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SaaS Gains Additional Momentum in Healthcare Vertical

John Moore

June 7, 2011

3 Min Read
SaaS Gains Additional Momentum in Healthcare Vertical

MSPmentor, TalkinCloud’s sister site, has covered how the federal government’s meaningful use program set the stage for a potential uptake of hosting and managed services. The program offers financial incentives to healthcare providers that adopt electronic health record (EHR) systems. To receive the incentive dollars, providers must achieve a series of meaningful use objectives according to the government’s timetable. SaaS seemed like a good fit, offering a quicker deployment path for meeting meaningful use deadlines.

Recent events validate that line of thinking. For instance, HMS Direct, the healthcare MSP subsidiary of Nashville-based Healthcare Management Systems Inc., last week reported plans to expand its data center capacity to support its business with community hospitals. The company said it will move hosting infrastructure into data center operator Peak 10’s Nashville facility. HMS Direct offers remote hosting and management services for health IT applications including EHR.

Healthcare Management Systems, which also sells software products, said hosting deals currently outpace on-premise solutions. More than 60 percent of the company’s sales pipeline is for managed IT. Steve Starkey, Healthcare Management Systems’ senior vice president and chief operating officer, estimated that managed services filled 20 to 25 percent of the pipeline a year ago.

Starkey cited the rapid pace of change occurring in health IT — meaningful use requirements among other developments — as a factor in the growth of hosting.

Cost avoidance is another consideration. Meaningful use drives hardware and software investment, but community hospitals have limited capital. Hosting,  Starkey noted, helps customers redeploy capital resources to cover other hospital needs. The service also helps on the speed of deployment, he added.

“We think this is where healthcare is headed, especially for our marketplace,” Starkey said.

Soren Technology, a health IT specialist in Plantation, Fla., wouldn’t disagree. The company last month rolled out an integrated SaaS offering that spans electronic medical records and practice management. The company’s present focus is on small to mid-sized practices of up to 12 physicians. That current emphasis, however, doesn’t preclude the company from increasing the size of its deployment, a Soren Technology spokesman noted.

The SaaS offering also has been built to run Accountable Care Organizations (ACOs) that “require reporting to Medicare for very large physician groups,” noted Dr. Faiz Fatteh, president and chief executive officer of Soren Technology.

The government’s proposed rule for ACOs surfaced in April. The newly forming organizations could emerge as a market for MSPs, as many ACOs will be starting from scratch technology-wise.

Soren Technology’s SaaS solution will be offered through resellers and MSPs as well as directly through the company, Fatteh said. He listed a few reasons practices are turning to SaaS:

“Practices are more familiar and comfortable than before with SaaS solutions,” he said. “Recently, some new clients cited problems with in-house storage and back up as the primary reason to move to SaaS. In particular, smaller offices do not want to incur the costs of server acquisition and support.”

Interest in hosting comes from a variety of practice types. TSI Healthcare, based in Chapel Hill, N.C., announced hosting deals in May with a rheumatology practice, an ophthalmic group and a foot specialist. The company hosts software from NextGen Healthcare, a provider of EHR, practice management and other health IT products.

Growing familiarity with SaaS appears to be offsetting some earlier reluctance among healthcare providers around the issues of security and control of data. “I think they understand it a little bit better today than a few years ago,” Starkey said.

That understanding, coupled with the time pressure of meaningful use, could make 2011 a solid year for SaaS in healthcare.

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