We have talked about implementing cloud technology in healthcare a lot, but there are still a lot of gray areas, such as the cost implications. Will it increase or reduce healthcare costs? More importantly, if we are looking to switch from the traditional on-premises infrastructure, how do the costs compare? Both in where we are today and in the long run?
In search of some answers to these questions, we reached out to our incredibly talented Healthcare IT Today Community. The following are their thoughts on this pressing topic.
Zach Evans, Chief Technology Officer at XSOLIS
The largest change for organizations implementing cloud technology — and one of the main benefits touted by cloud providers — is the ability to only pay for what you need. You’re moving from a capital-intensive, up-front cost model where you are paying for fixed capacity (plus additional, currently unnecessary capacity to allow for future growth) towards a variable cost basis, driven by consumption and utilization. This change can free up a great deal of capital but can also lead to challenges for new solutions with unknown or difficult-to-estimate usage patterns. Already, there are vendors sprouting up that help manage both fixed- and flexible-capacity spending, so companies can optimize spending and minimize surprises. The need and market for these kinds of companies will only continue to grow in the future.
There’s also danger in thinking that simply migrating an existing workload to the cloud will immediately pay dividends through higher availability and scalability while simultaneously lowering costs. Optimizing (or transforming) systems and applications is the key to unlocking the real value of public cloud infrastructure. Leaders should understand and anticipate the investment needed on the front end to maximize the flexibility, scalability, and durability of public cloud infrastructure before committing to migrating workloads.
Theresa Lanowitz, Head of Evangelism at AT&T Cybersecurity
The healthcare industry is continuing to make moves to transform digitally. More specifically, edge computing, complementary to cloud computing, is taking off in healthcare due to the potential to transform patient care and improve healthcare outcomes while lowering costs. Edge computing is a transformative technology that brings together various stakeholders and aligns their interests to drive integrated business outcomes. The role of IT has shifted from being the sole leader to a collaborative partner in delivering innovative edge computing solutions, with healthcare leaders budgeting differently for edge use cases. These two things, along with an expanded approach to securing edge computing, have become a priority among healthcare organizations.
As healthcare embraces edge computing, one area that’s examined is expense allocation. Recent research reveals that the allocation of investments across overall strategy and planning, network, application, and security for the anticipated use cases that organizations plan to implement within three years is almost equally distributed. Overall, spending is approaching a balance not typically seen in conventional computing. Where there are differences, it is likely tied to the requirements associated with the use case. Overall, these investment allocations exemplify the dynamic nature of healthcare edge computing, where there is no one-size-fits-all approach.
With that said, organizations should carefully determine where and how much to invest and consider security when calculating the total cost of goods by incorporating security from the beginning. It’s important to note that no single approach can completely safeguard all areas of edge computing. Instead, organizations should consider a thorough and multi-layered strategy to handle the unique challenges of every use case, specifically potential disruptions during the planning phases of development. A pilot phase is essential to find any unforeseen issues before any full-scale edge adoption. During this time, seeking input from industry peers and engaging external expertise to identify vulnerabilities can help prevent costly mistakes and accelerate deployment.
Gregg Church, President at 4medica
The cost of implementing cloud technology in healthcare can be up to 30% lower than traditional on-premises infrastructure. Over time, this cost savings is expected to grow as cloud providers continue to invest in innovation and efficiency. Healthcare organizations should balance public cloud, private cloud, and multi-cloud solutions based on their specific needs and requirements. Public clouds offer scalability and flexibility, while private clouds provide more security and control. Multi-cloud solutions can offer the best of both worlds. The potential challenges and considerations when migrating existing healthcare systems and applications to the cloud include data security, compliance, and vendor lock-in. Healthcare organizations should carefully evaluate their options and choose a migration strategy that best meets their needs. The tools needed to better handle the cloud in healthcare include cloud management platforms, security tools, and analytics tools. These tools can help healthcare organizations optimize their cloud infrastructure, improve security, and gain tremendous insights into their data.
Annmarie Ison, Head of Customer Service, Oncology Informatics at Elekta
The greatest advantage of cloud technology is the predictability of cost and ease of scalability. Cloud technology can be thought of as an insurance policy. You pay a monthly premium so it’s there when you need it most and IT experts are in place to do the heavy lifting, allowing healthcare organizations to focus on patient care while controlling costs. Also, like insurance, you can adjust the level of coverage to adapt for peaks and valleys in spending. If a company needs to scale up or down, it’s easy to make those changes.
Jon Kimerle, Global Strategic Healthcare Alliances at Pure Storage
When looking to incorporate cloud technology into a healthcare model, organizations should know what problem they are aiming to solve and understand the cost implications of implementation in the long run. Many of the legacy healthcare applications in use are not cloud-native and will cost more to run in the public cloud. Technology solutions, like the cloud, are tools that have advantages and disadvantages and need to be understood in relation to what business goals and clinical objectives they are meant to support in the long term. Organizations can look toward tools like Pure Storage’s Cloud Block Store for ease, speed, and substantial cost reduction with individual workloads in the public cloud while creating a hybrid/multi-cloud platform unique to the organization’s needs.
Ted Ferrin, Co-Founder and CEO at Rivet
Cloud-based technology has emerged as a requisite solution to ensure high-quality patient care and to safeguard private health information (PHI). Health system and practice leaders who still implement on-prem solutions out of security concerns should look for two qualities in SaaS-based technology partners: vigilance around security best practices and top security standards credentials, such as SOC 1 and 2 compliance designations.
Charlie Clarke, Chief Innovation Officer at hc1 Insights
Cloud technology helps healthcare organizations remove obstacles for growth and expansion, and provide optimal care. Implementing cloud technology in healthcare can lead to significant cost savings in the long run, primarily due to reduced capital expenses, scalability, and operational efficiencies. Compared to traditional on-premises infrastructure, cloud solutions often have lower upfront costs. Over time, as healthcare data grows and the need for real-time insights becomes paramount, the cloud’s flexibility and scalability can offer more cost-effective solutions than maintaining and upgrading on-premises systems. As part of that journey, it is important to have trusted partners by your side, as we do with AWS, who can provide HIPPA-compliant tools tailored to host the data ingestion, manage components, and scale the infrastructure safely and reliably to your customers.
Michael Brickman, Medical Director of Plastic Surgery at ModMed
Cloud-based EHRs are the gold standard for physician practices. On-premise EHR servers drain valuable resources as they need to be replaced every 3 to 5 years and incur significant costs thanks to the large upfront installation fees and recurring price of regular backups. By implementing a cloud-based solution, practices have more flexibility to scale and can avoid the superfluous costs of traditional infrastructure.
Sulabh Agarwal, Chief Technology Officer at KeyCare
Implementing cloud technology in healthcare offers cost advantages over traditional on-premises infrastructure. Starting from scratch, the cloud eliminates upfront capital expenses. It reduces the need to hire specialized talent, as cloud providers offer managed services. Security is enhanced through cloud providers’ investments. Scalability allows for cost-effective resource adjustments. The cloud ensures future-proofing, adapting to evolving needs without costly infrastructure upgrades. Although initial costs may seem higher, the total cost of ownership over time often proves to be equal or even less compared to on-premises solutions due to these benefits and efficiency gains.
Monte Sandler, Chief Operating Officer at Experity
In today’s climate of value-based care, changing reimbursement models, increasing regulatory burdens, and shifting payer mixes, effect RCM is mission-critical to maintain a strong financial profile and stay afloat. From health systems to private practices and on-demand clinics, an organization’s practice management (PM) solutions must have the end-to-end functionality to fully support their revenue cycle, and those are often cloud-based. Cloud-based interoperability and cloud-based PM solutions allow for integration and exchange of patient information between different EHRs, while also enabling more streamlined billing, invoicing, patient scheduling, and claims processing activities that contribute to stronger RCM.
Jeffrey Sullivan, Chief Technology Officer at Consensus Cloud Solutions
With cloud technology in healthcare, you have to think about the total cost of ownership. The cloud ends up being cheaper in all but the most extreme circumstances. On the on-premise side of things, you have that big, upfront capital investment, and then that kind of burns down over time. Long-term, it is less expensive from a pure “cost-of-infrastructure” perspective to roll your own infrastructure and put it on-premise versus staying in the cloud – especially if you’re willing to “push the envelope” and run your infrastructure for longer periods of time between refreshes.
But that view changes when you start to look at the frequency of turning over the on-premises infrastructure. If you’re turning it over in a typical three-year timeframe, then it’s probably close to a wash. If you’re trying to amortize that out over a longer period—say, five or even seven years, which frankly is stretching it in terms of what’s reasonable—on-prem infrastructure could be cheaper on paper. But you have to think about cost in terms of more than simple capital outlay.
Number one is the cost of maintenance. If you’re trying to stretch your refresh cycles, you’re going to incur support costs when you go beyond that initial warranty or support period. Now throw in labor: You’ll need a team of people who can manage, monitor, and support that infrastructure 24/7. This is where the balance starts to tip in favor of the cloud for all but the largest and most well-funded of organizations.
Kevin Day, Chief Technology Officer at Rhapsody
The cost implications of implementing cloud technology in healthcare compared to traditional on-premises infrastructure can vary. Initially, there may be upfront costs associated with migrating systems and applications to the cloud, including data transfer and integration expenses. However, cloud technology offers several advantages over time that can lead to cost savings. These include moving costs from CapEx to OpEx and reducing the need for expensive hardware and the space to keep it. Leveraging the cloud also reduces time and cost around system upgrades, security, and maintenance, freeing IT teams to focus on more value-added activities.
While the cloud offers several cost and operational benefits to on-premises, healthcare organizations have invested in infrastructure for on-premises systems that continue to work reliably. This gives little motivation to move everything to the cloud immediately. In these cases, organizations can decide to slowly adopt a move to the cloud that risks additional latency and costs. Many healthcare organizations are taking a hybrid cloud approach that puts cloud services into play alongside on-premises options. Over time, we will continue to see increased cloud adoption as legacy on-premises solutions reach end-of-life or stop meeting an organization’s requirements.
Sameer Bhat, Co-Founder and Vice President of Sales at eClinicalWorks
As data centers continue to become more ineffective at protecting data and providing opportunities for innovation, cloud technology presents healthcare IT companies with a cost-effective path to both public and private data storage as well as processing and computing capabilities. This results in lower costs compared to building out personalized data centers. Cloud technology also makes it easier for patients to interact with their healthcare providers through the use of AI and cloud automation, while giving providers more control and instant access to medical records and financials. Over time, companies will only remain competitive within the marketplace by leveraging cloud-powered solutions.
Patrick Birmingham, EVP, Credentialing Operations at symplr
It’s an essential part of hospital operations to ensure physicians are delivering safe, effective care to patients, which involves each provider being credentialed, privileged, and onboarded both accurately and efficiently. A centralized, up-to-the-minute digital source of truth for all provider data is increasingly critical as more hospitals and health systems demand agility and operate multiple facilities with providers delivering care across the entire enterprise. With modern, cloud-based credentialing software, hospitals and health systems can shrink credentialing turnaround times, dramatically speed up onboarding and enrollment of providers, and save an average-sized hospital up to $9,000 per physician per day.
Chris Lance, Chief Product Officer at Edifecs
Cloud infrastructure provides the potential for far more efficient and cost-effective utilization of infrastructure compared to traditional on-premise deployment, but this opportunity generally requires incremental investments in both technology modernization and organizational transformation. Successful adoption of cloud infrastructure allows unused resources to be “returned to the population” rather than sitting idle when not in use and enables applications to scale up immediately and nearly indefinitely as demand increases. This can dramatically reduce operating costs and improve performance, particularly in environments where processing and/or storage demands fluctuate widely over time.
These benefits, however, can easily be quickly negated by ineffective resource management, mismatched architecture, and misaligned operating models. This can ultimately lead to reduced savings in the best of cases and, in an unfortunate number of instances, costs that are actually higher than on-premise deployment, due to the ease with which new resources can be consumed and the relatively high cost per unit compared to on-premise capacity.
To truly benefit from the capabilities of cloud infrastructure, organizations must design their applications and systems to scale horizontally and minimize the unnecessary replication of resources. often requires investments in refactoring, re-platforming, or migration to alternative underlying technologies. Additionally, organizations must equip and structure their teams to operate within this new paradigm. Overall, organizations should ensure they are committed to transformation before choosing to begin their cloud journey.
So many great insights here! Thank you to everyone who took the time to submit a quote for this article and thank you to all of you reading this article! We could not do this without all of your support. What are your thoughts on the cost implications of implementing cloud technology in healthcare? Let us know either in the comments down below or on social media, we’d love to hear from you!
