Summary: The Software as a Service (SaaS) business model has long-term viability challenges. Cloud/SaaS enthusiasts beware.
I came across a piece of hype about "cloud-based makeovers" for imaging and lab results in Venture Beat, referenced from a Linked In Clinical Trial Imaging group posting.
It is nice perhaps that an EHR vendor executive apparently "gets it". What interested me though, was not the fact that that folks were repeating the obvious, that CDs suck, and it is worth exploring a "cloud" or Software as a Service (Saas) medical image delivery method, whether for clinical care or clinical trials.
Rather, at the top of the page, was a link to another article entitled "the unprofitable SaaS business model trap" by Jason Cohen. Now that was interesting, not because I indulge fantasies of starting a SaaS business (at least not on a very regular basis or very seriously), but because it caused me to start to wonder about how potential customers of SaaS services for EHR and medical image sharing, PACS and VNA assess the potential longevity of any service provider they get into bed with.
Not that "cloud" and "SaaS" are necessarily synonymous (e.g., see Wikipedia's description of Cloud Computing, "SaaS" and even Storage as a Service (STaaS), "Cloud Computing vs SaaS", "Demysityfing SaaS vs. Cloud", "Cloud Computing Versus Software as a Service", "Cloud vs SaaS", "Understanding the Cloud Computing Stack: SaaS, PaaS, IaaS"). For the sake of argument, in the context of EHR and image transfer or sharing or distribution or viewing, let us assume that the customer is using a pay-as-you-go (PAYG?) service, which is the issue discussed in the article.
Healthcare use cases have an additional quality and regulatory burden that is inflicted, for better or for worse. This creates the need for even more spending by the provider, beyond R&D and Admin cited by Chohen. So the long term viability question should perhaps be even more at the forefront of healthcare customers' minds. Not to mention wasteful certification (aargh!) spending, as well as the costs of integration and the cost/risk of migration at the end of a failed service-provider relationship. Cohen describes 75% annual retention, with the potential for complete customer turnover after 4 years; it would be interesting to see healthcare-specific numbers.
Some vendors have been successfully offering SaaS in the PACS world for a while. This 2011 Aunt Minnie article summarizes an InMedica report. It would be interesting to see what the relative proportions are now, and whether the 1% share in 2010 that was both storage and software hosted by a third party has grown since, and by how much.
One question I might have for a potential service provider would be how diversified they are, and whether the SaaS offering is their only source of revenue. Diversity though, is no guarantee the provider would not kill off an unprofitable business line, of course. How many large PACS vendors regularly completely change their architecture or even their entire product line and end the lives of their customers' installations, whether a capital acquisition or service was involved?
Sophisticated customers and vendors probably have stock questions and responses in this respect. I do wonder how often the small, inexperienced customer gets sucked in by a "0% API for an introductory period" pitch, and potentially puts their data at risk in the face of impending penalties or loss of incentives if they don't "go electronic". Or the small and enthusiastic provider makes promises with the best of intentions but without the ability to follow through. Or perhaps, without the best of intentions, has a "someone big will buy us for our customer base before our burn rate catches up with us" exit strategy.
On the other hand, worst case, if your SaaS vendor goes under and takes all your data down with them, how bad could it actually be? No worse than an imaging center or clinic or hospital closing, and no longer being a reliable source of priors or historical records, maybe. Here is an interesting article about "Protecting Patient Information after a Facility Closure" that is worth a read, perhaps with respect to what you might want in a SaaS contract. At least you won't have to worry about migration though, if the data is completely lost.
I guess in the long term, as health care systems globally collapse under the weight of aging and sicker populations, it will merely be a matter of which races to the bottom faster, the non-viable SaaS providers or the non-viable health care providers. Their lost or inaccessible electronic records will probably be the least of our worries. It's a cloudy, gray and rainy day in the North-East today!