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In the wake of our recent editorial and feature series on healthcare cloud outsourcing, we decided to pose some of the questions raised about how vendors approach provider CIOs to Wesley Smith, director of healthcare information systems, Digital Products Division, at Toshiba America Information Systems Inc.
Why is now the time to unveil new cloud services for healthcare?
Wesley Smith: From a healthcare perspective, following the regulatory reform guidelines and trying to take a proactive approach to the business ... if you're going to trust us with your information [using our] laptops and tablets, you might want to put multiple eggs in one basket. If we're going to be leading innovation in information management, that also includes a lot of areas where the information itself is stored. What's the best way to preserve your capital? It's to turn cost into an operations expense instead of a capital cost.
In the background, a large healthcare cloud vendor told us they pass over pitching the chief information officer and go to the chief financial officer or chief executive officer because CIOs are set in their ways and won't consider outsourcing. Does Toshiba pitch to CIOs or their C-suite peers?
Smith: Honestly, we do both. People wear different hats. The CIOs I talk to are starting to see from hospital budgets that [they might need to] reduce their capital expenses by reducing IT. If you talk to an administrator and you're replacing their job, that's obviously a touchy discussion. From the CIO perspective, most are focusing on their core competencies. A lot of them are [versed in] Epic installations [or another EHRs] and don't have time to deal with storage. It's hit and miss; some of them are very interested in virtualizing and some of them are interested having guaranteed SLAs [service-level agreements] and operations expenses versus capital expenses. Some of them are hardcore set in their ways and believe they can do it better than anybody out there and are going to buy racks and capital equipment and power and floating data centers that can take a big earthquake. It just comes down to costs and priorities.
At the end of the day, CEOs focus on big ideas, not normally how you get it done. So you talk to a CEO and say, 'Hey we can save you a lot of money [instead of if you do] it yourself, while guaranteeing performance.' They say, 'That sounds like a great idea!' Then they'll tell us to get with the CFO to make sure the dollars line up. Then the CIO will get involved, but you've gotten [the others'] buy-in influence to see it their way.
What's the best way to preserve your capital? It's to turn cost into an operations expense instead of a capital cost.
director of healthcare information systems, Toshiba America
Most of the time, though, the CIO's going to get involved and help drive or want to do it himself.
Do you foresee a time for most healthcare providers where their own data center costs will overrun the ability to pay for them?
Smith: I do. If you look at reductions in reimbursements, and especially if [a provider] didn't adopt stage 1 of meaningful use, where you get penalized 1% [by CMS] ... there aren't a lot of percentage margin points in the healthcare world.
I see a lot of the hospital moving outside of the hospital walls to the patient's place of residence, for one. Two, I see them trying to eliminate big capital costs: data centers, capital equipment, manpower, liabilities of IT, workers and the real estate that has to go along with it. For cloud services, you're paying a per-gigabyte base fee or a per-seat fee. We absorb the real estate costs and IT resources, and we guarantee the level of services.
Tell me about Toshiba's new SaaS and IaaS offerings.
Smith: Right now, we're in the process of building 20 global data centers. We have two of them up and running: one in Northern California, one on the East Coast in Virginia. We're doing virtual servers and virtual storage from a scalable perspective, from 500 gigabytes to multiterabytes, pretty rapidly for business continuity -- or if you need to replicate your [network] across the country in case of, for example, earthquakes in California.
Also, we provide virtual desktop interfaces. What are the three top investment CIOs making? Virtualization is one of them, [according to several market research firms], and they are removing the storage from devices and moving to a cloud-based infrastructure. We're supporting that. Let's say a facility wants Chromebooks to replace their computers on wheels for their nurses doing rounds. Now they can access patient data in the cloud, as well as have a secondary data set backed up off-site [for HIPAA compliance].
How do HIPAA business associate agreements work? Toshiba's big, it has a legal department, healthcare providers have legal departments.
Smith: We would normally sit down if they would have an agreement and review it from a liability perspective. We have a pretty lengthy SLA we work with customers on. If it comes down to specific business terms, our legal department is pretty fast and very thorough. Without getting into specifics, we sit down our legal [team] with their legal [team] and work something out that's amicable to both parties.
Is cloud a tough sell for healthcare providers now? Some CIOs we talk to refuse to let clinical data go outside their property lines.
Smith: There's some resistance. It comes down to resources. If they want to virtualize but they don't want to have to deal with the IT burden -- let's say for every 120 tablets you have one IT person managing that -- and they don't want the weight of that on their budget, then it makes a lot of sense. Most people, if they don't have their own data center, the rent rack space. And then those racks become obsolete.
And as fast as equipment gets built, it becomes obsolete. Take a best-in-breed enterprise-class storage system: You're looking at a million dollars up, normally, for an optical disk array for primary storage, where we can do it for a fraction of the cost. Yet you don't have to worry about technology refresh; that's on us. And if you want us to guarantee 'four nines' [99.99%] uptime and up, there's a value in that as well. Whereas if you have your own IT staff, you can't necessarily guarantee the uptime.