Cloud Storage and Computing: On the Rise in Healthcare?
Cloud storage and computing...is it real and will it affect healthcare? These are the most common questions we receive. After doing several months of research on the topic, the short answer is that the healthcare industry needs robust IT-based solutions which significantly contribute to finding secure, cost-effective ways to manage data. Currently, the lower cost per gigabyte, pay-as-you-go nature of "Cloud" looks to be the best solution to do that.
This does not mean that "Cloud" is ready for prime time in healthcare. It is not as yet, and companies are currently sorting through their messaging and the market is confused. However, Cloud IS REAL; like High Definition Television and other innovations, it will take time to refine and sort out the bit players. Even so, WinterGreen Research estimates the Cloud computing market alone will reach $160 billion by 2015.
Once the Cloud solution solves what HMG calls the RASP equation (Reliability, Availability, Security and Privacy - the key barriers to adoption in healthcare and medical imaging), then Cloud could take off as the healthcare solution of choice.
Why Cloud Storage and Computing Should Be on the Rise in Healthcare
Several trends are increasing data storage and data processing needs in the healthcare industry. These factors make Cloud-based infrastructure, platforms and services likely to capture a growing share of the market for Electronic Medical Record (EMR) and medical imaging data.
The geometric growth of healthcare data is putting new pressure on CIOs. They must seek cost effective, secure and reliable solutions for data storage that reduce the need for capital expenditures on IT infrastructure and increase the "elasticity" of their capability to meet variable levels of demand as well as greater ability to extend and share data to address the growing role of Regional Health Information Organizations (RHIOs), Healthcare Information Exchanges (HIEs), Digital Personal Health Records (PCRs) and large-scale epidemiological applications. While established EMR vendors are scrambling to provide basic functionality with their traditional client server products, while scaling up their systems to multi-hospital deployments, a new generation of Cloud-based healthcare IT solutions are being brought to market by companies like IBM, HP, Iron Mountain, Cisco and Amazon.
There are two major factors driving the need for radically more cost-effective storage of data:
- The metastasizing growth of digital radiography and medical imaging modalities in modern healthcare. Medical imaging is one of the fastest-growing components of healthcare. Even in the face of recession, according to NewsEdge, U.S. demand for medical imaging products is projected to increase 6.0 percent annually to $21.4 billion in 2010. With this growth in imaging systems, a corresponding growth in image study data is taxing the capacity of existing hospital IT infrastructure and resources. Exponential growth in the amount of data being generated at a time when compliance, regulations, and increasing types of media-rich files is putting even more pressure on hospital IT professionals responsible for storage. And as more medical specialties jump on board with Picture Archiving and Communication Systems (PACS), such as ophthalmology, pathology and internal medicine, new systems will expand to accommodate unique department needs, and data requirements will escalate even further.
According to the Freedonia Group, Inc. (a Cleveland-based industry research firm), medical imaging equipment will post demand of over $16 billion in 2010, up 6.8 percent annually from 2005 as hospitals and outpatient facilities replace earlier generation CT scanners and MRI machines with new high value-added multi-slice models. PET installations will also grow at a strong pace based on the availability of new hybrid PET/CT models with dual anatomical and metabolic scanning capabilities. In addition new four-dimensional (4D) imaging systems for existing markets such as new laptop and hand-held devices for point of care testing (POC) will boost overall growth prospects for diagnostic ultrasound equipment.
Medical imaging is such a growth industry that even the owner of the Dallas Cowboy has gone into the business. According to The Dallas Morning News, at Blue Star Imaging in Irving, a Cowboy's jerseys hangs in the lobby, and miniature NFL helmets line a shelf. On a wall next to the MRI machine are the autographs of Cowboys players who have had scans. Business is so good - about 1,000 scans a month - that a second Blue Star Imaging opened this year in Flower Mound, Texas. In fact, the medical imaging business is doing well in many places, generating $100 billion a year nationally. That's expected to double by 2012, according to America's Health Insurance Plans, an industry trade group.
In keeping pace with the dramatic growth of digital imaging modalities, it is not uncommon for medical centers to have more than 500 TB (half a petabyte) of data to manage, and in the majority of cases hospitals retain medical records in perpetuity. The rationale being that legal storage requirements for various components of the medical record (such as clinical lab data or radiology images vary considerably), thus making it easier for hospitals to store all of their data forever rather than researching and complying with the individual patchwork of storage requirements. - The $19 billion earmarked by the American Recovery and Reinvestment Act (ARRA) for electronic medical records. Even before the availability of ARRA funding, the amount of data being stored and processed by hospitals had been on the rise, but growth was often constrained by lack of funding for the transition.
Healthcare executives, physicians, clinicians, IT leaders and IT vendors are scrambling to define the ideal method of incorporating medical images, most often native to PACS, into their EMR systems while improving interoperability among departments, without creating additional storage burdens. According to recent reports in CMIO Magazine, one can now purchase 20 terabytes of storage from an acknowledged vendor for $60,000 to $120,000. Therefore, $100,000 might buy a mid-sized institution two to four years of storage. However, if all these images are duplicated in the EMR, not many departments are willing to budget an additional $100,000. Given lower cost per gigabyte, the ability to pay by the study, and other benefits, Cloud based solutions may be seen as better fit for the storage of medical imaging data.
As healthcare facilities prepare to address the numerous challenges for Meaningful Use requirements in the coming years, storage demands will continue to increase. The need for secure, reliable and cost-effective infrastructure will become a focal point for CIOs and hospital administrators as they achieve meaningful use guidelines and incorporate federal changes (ICD-10 requirements).
Cloud computing is an emerging model that allows users to gain access to their applications from anywhere, through any connected device on the network. The benefits of Cloud storage and computing are made possible by mainframe class computing with low energy costs, low labor costs, and high reliability. According to WinterGreen Research, the benefits of Cloud computing and storage include reduction of IT labor costs by up to 50 percent, reduced provisioning cycle times from weeks to minutes, and improved quality of service through the elimination of software defects by up to 30 percent.
WinterGreen Research also estimates that Cloud computing markets will grow to reach $160.2 billion by 2015 with market growth fuelled by ease of information access, faster development systems available to line of business analysts through point and click application development tools, and the development of industry-specific applications built from SOA components. This will result in Cloud computing moving rapidly into healthcare, specifically the high volume data processing and storage type applications (PACS, Cardiology, Longitudinal EMR, etc.).
According to the 2009 IDC (Leasing and Financing Survey Results), users rated Cloud computing as the top alternative to traditional IT leasing. Cloud computing garnered the highest average rating (2.7 out of a maximum 4), as well as the highest percentage of respondents (27%) indicating an interest level of 4 ("very interested"). It's notable that the third highest-rated alternative was "utility-type computing," which is synonymous with Cloud computing. It's clear that Cloud computing is of growing interest, not just to the technologists and senior IT executives, but to the money people - the CFOs, CEOs, Procurement VPs, who think about the capital and cost implications of IT.
According to a recent study by Evans Data, Google has been rated as the company most capable of executing in a public Cloud setting and IBM as best for the private Cloud. IBM was considered to be the company capable of providing the best security, with 21.7 percent of respondents stating they believe IBM offered the best security for Cloud environments, and Amazon coming in right behind IBM with 20.2 percent. The survey was conducted in September 2009 and measured developers' perceptions of leading vendors in the Cloud space including Amazon, Microsoft, AT&T, Rackspace, VMware, Sun, and HP, among others.
"The Cloud environment is currently very dynamic both in terms of development and vendor offerings," said Janel Garvin of Evans Data and author of the report. "Many are evolving their Cloud services to span both public and private Clouds and we'll soon see some interesting competitors vying across the spectrum as Cloud becomes more pervasive."
We do hope you enjoyed our assessment of Cloud storage. HMG provides business and healthcare advisory, management, and market research services and has significantly improved our clients' business success. If we can provide a similar service for you, or if you have any questions about this article, please call us at 570-881-3314 (or e-mail us at ghuntzinger@huntzingergroup.com), and one of the principals of our firm will be happy to work directly with you.
For general information about The Huntzinger Management Group and our services, we invite you to visit http://www.huntzingergroup.com/ .