1. Corporate Marketing Healthcare
White paper
Cloud Computing in Healthcare:
Path to Efficiency and Innovation

2. 2 Cloud Computing in Healthcare: Path to Efficiency and Innovation
Table of contents Executive summary
2 Executive summary The healthcare industry is in a period of accelerating change
3 The potential of cloud that requires continual innovation. The chronic disease
– What does cloud offer? epidemic, changing population demographics and
advancements in medical technologies are key contributors to
4 Taking advantage of cloud technology for agility escalating costs. All stakeholders expect more value for their
and efficiency money. And, patients are beginning to play greater roles in
– Hospitals and physicians managing their care. Driven by economics, emerging care and
– Health plans and insurers business models aligned with personal values and well-being
8 Building your cloud strategy are signaling a major shift in how healthcare organizations
will compete and operate in the years ahead. At the same
9 Change is possible. The tools exist today.
time, healthcare organizations, whether they are hospitals,
physicians or health insurers, need to lower administrative
costs and boost efficiency while increasing business flexibility.
A recent CEO Study conducted by IBM revealed that
34 percent of healthcare provider CEOs are focused on
simplifying operations to manage complexity more effectively.1
Similarly, 55 percent of healthcare payer CEOs believe that
their organizations are ready for the impending complexity.
Yet most recognize there is a new environment in which they
have to operate.2

3. Healthcare 3
This paper is part of a series that addresses the potential for Costly processes and systems and growing IT complexity
cloud computing in the healthcare industry. It explains how threaten to hold organizations back. A more flexible and
cloud computing can address key business challenges facing scalable approach to applications and infrastructure can help
healthcare today. It also suggests how organizations can take them support new care delivery and business approaches.
advantage of this evolving technology to establish the flexible
digital foundation needed to drive innovation.
Cloud computing offers new and flexible ways to provision,
manage and pay for technology resources. It can help
The potential of cloud organizations to address barriers standing in the way of
Regardless of segment, the healthcare industry is facing a adopting new, more efficient business models.
multitude of issues (Figure 1).
What does cloud offer?
Strong need for cost reduction Use data to analyze and improve Cloud computing is a general term for anything that involves
clinical and business performance the delivery of technology over the Internet. It is a model for
Strong need for operating efficiencies
and increased productivity Expand access to care enabling convenient, on-demand network access to a shared
Need to automate care delivery Transition from reactive to proactive pool of configurable computing resources (for example,
processes and systems care
networks, systems, applications and services) that can be
Need to modernize legacy Demonstrate greater healthcare value
applications and systems to all stakeholders rapidly provisioned and released with minimal management
Comply with regulations and security Need for business model innovation effort or service provider interaction.3 It is characterized by:
mandates to improve sustainability
• On-demand self-service
Figure 1: Healthcare industry issues
• Ever-present network access to computing resources
• Rapid and elastic provisioning with minimal management
effort or service provider interaction
• Pay-per-use

4. 4 Cloud Computing in Healthcare: Path to Efficiency and Innovation
Cloud computing changes the delivery of IT services in much Healthcare organizations are currently drawn to cloud
the same way that ATMs changed banking, Amazon.com and computing because it can help reduce IT costs and speed
iTunes have changed the music and entertainment industry and service and infrastructure availability. Although cloud
the Internet transformed commerce. Its overall goal is to computing has been associated more with infrastructure,
manage complexity more effectively, using simplification to the ability to generate new business value in terms of process
speed the deployment of new capabilities that can enable innovation and significant cost savings is on the horizon.
innovation. Cloud computing provides a platform for business-to-business
and business-to-consumer collaboration and can enable
For more information about cloud computing, see the IBM healthcare organizations to focus on differentiating activities
White Paper, “Cloud Computing: Building a New Foundation as distinct from transactional processes.
for Healthcare.”
Hospitals and physicians
Taking advantage of cloud technology Hospitals and physician practices are experiencing capital and
cost constraints and resource shortfalls driven by multiple
for agility and efficiency
factors that include inefficient processes and the IT
Businesses have different motivations for using cloud
investments needed to support growth, regulatory mandates
computing (Figure 2).
and new approaches to care. The isolated clinical and business
processes found in so many hospitals are becoming roadblocks
An enabler of business transformation to progress, adding cost and complexity. Increasing system
Business-
focused
• Creating new business models and network service requirements, low utilization of IT
• Enabling speed and innovation
• Reengineering business process tools and rising operational costs are familiar issues.
• Supporting new levels of collaboration
Transformation
Cloud computing can provide cost-effective ways for hospitals
An evolution of information technology and physician practices to expand IT capacity, accelerate
IT-focused • Changing the economics of IT deployment of new application environments and promote
• Automating service delivery electronic health records (EHRs), while protecting data on
• Radically exploiting standardization
• Rapidly deploying new capabilities mobile devices, reducing costs and improving clinical and
Efficiencies
administrative efficiency and productivity.
Figure 2: Motivations for cloud

5. Healthcare 5
Hospitals and physician practices need easier ways to capture Business continuity and high availability are increasingly
and store electronic health records and medical images. In the important elements of electronic health record deployments
United States, the American Recovery and Reinvestment Act and regulatory compliance. Cloud-delivered infrastructure
provides financial incentives to organizations that buy and use services can help improve the efficiency of IT processes
EHRs, yet it does not cover the full cost for many providers. such as IT help desks and data backup and meet regulatory
Cloud-delivered approaches help solve this problem. Cloud requirements for medical records retention. At the same time,
can help deploy EHRs more quickly. With cloud, EHR they provide scalable compute and development environments
payments can be made over time so that no big, upfront capital for compute-intensive research projects like those conducted
investments are needed. Doctors can focus on patient care by academic medical centers.
while their cloud services provider manages the technology
behind delivery. IBM’s security and risk solutions can help build secure clouds
and deliver security services from the IBM cloud. For example,
Cloud offers the opportunity to expand IT capacity quickly healthcare organizations can implement a private storage cloud
without major outlays. One example is storage capacity. A and use IBM Information Protection Services – Managed
modest 100-bed hospital will generate approximately 60 GB Backup Cloud to deliver it securely.
of new digital content per bed per year, requiring at least an
additional 6 TB of storage space annually. Cloud-delivered Cloud computing can further help hospitals and physicians
IT resources can help address the need for economical storage accelerate deployment of new applications or expand IT
expansion, eliminating the need to continue buying and infrastructure capabilities to accommodate sudden business
supporting in-house storage systems, lowering costs and growth and change. In fact, a recent IBM-sponsored survey
helping with storage management. shows IT professionals predicting that mobile and cloud
computing will emerge as the most in-demand platforms for
software application development and IT delivery over the
next five years.4 For many organizations, cloud computing
offers new capabilities that don’t require the IT staff
historically needed to service and maintain infrastructure.
By eliminating the upfront expense and headaches associated
with infrastructure growth and maintenance, IT staffs are
free to adopt new technologies that support strategic business
projects such as EHRs.

6. 6 Cloud Computing in Healthcare: Path to Efficiency and Innovation
Mobility is critical to providing health services at the point of Desktop virtualization from the cloud can improve efficiency
care, in the patient room, the skilled nursing facility or even at and provide anytime, anywhere access to healthcare
home. The benefits of optimized mobility solutions can be applications, information and resources without the added
both financial and clinical. Of course, unmanaged mobility in burden of adding staff for system management. Moving
healthcare has risks, because mobile devices loaded with applications from desktops into a centralized, hosted
sensitive patient data can be lost or stolen. Competent device environment can lead to better accessibility, manageability
management is critical to success. Cloud-based approaches can and security. IBM’s desktop virtualization solutions can help
enable safe and secure mobile access, improved workflow, more organizations quickly scale their IT infrastructures and boost
satisfied staff and better care, all while securing sensitive data. information accessibility, improving workflow, data access
With cloud-based storage, data is never stored on mobile and satisfaction, while reducing complexity, energy
devices, eliminating the chance that protected health consumption and cost.
information (PHI) will be compromised on a user device.
Cloud-delivered approaches can also improve staff
productivity by helping automate, streamline and manage
simple administrative processes. University College London
Hospitals NHS Foundation Trust (UCLH), one of the
largest NHS (National Health Service) trusts in the UK,
elected to use business process management (BPM) capabilities
from IBM WebSphere® Lombardi® Edition to develop a
comprehensive Patient Tracking System (PTS). The BPM-
based PTS enables UCLH to model patient pathways and
A large medical school deployed a private cloud from IBM to
link directly to those core IT systems that hold information
centralize management of desktops used by investigators using
about patient appointments, diagnostic tests and treatment
an enterprise-class data center rather than at user stations,
gaining greater control of application configurations and
so that when treatment is first administered, whether
increased controls over PHI data. therapeutic or a period of advised observation, this is all
noted and managed.

7. Healthcare 7
In short, hospitals and physician practices are feeling the Cloud-delivered capabilities can help to improve health plan
pressure to extract greater value from limited financial, and health insurer business process efficiency. IBM Blueworks
human and IT resources. Cloud-delivered capabilities can Live is a cloud-based business process management tool used
make it possible to use only the resources necessary to to discover, design, automate and manage business processes.
support administrative and IT operations at any given With capabilities that allow a business person with little
moment. This flexibility translates into reduced costs, better technical skill to automate processes, it can result in more
efficiency and productivity and increased ability to focus control and improved productivity using a social, collaborative
on differentiating initiatives. approach. It is an effective tool for building new approaches
to customer service.
Health plans and health insurers
Health plans and insurers are struggling with inefficient Improving customer service is a priority for many health
administrative processes, inflexible systems, increasing plans and insurers, who might relate to the experience of a
medical costs, new business models like Patient Centered prominent call center client. This client expanded its cloud
Medical Home and a steady stream of regulatory changes computing initiative, which has already reduced the company’s
that require significant investments to implement. Nine out desktop PC operating costs by 50 percent. Benefits can
of 10 healthcare payer CEOs believe the environment will go beyond operational expense reduction to improve
be more difficult over the next five years, further complicating service quality.
how they will manage and thrive.5
Cloud-delivered approaches can increase business flexibility
by expanding IT capacity and resources at lower cost and,
in many cases, providing superior service quality. While
initiatives to modernize core claims systems have historically
been viewed as expensive with limited ROI, cloud-delivered
infrastructure services can facilitate and accelerate claims
systems migration and modernization projects, enabling faster
time to value and improving return on investment.

8. 8 Cloud Computing in Healthcare: Path to Efficiency and Innovation
IBM Smart Business Development and Test Cloud provides a
security-rich, standardized test and development environment
that helps reduce test cycle times, complexity and risks. This
capability could accelerate transition to ICD-10. Benefits
include a possible reduction of capital and licensing expenses
by as much as 50 to 75 percent, using virtualized resources.
By automating development and test resource configurations,
health plans and health insurers have an opportunity to reduce
Healthcare collaboration in the cloud
operating and labor costs as much as 30 to 50 percent.6
Hospitals, physicians, health plans and health insurers can take
Like hospitals, health plans and insurers can also take advantage of cloud-based collaboration tools. IBM LotusLive™
advantage of cloud-delivered storage capacity to house their provides cloud-delivered business services that help people
burgeoning information stores. Cloud-delivered infrastructure connect and collaborate beyond the boundaries of their own
services such as managed backup services can help improve organizations. A multinational medical supply company in
IT backup efficiency and meet regulatory requirements for Switzerland is using LotusLive as a collaboration hub and to
data retention. Software services in IBM Tivoli® Live - service track project tasks for the effort to fight malaria in sub-Saharan
manager7 can enable better automation and control of IT Africa. A drug inventory monitoring solution captures current
service desk functions – functions that are critical to stock levels of combination therapy and quinine drugs. Drug
suppliers, state officials and other logistics organizations can
maintaining business operations.
then access these records, using a tabular, web-based interface
that maps existing supplies to geographic locations. The
LotusLive solution enables comprehensive, inexpensive weekly
reporting for every medical facility in a district and promotes
improved malaria epidemic detection.

9. Healthcare 9
Building your cloud strategy
The successful infusion of cloud into your business strategy,
including focused pilots, can accelerate IT cost reduction and
speed service and infrastructure availability. In our experience,
the best cloud strategies are workload-driven. Figure 3 shows
examples of workloads that can be moved to the cloud to help
reduce capital expenditures, operational costs and risk and to
produce better quality of service and increased agility.
IBM Research demonstrates private test cloud cost savings
IBM Research has studied the cost savings of private test
Process Automation and clouds by analyzing comparable application testing services.
Optimization
One used a private test cloud and other used the current
Secure Mobile Desktops application testing IT environment. Both environments had
and Devices the same level of IT support for both environments. They
Efficient PC Refresh Cycle discovered:
IT Service Help Desk
• Hardware savings of 65 percent from reduced infrastructure
Long-term Data Archival and improved hardware utilization
Development and Test • Software savings of 27 percent from lower license costs
Environments
and improved utilization
Business Continuity and • System administration savings of 45 percent from reduced
Disaster Recovery
system administration and operation costs
Security • Provisioning savings of 76 percent from labor savings in
Capacity for service request management
Compute-intensive
Research
Compute and Storage for
Peak Demands
Legacy Modernization
IT Simplification
Figure 2: Workload examples

10. 10 Cloud Computing in Healthcare: Path to Efficiency and Innovation
Change is possible. The tools exist today
IBM can help you assess and plan cloud adoption. We can
help develop business and care delivery strategies, extend
IT optimization strategies and build a roadmap. Our roadmap
methodology can help you understand not only which cloud
strategy meets your needs but also which service is best suited
for delivering specific clinical and business use cases.
In realizing lower operational costs, increased agility and What IBM offers healthcare organizations
faster time to market by using cloud computing, healthcare
• Clear economic value. IBM helps you work through the right
organizations can dedicate more focus on initiatives leading mix of delivery models and choices to reap the maximum
to healthcare innovation. benefit. An innovative healthcare organization shared lessons
gained from an IBM CloudBurst™ (infrastructure as a service)
implementation that introduced a pay-as-you-go model to
increase project flexibility and allocate freed up resources to
other high-value activities. The investment in cloud
computing required creativity and a strong commitment to
realize benefits.
• Integrated and open solutions. IBM actively supports
healthcare standards development, working with policy
makers, building consensus and delivering unique, innovative
new technologies. IBM initiated a community-based effort to
drive new standards for cloud computing. Our open
standards approach encourages a broader ecosystem,
including developers, independent software vendors and
resellers, which can lead to collaborative partnerships that
will be critical to the deployment and success of healthcare
cloud platforms.
• Secure solutions that are ready for business. The IBM
Security Framework and Blueprint provide a comprehensive
method for addressing all aspects of security and an equally
comprehensive portfolio of security offerings and services.
IBM is working to implement secure delivery models,
deploying platforms for industry clouds that are “secure
by design” so that when healthcare organizations or
communications services providers deliver services, they
can trust that their services are not compromised. In addition,
IBM Research is helping clients navigate and manage the
cloud security landscape.
• Designing for simplicity. From sourcing to usage to
maintenance, IBM cloud solutions are simple, intuitive and
designed for how healthcare organizations actually work.
• Globally relevant. We’ve established 11 global cloud
computing laboratories to help local organizations,
governments and research institutions design, adopt and
reap the benefits of cloud technologies. Each lab serves as a
gateway for local clients to tap into the knowledge of IBM
software, services and research labs around the world.

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12. © Copyright IBM Corporation 2011
IBM Corporation
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Somers, NY 10589
U.S.A.
Produced in the United States of America
February 2011
All Rights Reserved
IBM, the IBM logo, ibm.com, Cloudburst, LotusLive, Tivoli and
WebSphere are trademarks or registered trademarks of International
Business Machines Corporation in the United States, other countries,
or both. If these and other IBM trademarked terms are marked on their
first occurrence in this information with a trademark symbol (® or ™),
these symbols indicate U.S. registered or common law trademarks owned
by IBM at the time this information was published. Such trademarks
may also be registered or common law trademarks in other countries.
A current list of IBM trademarks is available on the Web at “Copyright
and trademark information” at ibm.com/legal/copytrade.shtml
Lombardi® device, Lombardi Blueprint®, Lombardi Blueprint® device,
Lombardi Services® device, Lombardi Software®, Lombardi
Teamworks®, Lombardi University® device, and Teamworks® are
trademarks or registered trademarks of Lombardi Software, Inc., an
IBM Company.
Other company, product, or service names may be trademarks or
service marks of others.
1 2010 IBM CEO Study, IBM Global Business Services
2 2010 IBM CEO Study, IBM Global Business Services
3 Source: US National Institute of Standards and Technology, Information
Technology Laboratory
4 IBM Survey: IT Professionals Predict Mobile and Cloud Technologies Will
Dominate Enterprise Computing By 2015
5 2010 IBM CEO Study, IBM Global Business Services
6 Based on results from IBM’s Technology Adoption Program, in which an
internal “Collaboration Innovation” cloud was developed using IBM
technology. The solution has more than 100,000 participants. Results vary
depending on the customer’s existing environment. Final results can only be
ascertained after an ROI analysis.
7 IBM’s New Cloud Offering Helps Companies Improve IT Service Desk
Operations: http://www-03.ibm.com/press/us/en/pressrelease/33178.wss
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