Hospital moves into ASP niche

Tight budgets and the difficulty of retaining staff in a low-paying industry have pushed many New York hospitals to outsource their IT departments. But Maimonides Medical Center in Brooklyn hopes to tackle those problems by doing the exact opposite: turning its IT unit into an outsourcer -- and a profit center.

This month, the medical center launched Technology 4 Healthcare LLC, which Maimonides CIO Ann Sullivan estimates will generate $80 million in revenue within four years. Armed with $6 million in funding from an equity partner, Sullivan's group plans to eventually add 125 employees to its 85-person staff. It will serve both the hospital and outsourcing clients in New York, New Jersey and Connecticut.

Sullivan said Maimonides' IT group, with its history of "showing how technology can improve the bottom line," is poised to operate as a for-profit business. Before implementing any technology, Maimonides conducted a "full-blown investment analysis" to show its payback, she said.

Technology 4 Healthcare will serve as an application service provider (ASP) and offer implementation and training support for packaged software in technologies such as picture archiving and communication systems (PACS), patient scheduling and electronic patient records. Maimonides will be the company's first client.

Operating as an outsourcer can be a risky move for a health care provider, said Richard Telesca, a senior analyst at Cambridge, Mass.-based Giga Information Group Inc. Outsourcers must negotiate service-level agreements with clients and offer compensation in the event of a system failure.

ASPs in the health care market, however, are doing fairly well, Telesca explained, because hospitals are looking seriously at hosting services and ASPs to cut costs, especially in the face of the recently enacted Health Insurance Portability and Accountability Act, which contains various IT regulations with which hospitals have two years to comply.

Technology 4 Healthcare will partner with the following software vendors: E&C Medical Intelligence Inc. in Glen Rock, N.J., which makes an intelligent birth records system; MicroMed Healthcare Information Systems Inc. in Tustin, Calif., which makes electronic medical records and enterprise appointment scheduling systems; and StorComm Inc. in Jacksonville, Fla., which makes a PACS.

Analysts believe Technology 4 Healthcare has a strong competitive advantage because of its industry-specific knowledge and experience, said Matt Duncan, research director at Gartner Inc. in Stamford, Conn.

The health care IT outsourcer will possess "not just a knowledge of [clients'] business but knowledge of the applications they're going to be supporting," said Duncan.

But Ashoke Talukdar, an application services engineer at The MetroHealth System in Cleveland, said his organization would choose an outsourcer based on whether it could provide the technical resources it needed, not whether it belonged to a health care provider.

"We wouldn't rule out a health care outsourcing provider, but we'd look around at other places," he said. "It depends on who gives us the most bang for the buck."

This story, "Hospital moves into ASP niche" was originally published by Computerworld.

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