Increase the success of healthcare vertical integration with industry cloud

Cloud designed for healthcare will help the many healthcare vertical integrations combining payers, providers, pharmacies, and technology providers to achieve their business case and enhance value for stakeholders. Healthcare vertical integrations seek to address the deterioration across the triple aim of care (reducing costs, enhancing experiences, and improving health outcomes), improve enterprise financial management, and address the evolving consumer expectations.

An industry cloud is a cloud platform designed to meet the specific needs of vertical industry segments. These are likely to emerge where generic solutions fail to meet a vertical’s needs. Healthcare has three significant unmet needs:

• Overcoming the burdens of the legacy: Healthcare data is siloed, often insecure, and sub-optimized, all of which impact the costs of addressing consumers’ health and care needs. Leveraging decades of multi-industry experience with the cloud to tighten security and optimize data will give the healthcare industry cloud a running start.
• Addressing the consumer continuum: Some may argue there is already a healthcare industry cloud by citing a couple of cloud-native applications. However, these applications don’t address the continuum that health consumers traverse as health plan members, pharmacy customers, or patients at a healthcare facility. The ability to leverage data, reimagine the value chain, and facilitate a seamless continuum will be at the heart of a healthcare cloud.
• Increasing speed and expanding engagement: Addressing consumers’ health and care needs is often life and death. The speed to provide access to healthcare resources and enable their optimal utilization is often key to better health outcomes. By securely optimizing data, seamlessly addressing the consumer continuum, and leveraging cloud-native capabilities to improve computation speed can directly improve the triple aim of care.

Vertical integrations are on the rise to tackle multiple industry challenges

Vertical healthcare integrations seek outcomes that address deterioration across the triple aim of care, improve enterprise financial management, and address consumers’ evolving expectations.

Exhibit 1: Healthcare vertical integration is exacerbating legacy challenges and making it harder to realize value

Source: HFS Research, 2023

The contours of the healthcare ecosystem are rapidly changing, challenging legacy value chains as health plans acquire hospitals, health systems, and pharmacy benefits managers. Pharmacy chains are reinventing themselves and health techs are becoming a differentiator. Exhibit 1 captures a sample of healthcare vertical integrations over the last couple of years in the US as funding and care delivery attempt to reimagine their foundational value proposition.

Changes in the healthcare landscape make legacy challenges worse and create new challenges

This unprecedented change in the healthcare landscape, driven by vertical integration, will likely exacerbate legacy challenges while creating new issues that need to be addressed. Exhibit 2 captures critical success drivers a vertically integrated healthcare enterprise must target.

Exhibit 2: Vertical integration success is dependent upon addressing debt, compliance, and the business case

Source: HFS Research, 2023

Genuine from-the-ground-up industry cloud has never been more in demand

The evolution of cloud computing, as seen in Exhibit 3, must give us the confidence that it can enable healthcare-specific business processes. However, to truly realize that potential, we will require imagination and collaboration between clinicians, cloud gurus, and healthcare enterprises.

Exhibit 3: Cloud as a technology continues to evolve from enabling distributed computing to potentially enabling new industry models

Source: HFS Research, 2023

Cloud participation in healthcare has mostly been the digitization of legacy and manual processes, defined by Horizon 1 in Exhibit 3. Healthcare enterprises have been biased in considering the cloud to reduce both their tech debt and operating expenses. There is nothing wrong with that approach, but it hasn’t moved the needle in addressing process or technical debt. This is where hyper scalers and service providers with private clouds have been playing.

Yet, others, such as Microsoft Azure, are expanding into Horizon 2 for healthcare. They are specifically beginning to solve domain-specific needs such as interoperability, care management, virtual health, and care coordination. Technology enablement is still biased toward point solutions to address existing processes without reimaging or reengineering the value chain. The creation of point solutions comports to an industry wrapper around the generic cloud and is ways away from enabling a cloud native healthcare value chain that is optimized and integrated.

There are no Horizon 3 cloud players in healthcare currently that can be called a genuine industry cloud. Given the triple aim challenges, the time is ripe to address the polymathic challenges through the enablement of an industry cloud. A healthcare cloud that will address healthcare vertical integration and free up time for the enterprises to focus on the rationale behind the vertical integration.

The path from the cloud with an industry wrapper to the true industry cloud may be simpler than you think

A true industry cloud can meaningfully improve the triple aim of care by reducing the cost of care (tech and process debt reduction), improving health outcomes (improving speed to care), and enhancing the experience of care (reducing the barriers to access).

Exhibit 4: Industry cloud requires healthcare-specific capabilities built on the foundation of a robust Horizon 2 foundation

Source: HFS Research, 2023

Exhibit 4 reflects the key elements of an industry cloud that is built on the experiences and capabilities of the generic cloud.

The Bottom Line: Industry cloud enablement can radically change the game and increase the likelihood of success for healthcare vertical integration.

Hyperscalers, service providers, and healthcare enterprises must embrace the philosophy of “form follows function.” They must consider the outcomes they are attempting to achieve and design their cloud to address those objectives. There is a genuine need for a healthcare industry cloud in the changing ecosystem landscape. It is time to address those needs and go beyond the prevailing industry cloud narrative.