Overall, the current regulatory environment tends to preserve the status quo, protecting institutions such as large hospital systems that dominate the markets in which they operate and suppressing the forces of technological and organizational disruption, Bush argued. "We have a tendency as a society to stifle the things we care about the most," Bush said. "The things that move least fast are the things we put the most protections around." Even the government's attempts to control costs, such as the standardized fees imposed by the Center for Medicaid Services, amount to counterproductive "price fixing" in his book.

Innovation in healthcare instead requires the emergence of "a healthcare Internet" that would disaggregate many of the services currently performed under the umbrella of a hospital and allow new players to emerge, he said. Some of that is happening anyway, in halting steps, he said. For example, now that medical images are digital, the specialists who read and interpret them don't necessarily need to be within the walls of the hospital -- they could be anywhere in the world. One of the firms Athenahealth works with, Radisphere, is trying to capitalize on that idea, turning radiology into a cloud service. There are starting to be cloud-based services for dermatology, psychology, and second opinions.

When Bush talks about hospitals, it's important to understand that they aren't his primary customers -- Athenahealth serves physicians and groups of physicians, many of whom are affiliated with hospitals, but its software and services are for "ambulatory" or walk-in patients, not for the care of patients in hospital beds.

Still, the next challenge for Athenahealth is to "do a better job of stitching the cloud into the hospital. The hospital is actually a giant bazaar of activities that are being done for patients, both inpatient and outpatient," Bush said, and because of this artificial bundling they're being performed "massively below scale." Hospitals need to be permeated with cloud services that will add flexibility, but "still give you the feeling of integration" and allow the hospital to enforce overall quality control.

"The idea of a PACS system, or radiology information management system, that only manages pictures that happen to have been taken at that hospital -- rather than all the images taken of that patient at whatever hospital -- is kooky, it's a 1980s, pre-Internet idea," Bush said.

Hospitals need to adapt to a world in which the bazaar of healthcare services will be a mall, not a monopoly, he said.

Follow David F. Carr on Twitter @davidfcarr or Google+. He is the author of Social Collaboration For Dummies (October 2013).

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