne said one of its top priorities is increasing its offerings of preventative care analytics solutions.
"This means that the patients get better care, have a better health outcome, and IBC avoids expensive hospitalization," Waqar Hasan, CEO at InsightsOne, said in an email.
Cloud storage and file-sharing service
Box said in the past year, its sales in the healthcare industry has grown more than 81% as companies work to quickly adapt and cope with the long-term changes in the healthcare environment. Healthcare organizations such as Henry Ford Health System, Beaumont Health System, HealthTrust Europe, Johns Hopkins HealthCare Solutions, Wake Forest Baptist Health, San Juan Regional Medical Center and Garden City Hospital have been among the newest additions to the company's growing healthcare clientele list.
"There's almost this feeling that once all hospitals and all clinics are on an electronic medical record, that basically the job is over," said Dr. Crounse. "But the fact of the matter is we're only beginning the journey because once the information's digitized, of course it's what you do with it that counts. It's what you do with it that changes the quality and changes the access and affordability of healthcare. And if we don't act on the way we use that data nothing changes."
Follow @atwtse-- Written by Andrea Tse in New York
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