The coming demand for storage will be great, but so will regulatory and compliance scrutiny, data security, risk mitigation, and transparency.

InformationWeek Staff, Contributor

March 24, 2010

5 Min Read

Undoubtedly, value added resellers (VARs) offering storage solutions have an opportunity to increase their business in the lucrative healthcare market segment, but that doesn't mean there aren't difficulties along the way.

Just ask a few storage VARs and you'll immediately sense the unease. As a national Health IT infrastructure is being built to support the addition of 32 million Americans to the health insurance rolls, with the goal of each individual having an electronic medical record by 2014, storage VARs say the challenges are great.

"A lot of healthcare organizations are getting ready for a huge inflow of data as they prepare to accommodate electronic health records (EHRs)," said Richard Kuhar, vice president of business development at Akron, Ohio based Arkay Storage Solutions, Inc.

Arkay saw its health IT business jump from 15 percent to 25 percent last year. The increase is in large part due to the company's contracts to provide storage to the University of Michigan's medical school and the National Institutes of Health.

"In the health area there's a lot of growth in server and desktop virtualization, often leaving health IT managers trying to decide how to integrate disparate data storage networks into a more centralized and manageable infrastructure," Kuhar said.

Health IT managers are also considering using software-as-a-service (SaaS) and other cloud-based services for healthcare records, medical automation, and other areas of their business, Kuhar said.

Yet while the prospect of gaining new business in the health arena is bright, there are difficulties; chief among them is the diligence necessary to address issues such as regulatory/compliance scrutiny, best-practice management, data security, risk mitigation and transparency.

"The certification game is tricky," Kuhar said. He noted that one of the biggest problems in Health IT is the "red tape" which often seems to stifle competition and innovation. It is not enough that a given solution works well. In addition it must often jump hurdles of certification championed by the likes of large original equipment manufacturers such as GE Healthcare or McKesson Corporation, PACS (picture archiving and communication system) or other medical application/platform manufacturers, or even from well-established vendors such as EMC or IBM, all of whom may hold some sway over whether a given hardware/software solution being offered is compatible or not.

"When you are talking about integrating any systems it's a chance for somebody to make threats about going against the status quo. This may include stating that you will jeopardize support, harm performance, or create some other wrinkle in any given vendor's specifically-controlled component of the infrastructure," Kuhar said. "Such guidelines are certainly prudent, even if it's not always known to whose advantage they are actually meant. Healthcare is serious business," Kuhar added.

Francis Poeta, President of P & M Computers, Inc. a Cliffside Park, N.J.-based storage integrator said one of his clients rejected a storage solution he proposed.

"We were offering a storage life cycle management imaging solution for a hospital's cardiac division. The hospital's IT manager said they did not know if the solution was compatible with GE's solutions, and that's where the conversation ended," Poeta said.

Although P & M Computers has over the last two weeks received 15 calls from hospital officials inquiring about whether the firm could provide them with storage solutions, Poeta said he'll have to think hard about pursuing new business in the health IT sector.

"We don't think we'll be moving forward aggressively with providing storage solutions in the healthcare area until we figure out if hospitals will accept our technology or whether we can be on the approved list of large healthcare vendors," Poeta said.

Keith Norbie, vice president of sales at Nexus Information Systems, a Minnetonka, Minn.-based storage VAR, said most of the decisions to buy technology are made by doctors instead of IT managers, and compounding the problem, companies like McKesson have a "gigantic say" in what technology hospitals buy.

"One of our hospital clients wanted to virtualize his server environment for his McKesson applications, and McKesson said they don't support VMware virtualization. The hospital's systems architect went ahead and bought the VMware software from us anyway, installed it and things worked well," Norbie said. However, not all IT managers reject the advice of a vendor, Norbie added.

Gary Chen, IDC analyst, said he has heard similar comments from users and notes that these support issues are more commonplace with the smaller independent software vendor (ISVs) who make niche, vertical applications.

"Often there is just a lack of understanding of how virtualization works and the status of the technology. There are often concerns over how licensing would work in a virtualized environment and performance. Many of these ISVs and their apps have a long entrenched history, a certain way of doing things, and a very conservative approach. So change for them can be slow," Chen said.

And there are other problems too. According to Norbie, the push toward digitizing medical records and the shift to data sharing are expensive to implement especially at a time when healthcare providers' budgets are thin.

"Hospitals face a more widely scrutinized set of requirements than the standard IT shops because patient records have high end governance, high end security, high end retention requirements for documents and very fragmented access points to the technology with different clinics to support the hospitals," Norbie said.

Yet, while these problems are prevalent they are not insurmountable. "We try to find compromises, and we believe the marketplace will evolve and sort things out," Norbie said.

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