Can Cloud-Computing Take On The Health Care Establishment?

Forbes: Zina Moukheiber, Contributor

“I just met the man who will kill me…such a beautiful app! Oh the envy!!” Jonathan Bush generously tweeted, after viewing a demo from a three-year-old upstart called CareCloud. Bush is the chairman and chief executive officer of athenahealth, an electronic health records company with $324 million in revenues (2011). The would-be killer: Albert Santalo, the founder and CEO of CareCloud, which introduced an EHR earlier this year, and has between $8 million and $12 million in revenues.

I ask Bush what he meant by that compliment. He recalibrates it. “I doubt they could win against athenahealth because of our accumulated experience,” he says. But, he adds: “I thought finally, people are entering the cloud!”

Athenahealth, which sells to physician practices, pioneered the use of such technology in health care. The cloud, where information is stored on an external network of servers and accessed via the web, is nothing new in the world of technology. But, in the health care industry it is a very forward concept, especially for large hospitals, where concern over security breaches is paramount, as well as a fast and reliable Internet connection.

One of the most sought-after EHRs is a closed platform that runs on a 44-year-old programming language, requires a huge farm of servers, an army of technicians, and long hours of training. (Doctors hate that last part). Epic Systems makes it for large hospitals and physician groups, and there are no signs of sales slowing down. Last month, Boston-based Partners HealthCare, which encompasses a network of hospitals and physicians, announced it is implementing Epic at a cost between $600 million and $700 million. David Blumenthal described Epic as a “universal EHR system”—perhaps not the best choice of words. He is the Chief Health Information and Innovation Officer at Partners HealthCare. Until last year, he was the National Coordinator for Health Information Technology, where he was responsible for promoting an interoperable health information system—which Epic is not, but cloud could facilitate.

Before ultimately becoming U.S. Chief Technology Officer, athenahealth’s co-founder Todd Park championed cloud-computing as a more affordable option for physician practices. Last month, Forbes ranked athenahealth #4 out of the top 25 fastest growing tech companies.

Cloud-based EHR companies that target small physician practices include eClinicalWorks and Practice Fusion, but perhaps no start-up has staked its existence around cloud technology more than CareCloud. “That’s where the market is going,” says Santalo. He was thrilled by Bush’s comment, and intends to go after athenahealth’s market by positioning himself as a more nimble player, but reserves his contempt to the likes of Epic and Cerner, calling them the “walking dead.” “It’s a fight among dinosaurs,” he says. CareCloud has raised $20 million in a series A round led by Intel Capital, with Norwest Venture Partners.

Ryan Champlin, who is vice president of operations of the physician network at Cook Children’s Healthcare System in Fort Worth, Tex., will be meeting with CareCloud this month. Cook Children’s has 325 doctors in its network. “It’s the newness of CareCloud that attracts my attention,” says Champlin, who is a big believer in the cloud. In 2009, Cook Children’s selected athenahealth over Epic for its doctors’ network, because of concerns over cost and implementation. Its hospital uses Meditech’s legacy system. “The difference is there’s no significant upfront investment with cloud. What I like about athenahealth and CareCloud is if they’re not working for you, you can move on; you don’t have a huge sunken cost,” says Champlin. “The question is: who is going to produce better health for a given dollar? I bet my money it’s cloud. [Epic CEO] Judy [Faulkner] will say it’s crazy, there’s no track record, but stone tablets used to work well too.”

Will David beat Goliath? For now, there’s room for both.

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