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Cloud computing expected to grow rapidly in health care

Hospitals and physicians have different uses for the technology, but they are likely to embrace it to save money and share information, experts say.

By Emily Berry — Posted July 23, 2012

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Cloud computing experts say health care is about to follow other industries in embracing cloud-based computing as a way to share information, cut costs and conduct business faster.

“We have an outlook and expectation of very high growth,” said Barry Mason, vice president for global health care payers at IBM. “There are a lot of drivers behind cloud computing itself, and there’s a tremendous opportunity for all stakeholders in health care. We do see a dramatic shift in spending toward cloud computing.”

A July projection by Dallas-based consulting and forecasting firm MarketsandMarkets quantified the expected growth, predicting the global health care cloud computing market will be worth $5.4 billion in 2017, up from $1.8 billion in 2011. Health system reform and payment changes are part of what will drive that growth.

“Health care organizations are expected to deliver more while limiting health care costs at the same time,” the report said. “Despite this, a few factors restrain the growth of this market, with security and privacy concerns being the primary reasons for slow adoption of this technology.”

Other analysts and vendors who work in and are closely tracking cloud computing said they also expect rapid growth in cloud computing in health care.

The $5.4 billion estimate is “reasonable,” but actually might be low, said John McDaniel, national practice leader for the health care provider market at NetApp, a cloud computing firm based in Sunnyvale, Calif. He sees a few key business dilemmas for hospitals that are likely to accelerate adoption of three types of cloud computing:

  • Hospitals and firms need more data storage capacity, but they don’t have bigger budgets for new servers and the space to house them. Using cloud-based infrastructure as a service to store data can be the answer, he said.
  • Software as a service is attractive for the same reason, McDaniel said, because cloud-based software reduces the need for data storage.
  • Platform as a service cloud technology allows even small hospitals to take advantage of the cloud by giving them a place to share information and tools with doctors and staff at a price they can handle.

For physicians, there are reasons to wait before adopting cloud-based technology — primarily, the time and money necessary to make the switch. But there are even better reasons for them to make the jump, experts said. They expect the desire by physicians to exchange health information about patients and access that information anywhere will drive doctors to the cloud.

“One of the things that’s going to speed adoption is the [accountable care organization], and care coordination is going to force the adoption of something like the cloud to provide that coordination of care,” said David McCament, a director in the health care payer-provider practice at Information Services Group, a Stamford, Conn.-based consulting firm that helps businesses improve operations, especially around IT.

On the other hand, he said, the price and risk that comes with adopting new technology is likely to keep some doctors from using cloud computing until they have a guarantee it will save them money.

“They have to have cost certainty,” he said. “They can’t experiment.”

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