Microsoft VP Explains How Its Cloud for Healthcare Will Reshape Industry

Microsoft Cloud for Healthcare is the first of many custom, industry-specific cloud offerings Microsoft has planned.
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Microsoft revealed more about its cloud strategy this week with the rollout of Microsoft Cloud for Healthcare, its first industry-specific cloud offering. 

Microsoft Cloud for Healthcare is "the first of many" custom cloud offerings tailored for specific industries, said Greg Moore, Microsoft's VP of health, at a Wednesday event hosted by RBC Capital Markets. Moore, who is also a medical doctor, explained how the new service will improve efficiency and overall outcomes in health care. 

Shares of Microsoft  (MSFT) - Get Report rose 1.2% on Wednesday to $185.39.

Moore said that the coronavirus pandemic has fueled a rapid transition to digital health care, noting a surge in telehealth and the number of healthcare workers using Microsoft Teams and other productivity tools. Microsoft Cloud for Healthcare packages together Azure, Microsoft 365, Dynamics, and other specialized offerings for healthcare providers. 

"We saw in the past few weeks 34 million healthcare interactions on Teams," Moore said. "We do think the time is right to bring these things together and offer differentiated solutions."

Microsoft highlighted its security standards in Microsoft Cloud for Healthcare. The healthcare industry has much higher compliance burdens than most, and Moore said Cloud for Healthcare makes it possible for providers to share and analyze information with HIPAA and "enterprise-grade" security built in.

Microsoft says it worked with a range of tech and healthcare partners, including Adaptive Biotechnologies  (ADPT) - Get Report, Allscripts  (MDRX) - Get Report, DXC Technology  (DXC) - Get Report, KPMG, Nuance  (NUAN) - Get Report, Humana  (HUM) - Get Report, Providence, Novartis  (NVS) - Get Report, and Walgreens Boots Alliance  (WBA) - Get Report, to co-develop specific solutions.

"Healthcare systems have been providing care in their communities for a century or more, and they earn that trust through relationships every day with patients," Moore said. "We’re taking a humble approach here and learning from partners every day." 

Moore said that many of the custom offerings, such as a chatbot used to aid diagnoses and AI tools to generate documentation and paperwork, will help reduce burnout among healthcare providers, as well as lower costs over time. Tools like virtual appointments and chatbots are an "affirmation of the market" and are here to stay, he said. U.S. healthcare spending was estimated at $3.6 trillion in 2019.

"Healthcare is 18% of GPP roughly...this industry is already infused with technology, and like other industries, is making a significant move to the cloud," Moore said "That’s not a part of the economy, a business that you ignore."

In a note on Wednesday, RBC Capital Markets analyst Alex Zukin noted that healthcare initiatives are viewed as an important growth driver "at the highest levels of the company." 

Microsoft's CEO Satya Nadella emphasized rapid changes in the healthcare industry in a video statement this week, highlighting the ways in which organizations are bringing "together compute, data and AI speed up the response to COVID-19."

RBC's Zukin added that Microsoft Cloud for Healthcare "continues to underscore the synergies that the 'new' Microsoft has been able to harvest over the last few years by knocking down traditionally silo’d fiefdoms and going to market with a cohesive, cross-product strategy."

In its March quarter earnings release, Microsoft reported 59% growth in its Azure business, as well as high engagement with its various productivity products. 

Microsoft shares have risen 15% year to date. 

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