Health IT managers are giving finance a crash course on cloud economics

You know the cloud can help your hospital save money by subscribing to cloud-based applications rather than buying them outright. But does your finance department?

Jeff Rowe | Dec 06, 2017 12:00 am

An increasing number of hospitals are subscribing to cloud computing services, but more than half of  CIOs say it’s still tough to make the case to their finance departments when they’re vying for IT budgets and approvals. 

That’s according to data from Black Book, from research the firm compiled for its pending 2018 Health IT Trends report, as reported by our colleague Tom Sullivan over at HealthcareIT News.

But that seems to be changing.  According to Black Book managing partner Doug Brown, Black Book found that “85 percent of hospital managers in facilities under 200 beds are paring back or freezing new IT CapEx investments in 2018, opting instead wherever possible to fund projects from the OpEx budget.” 

Moreover, “57 percent of large hospitals over 200 beds are also pairing back or freezing IT CapEx investments in 2018,”  Brown added. 

In other words, finance managers are listening to their IT counterparts and realizing the cloud can save them money.

As Sullivan explains the implications of that realization, “analyst house IDC . . . projected that spending on cloud computing, including services as well as cloud-enabling hardware and software, will more than double to $530 billion by 2021. This convergence of predictions means two things: cloud services, which frequently fall under that operational expenditure budget, are likely to become considerably more attractive than purchasing software upfront, and smart CIOs will cozy up to their CFOs to better understand CapEx vs. OpEx in practice.”

Sullivan cites a number of examples of hospital IT shops that are already operating in conjunction with the finance team.  For example, at Northwell Health, which serves the Greater New York City region, CFO Michele Cusack said that the departments are working together to take advantage of cloud-based services, adding that common applications to evaluate moving into the cloud are email, productivity and commodity apps that don’t contain large amounts sensitive patient data, notably protected health information and personally-identifiable information.

“Northwell is also in the process of moving its human capital management system to the cloud,” Cusack said. “We also have through third-party arrangements many key applications that are hosted externally in private cloud environments. We look at the overall savings by comparing the monthly fees to the upfront capital costs, the potential reduction or elimination of certain on premise IT infrastructure, the cost benefit of seamless future upgrades to systems, and the cost benefit of being able to scale resources quickly in response to demand.”