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The Case For an Agile Intelligent Healthcare Datacenter- Situation

(Part 1 of a multi-part series covering, strategy, structure, systems, process and people change management as well as the case for an Agile and intelligent Healthcare Datacenter)

"I predict that five years from now none of us will have data centers," John Halamka, CIO Count Beth Israel Deaconess Medical Center.

Healthcare is witness to a major disruption impacting payers, providers, pharma and medical device manufacturers. For providers the velocity and nature of disruption is significant.

Business Model changes from volume based to value based necessitates a closer touch with the patient pool along with a focus on quality and containing costs. Providers are hard pressed to improve asset utilization and take costs out of the systems. The gap between payer and providers is narrowing in part by a value based and common quality metrics. Payers are becoming providers - Highmark acquired Allegheny Health, Cigna runs several clinics, Humana acquired Concentra which ran several urgent care and corporate clinics.

For IT this requires innovation in digital health strategies, technologies that drive operational efficiencies at the same time there is a growing perception that IT costs CAPEX and OPEX need to come down.

Population health management- Provider focus shifts from sick care to managing population health- assessing patient pool risk and implementing methods to mitigate. For IT this shifts focus to big data, analytics and actuarial services creating a proactive IT system of intelligence.

Meaningful use - Over 90% of physicians now use an EMR system to capture patient encounter information. A Medscape Lifestyle report studied the impact of the EMR to physicians. Over 51% of physicians claimed a burnout.

MU3 will require targeting clinical decision support as well as "freeing" captive EMR natural language data.

All of the above also require a targeted focus on the system of record- a focus on Patient 360, semantic interoperability of data across the integrated or extended healthcare eco-system and applications, a paperless medical information system- an EMR adhering to the HIMMS EMRAM model.

Digital Health Strategies are causing a major disruption in the way patients will interact with the healthcare system. Clinical grade consumer devices are proliferating from EKG, to Ultrasound, to continuous glucose monitors and the like, changing the dynamics of care. These devices transmit and store data in the cloud which can then be consumed through applications by the provider and the patient. Kaiser predicts that by 2018 50% of their patient encounters will be through Telehealth.

Telehealth also provides an impetus to the retailization of Healthcare . Cleveland Clinic partners with the CVS Minute Clinics bringing in specialists virtually to assist with the patient encounter.

IT will need to enhance capabilities for Business to Business Collaboration, Business to Consumer virtual collaboration, CRM systems, care coordination, intelligent contact centers, high velocity personal health data storage-interpretation-response and security

Aging Population has economic impacts- the cost of taking care of a 50 year old is almost $10K - for a 65 year old that cost shoots up to $20K. People are living longer and surviving with multiple co-morbidities. Outcome based models reimbursement models incorporate quality, outcomes and patient experience. Provider systems focus on habitually non compliant patients with strategies to manage adherence and methods to provide informed decisions to the patients.

IT will need to enable, engage and empower both patients as well case managers, allied services, physicians and nurses through creative collaborative solutions, intelligent contact centers and CRM systems integrated to EMR systems.

Shortage of Clinical resources - There is a shortage of primary care physicians, specialists such as dermatologists, nurses are increasingly leaving the system.

Some of the physician load will fall on the shoulders of Nurse Practitioners in retail settings. NP's will require AI and cognitive computing tools to provide guidance.

Regulatory and Penalties - Provider economic models comes with carrot and sticks. There are penalties for readmission and PHI breaches. For the six months in 2017 hospitals will suffer an estimated $528 Million in readmission penalties, a number that exceeds penalties for the 12 months in the prior year.


Between 2009-2011 over 18 million patients records were reported breached. In the year 2016, Healthcare saw 450 breaches with over 2 Million patient records being compromised. By mid year 2017, 233 breaches were recorded affecting 1.2 Million patients. 80% of the breaches were reported by Healthcare providers, 11% by health plans and the remaining by third party providers.

Comprehensive security architectures will need to be put into place to secure bio-medical devices, infrastructure protection, application protection, data protection and incidence response.

Mergers and Acquisitions:

Payers in risk based models are looking to acquire healthcare providers that have a significant patient pool to benefit from the economies of scale. This has led to a major increase in deals for mergers and acquisitions in the provider space. Providers are also consolidating either acquiring/ merging or shedding unproductive assets. Community Health is divesting under-performing assets and Tenet exiting certain markets to focus on primary markets where it is number 1 or number 2. Quarter on Quarter deals have increased. There were 12 mega deals in Q2 FY 2017 of which over $2.2 Billion involved healthcare provider systems. In fact the provider M&A transactions increased 15% year on year with values increasing by over 12%.

With mergers comes challenges for IT:

  • Integration of systems and practices

  • Consolidation of assets, data-centers and applications

  • The need for standardization and reducing diversity

  • The need to set Governance, architectural standards and policies

  • Eliminate security holes and risks

  • Cope with increased traffic to consolidated Datacenters

Caps on Capital budgets - Changing reimbursement and value based models are already impacting IT budgets as providers struggle to take costs out of the system.

The healthcare IT infrastructure grew organically, through donated or heavily discounted infrastructure and applications. Compounding this was the spree of acquisitions - much of the infrastructure is aging, lacks an organized architectural approach, and in some cases includes grey market equipment in the mix. One healthcare system recently spent over $100Million to refresh their infrastructure to incorporate a more secure environment. At one large healthcare system Physicians insisted on using the wired network over the wireless network for their workload- such was the confidence on the wireless infrastructure.

While IT budgets shrink investments in storage will continue to rise as will the operational expense of managing an in house data storage. Unplanned aging IT architectures will need to be refreshed at considerable expense. At the same time providers will be stressed to improve collaboration within the system as well as with integrated healthcare systems, to cap it all would need comprehensive security. IT will need to find creative ways to to conserve both CAPEX and OPEX- a case to move to the cloud.

Digitization is creating a perfect storm with growing needs for Storage: Diversity of infrastructure is not the only issue- almost every device and function in healthcare is digital and producing exabytes of growing digital information. MRI's have been upgraded from 16 slice to 64 slice systems, pathology is digital, image size and volumes increase by the day, EMR's continuously expand with data, pdf's, scanned images and scanned faxes, research registries grow by the day supplemented with volumes of omics data, ERPs add to the data overload, Care coordination CRM systems and Contact centers are data sources, E-mail volumes grow day by day. The infrastructure and applications continuously generate volumes of dark data and SIEM logs. Much of this data needs to be archived, backed up and replicated. Wearables introduce another stream of high velocity personal health data.

Storage will remain as one of the larger components of CAPEX investment in IT. It is estimated that storage operating expenses in IT is almost 40% of Storage capital expenses.IT will need to budget for CAPEX and OPEX to meet growing storage needs.

IT SPEND: IT spends 74% of its budget to run the business, 16% to grow the business initiatives and only 10% of its budget to transform the business.

With the increased requirements of value based models, stress on reduced CAPEX IT needs to shift its budgets into a more cost effective approach

IT is in need of a new medical grade, resilient architecture that assures asset security and data protection.

An IT that builds a comprehensive system of record, a system of engagement and a system of Intelligence needs skillsets and capabilities. Some of these capabilities in particular with the system of intelligence are new to most providers. Most healthcare IT have basic capabilities with a data center, IT operations and help desk but lack other more mature capabilities:

Is IT equipped with capabilities for an agile, resilient, secure, intelligent Datacenter?

Understandably about 35% of IT staffing is focused on Applications support and the rest evenly spread out in Data Center, End user computing, Service Desk, Network support, Application development and IT management.

IT Staff Capability Maturity:

IT staffing has not been able to sustain the pace and demands of a resilient, responsive, secure, intelligent and agile infrastructure that provide a mature system of record ,system of engagement and system of intelligence to its stakeholders.

  1. There are 3 distinct IT functional resource capabilities:


A majority of Healthcare IT hospital have skilled staff that can provide the basic capabilities:

  • Infrastructure skillsets

  • Storage skillsets

  • Some Security skillsets

  • Workload management skillsets

  • Helpdesk skillsets

  • Operations staff


Some IT hospitals besides basic skillsets also have:

  • ITIL/EA Architecture certified staff

  • Enhanced operational resources capabilities leveraging performance management tools

  • Some degree of Virtualization (especially with EMRs) skills

  • Infrastructure Management skillsets

  • Certified Security Management specialists

  • Certified network architects and certified network engineers

  • Certified storage specialists managing the storage environment

  • Environmental Management staff


Mature IT functions supplement Basic and Enabled with additional skillsets. These IT organizations are more likely to have setup a private or public cloud datacenter.

  • A single Change Management Board with an appropriate governance structure to enforce strict change management policies with tailoring guidelines for deviations

  • Enterprise architects creating an Enterprise Architecture & Process to standardize policies, infrastructure, applications across the extended enterprise

  • ITIL/COBIT certified resources for the operational management of the datacenter and infrasatructure

  • A focused approach to backup, recovery, disaster recovery and resiliency with failover and failback

  • Medical grade infrastructure

  • Certified Experts – Application, Security, Infrastructure, Storage

  • Data Scientists, AI and Natural language programming specialists, Machine learning algorithm development skillsets

IT needs to make an assessment of the maturity of its infrastructure and skillsets to meet the needs of an agile, secure, resilient and intelligent healthcare datacenter that will respond to the needs of outcome based business models. How does this impact the IT spend mix? Can IT shift its dollars from its CAPEX and OPEX Run the business spend to grow and transform the business?

In the next paper we will investigate IT maturity.



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