Healthcare Market Offers Opportunity, Challenges For MSPs

Healthcare digitization offers an enormous opportunity for MSPs but smaller firms face training and regulatory challenges that prevent them from fully participating in the market.

Aldrin Brown, Editor-in-Chief

March 8, 2016

3 Min Read
Synoptek employees work in a remote monitoring facility
Synoptek employees work in a remote monitoring facility.

Digitization of the healthcare industry has been very good to Synoptek, an Irvine, California-based managed services provider.

The firm has grown 300 percent since its founding in 2005 and nearly a quarter of its business comes from medical providers seeking to outsource their information technology needs and comply with record-keeping and security requirements mandated by the Health Insurance Portability and Accountability Act (HIPAA), and the Affordable Care Act.

That trend shows no sign of slowing.

Synoptek’s healthcare-related revenue continues to increase, with average year-over-year growth regularly hovering somewhere between 18 and 22 percent, said Mike Bank, the firm’s vice president for sales and marketing.

“It is the second-highest growing vertical that we see as a company – right behind general technology services,” he said.

Healthcare IT has become a boon to the entire U.S. economy, offering an estimated $80 billion in net savings through greater efficiency and a 20 percent increase in related jobs, like medical records and health information technology technicians, according to a 2014 report from the Computing Technology Information Association (CompTIA).

Nowhere has the trend been more acutely felt than among managed services providers, which have been enlisted by healthcare firms to oversee the conversion from paper to electronic health records and the automation of numerous processes aimed at reducing cost and improving patient outcomes.

But while the transition offers an enormous opportunity, smaller MSPs continue to face training and regulatory hurdles that prevent them from participating in the market in meaningful numbers.

Among the barriers to entry for smaller firms:

  • A dizzying patchwork of state and federal laws contain varying definitions about what constitutes a reportable data breach and how quickly such breaches must be reported. The legal expense of staying on top of the disparate requirements in each state can be prohibitive for smaller firms.

  • New rules enacted as part of the 2008 economic stimulus package extend HIPAA liability for violations of personal health information security to business associates and contractors, exposing MSPs to criminal penalties, costly lawsuits or civil fines as high as $1.5 million.

  • Insufficient training exists to help current IT professionals get certified in the intricacies of the healthcare sector.

“These men and women can be activated very rapidly to help with the transition toward health IT, but (firms) need some economic assistance to offset some of the costs of this sizeable investment,” researchers wrote in a CompTIA white paper.

CompTIA, a nonprofit trade association representing the IT industry, has been advocating for legislative changes aimed at reducing obstacles for smaller managed services providers.

For starters, the association is pushing for a single, national standard for determining which security breaches must be reported and under what time frame.

CompTIA is also calling for better coordination by the federal government to connect small IT firms with the healthcare providers who need their services.

The nonprofit wants to see elimination of private rights of action against business associates and contractors, which would shield MSPs from lawsuits following data breaches.

Finally, CompTIA has set up training programs and is pushing for additional funding to educate existing IT professionals to meet the specific needs of healthcare providers.

Bank, the Synoptek executive, said challenges like regulatory compliance and shrinking margins have created a huge opportunity for managed services providers that can assume the burden of routine information technology activities, allowing healthcare firms to reallocate resources to clinical innovations that improve patient care and outcomes.

Monitoring those systems also offers a revenue stream for managed services firms.

“There have been very few incidences where we have been tasked to reduce IT spend,” Bank said. “(Customers) are willing to spend more, so long as they can get results. It’s a reallocation of IT spend from commodity to strategic.”


Send tips and news to [email protected].

Read more about:


About the Author(s)

Aldrin Brown

Editor-in-Chief, Penton

Veteran journalist Aldrin Brown comes to Penton Technology from Empire Digital Strategies, a business-to-business consulting firm that he founded that provides e-commerce, content and social media solutions to businesses, nonprofits and other organizations seeking to create or grow their digital presence.

Previously, Brown served as the Desert Bureau Chief for City News Service in Southern California and Regional Editor for Patch, AOL's network of local news sites. At Patch, he managed a staff of journalists and more than 30 hyper-local and business news and information websites throughout California. In addition to his work in technology and business, Brown was the city editor for The Sun, a daily newspaper based in San Bernardino, CA; the college sports editor at The Tennessean, Nashville, TN; and an investigative reporter at the Orange County Register, Santa Ana, CA.


Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like