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It is 2035. The last US hospital has finally migrated its EHR to the public cloud. It has been some digital transformation journey, spanning nearly two decades. In that time, hospitals have realised lower operating costs, lower total cost of ownership and the goal of seamless, system-wide information sharing. Big EHR vendors like Epic and Dedalus have answered customer needs. And Big Tech has played a central role in the transformation.
Rewind to 2023 and public cloud providers Google Cloud, Amazon Web Services (AWS) and Microsoft Azure stand, at last, on the cusp of cracking the hospital IT public cloud market. Their success to date has been mixed: only around 15% of US hospitals had fully migrated to public cloud as of end-2022. But recent EHR hosting agreements between Epic and Google Cloud (in the US), and Dedalus and AWS (in Europe) promise to accelerate migration.
However, on the notoriously slow-moving healthcare ship, and for many reasons, full migration will take more than a decade to achieve.
The Signify View
Epic’s November 2022 announcement that hospitals running its EHR would be able to run their EHR workloads on Google Cloud was a pivotal moment for the tech giant. Around one third of US hospitals run Epic’s EHR solutions. It is by far the largest health IT vendor (in terms of the number of hospital customers), and with a steadily growing market share. Google Cloud can reasonably hope that, eventually, it will host most (if not all) of Epic’s (growing base of) customer EHRs. Epic will pay Google Cloud for every gigabyte of storage and megahertz of processing power its customers’ EHRs need. With millions of patient records with Epic, that is a huge prospect for Google Cloud. But public cloud migration is lengthy and complex. Any migration benefits will take years to materialise.
Shorter term, the Epic tie-up helps Google Cloud make up ground on AWS (the leading primary and secondary cloud provider to healthcare IT vendors) and Azure in terms of public cloud market share. Until now, Google Cloud has typically been used as a secondary provider to plug functionality gaps (health IT vendors do use different cloud providers based on functionality needs and their want to accommodate the cloud preferences of the payer/providers’ customers). Google is also running a clinical data search and summarisation project for MEDITECH’s Expanse EHR.
Opportunities at Cerner now appear much more limited for Google Cloud at this time, however. Oracle’s 2022 acquisition of Cerner (and Oracle’s stated ambition to reduce Cerner’s reliance on Oracle’s competitors) will weaken Cerner’s relationship with AWS, which was implementing public cloud for Cerner’s customers. This will be to Oracle Cloud, not Google Cloud’s, advantage.
Relationship dynamics are important, and Google Cloud will have to bear in mind its own patchy record in this respect, most notably with Epic itself. In 2020, the number one vendor told customers it would no longer pursue further integration with Google Cloud. It temporarily moved to AWS and Azure to provide cloud technology for medical research, data storage and file sharing. Google Cloud will see the latest tie-up with Epic as being both a long-term business opportunity and a chance to rebuild bridges.
Benefits and Barriers
Google Cloud says by hosting Epic’s EHR on its public cloud, hospital systems will have access to analytics and AI to improve patient outcomes. EHR vendors, meanwhile, see cloud as a way for their customers to reduce operating costs, total cost of ownership, enhance their products and improve the security of their data.
Cloud is cheaper (in terms of total cost of ownership) and quicker to implement for providers than on-premise server rooms/racks etc, and ongoing maintenance costs are minimal. Cloud users simply pay a monthly fee. Cloud also has the obvious advantage of multiple sites being able to access the same EHR instance. Furthermore, hospitals need not employ IT staff (or consultants) to maintain their servers. Cloud offers far more predictable budgeting. Cloud advocates also say scaling is easier and that hospitals can channel resources towards care quality and patient outcomes rather than managing on-premise servers.
The reality, however, is that most hospitals have invested heavily in on-premise data storage and server rooms, including hardware and software licences, in the relatively recent past. They have factored annual maintenance and infrastructure support costs into their capex and opex models. Despite the clear benefits of public cloud migration, some hospitals are understandably keen to maximise the shelf life of costly IT installations. Migration costs and disruption, and the development of additional network infrastructure, are also significant barriers in terms of transition. For some hospitals, it could take a decade or more to make the switch. In some cases, in the early stages of this process, hospitals are migrating to private cloud installations run by Epic and Cerner hosting their own EHRs, which are seen as more secure. A hybrid cloud model is also a potential intermediate step.
There are justified concerns over breaches of highly sensitive Personal Health Information (PHI). Such incidences have previously strained relationships between EHR vendors and Big Tech. However, public cloud vendors invest billions each year on data centre security, many times more than a healthcare provider. Consequently, public cloud provides a more secure environment than on-premise.
Off-premise EHR also raises the prospect of data latency, especially with regards to the storage of memory-intensive documents. And, finally, there are regulatory hurdles to public cloud migration. Some countries prohibit hospitals from storing patient information on the cloud. Others have data sovereignty laws which prohibit patient data being stored outside the country. This is an issue in regions such as the EU.
However, changes in IT procurement and provider organisational structures, along with the advantages outlined earlier, are expected to counter these barriers. The growth of hospital networks and IDNs in the US, and regional procurement organisations in international markets (e g GHTs in France, ICSs in the UK and ACO-type health clusters in Saudi Arabia), mean that IT procurement and decision making is becoming increasingly centralised (around CIOs/CEOs or regional governments), and adoption planned from a healthcare network perspective, instead of an individual hospital perspective. This will have a positive impact in bringing cloud adoption to scale.
Coming of Age
A new era is dawning for hospital IT. The power struggles between EHR vendors and the tech giants which have flared up in recent years are being replaced by a more collaborative approach. This is illustrated not only in this month’s Epic-Google Cloud tie-up, but also an agreement last month between AWS and Dedalus which will see Dedalus customers access a range of cloud services including disaster recovery and improved security. Currently, AWS hosts Dedalus EHR solutions for more than 50 hospitals in the UK, with more migrations planned next year and in 2024.
These partnerships promise to accelerate public cloud adoption, reducing costs and improving patient outcomes for hospitals, and opening up new markets and revenue pathways for the likes of Google Cloud and Epic, and AWS and Dedalus. The public cloud providers will become an increasingly important conduit for IT vendors delivering software to provider and payer organisations.
Public cloud EHR migration is, however, complex and time intensive. It will require a change of mindsets before the benefits truly kick in across the public cloud ecosystem.