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Hospital Consolidation as a Driver for the Shift to Cloud Computing

Close up of hospital monitor with patient in the background
July 15, 2016

How is Hospital Consolidation Fueling Changes in Technology Delivery?

Shifting Technology Delivery Models

A major trend identified by The Peak 10 2nd National IT Trends in Healthcare Study involved changes in overall technology delivery models. Feedback we received from major healthcare IT decision makers indicated that the consolidations of hospitals, as well as consolidations of vendors or applications, are key drivers for technology delivery models. A marked shift toward cloud computing is taking place, as SaaS and IaaS adoption among healthcare organizations has increased one-third.

Interoperability also acts as a driver for consolidations—integrating systems and data and translating it into a main hospital system is a key initiative. Overall, consolidation and integrations can be an arduous task, but using best practices and calling upon experienced technology partners can ease the burden.

Consolidating Hospitals

There are a few reasons causing consolidations of hospitals, each of which is creating the need to make changes to the technology delivery model.

  • Mergers and acquisitions (M&A)

    In today’s healthcare landscape, a hospital serving a small population in a rural area is no longer a profit center, and most cannot sustain themselves.  Often times, a larger hospital system with many different locations in the same state will acquire smaller facilities in order to expand into, or take over, a territory in that area. As a result, considerable efficiencies are gained for what was once likely a small and financially draining operation. The IT team at the large hospital will consequently have the need to integrate, taking the smaller hospital’s systems and data and transferring it into the main hospital’s systems and data.

    Vendor consolidation can also come into play in this situation. For example, if one hospital is using Epic and the other is using Cerner, the facility will have to consolidate vendors; using several is not efficient.

  • Loss of profit in smaller hospital

    Regardless of location, small, autonomous hospitals and healthcare facilities are finding it hard to survive in the aggressive, system-driven environment of healthcare today. Many small healthcare organizations that have managed to subsist until now are suffering financially, and will likely have no remaining option but to be absorbed into a dominant hospital system.

  • A typical merger/general consolidation

    It’s not uncommon for two hospitals to merge together. General consolidation is another reason for a change in the technology delivery model.

Resulting Changes to the Technology Delivery Model

All of the above change events are going to make a considerable impact to a hospital system’s delivery of technology services—“how” depends on the original IT set-up of each respective facility.

For instance, if one hospital primarily leveraged the cloud, and its merging hospital tended to keep systems on-premise, then the preferences of new decision makers will determine what sort of delivery model is chosen.

Such facilities are most likely going to need to migrate applications and optimize or consolidate servers. As an example, instead of running two HR systems, only one is needed. All business applications will need to be merged, including financial, marketing, sales, EHR, and any other portals or critical applications.

Ultimately, the CIO will have to make some tough decisions regarding either training existing staff on new systems, or transitioning existing staff out of the business and hiring in people who can accomplish the objectives of a new delivery system.

…And Consolidating Vendors

The consolidation of hospitals and vendors do not necessarily go hand in hand. The consolidation of hospitals is inherently going to be a more complicated process than the independent consolidation of vendors.

If a facility has had multiple systems to do the same or similar jobs, like an EHR system, they may eventually decide to merge those systems together to gain efficiencies avoid interoperability challenges. Additionally, there may be a difference in the deployment of differing systems; if one is in the cloud and the other is comprised by physical servers, making them speak to each other seamlessly will be difficult.

Some hospitals are also realizing the benefits to transitioning to the cloud simply for the better efficiencies. As a result, initiatives to outsource to third-party cloud providers are in process, which fundamentally changes how IT works on a day-to-day basis.


“Our HR system is cloud-based. Anytime we look into a new system, we consider cloud.” – CIO at NE hospital

A Smooth Transition for CIOs and CTOs

If any kind of systems consolidation is taking place, migration is necessary. Whether you’re transitioning other systems into your on-premise systems, or moving systems to an off-premise third-party provider, you have to migrate. In many cases, reaching out to external resources, especially where cloud migration is concerned, is the safest bet—it will save your internal resources a lot of time and headaches, and allow them to remain focused on daily IT operations.

Considerations for Migrating

  • Is your data secure?
  • Are regular back-ups taking place?
  • Will downtime be a risk?
  • Do you have a strategy for ensuring that the same protection of your old system will also be part of your new system?
    • If you have backup and recovery in place currently, ensure that it will still be in place post-migration.
  • Is there a strong disaster recovery plan in place?

More Trends in Healthcare IT

Peak 10’s 2nd National IT Trends in Healthcare Study yielded considerable insight from many IT decision makers from major healthcare organizations, spanning upcoming technology issues through compliance concerns.

See the Peak 10 Industry Spotlight: Healthcare IT website.

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About Peak 10

"Our values are the foundation for everything we do at Peak 10, and are ultimately what enable us to earn our customers' business and their trust."
David H. Jones,
Board Member, Peak 10 + ViaWest