Featured October 28, 2014 | modernhealthcare.com | Joseph Conn
Salesforce.com, the cloud-based customer resource management services provider, has been generating buzz lately because of a reported big push into healthcare.
Two unnamed company sources recently told Reuters that Salesforce hopes to bring in $1 billion in annual healthcare industry sales in the coming years.
That would mean a 25% bump to its top line, based on last year’s numbers.
What’s not so well-known is that Salesforce already is in healthcare. That makes this latest move more an expansion than a new initiative, as the Reuters story seemed to imply.
Salesforce already is “absolutely in healthcare, but I think quite possibly the healthcare community doesn’t know much about Salesforce,” said Tim Pletcher, CEO of the Michigan Health Information Network Shared Services based in East Lansing, a Salesforce customer for the past four years. “They’ve crept in through the sales and marketing and the CRM (customer relationship management) space. But I think a better way to say it is they’re moving into the healthcare-delivery space.” It can be quite challenging for some people to understand what salesforce is truly about, so a little bit more research might be appropriate. You can learn more about that here.
MiHIN looked to the Salesforce cloud platform to build a directory it uses to keep track of and understand the relationships between 275,000 doctors, hospitals and other healthcare organizations and facilities.
In June, Salesforce announced a partnership with Dutch electronics giant Philips, a maker of consumer-oriented health monitoring devices, to provide a cloud platform for data storage and retrieval from those devices.
Salesforce posted revenues of $4.07 billion for its fiscal year ending Jan 31, 2014, up more than 33% from $3.05 billion a year earlier. Meanwhile, it incurred a net loss of nearly $232.2 million last year and $270.4 million the year before that.
Red ink notwithstanding, Salesforce is “arguably the leading cloud computing company out there,” said Jack Andrews, a senior research analyst with D.A. Davidson, a financial services company based in Great Falls, Mont., who tracks the company. Salesforce has “plenty of cash” and is executing its strategy announced earlier to move into larger corporations in six industries to try and maintain sales growth, Andrews said. “Healthcare is just one of their areas of focus,” he said.
If Salesforce is to succeed in grabbing market share in healthcare delivery, it will need stamina as well as innovative products, said Todd Cozzens, venture partner and senior adviser to Menlo Park, Calif.-based Sequoia Partners.
“There is a long, tattered history of these software companies getting into healthcare and finding out how hard it is and getting out,” Cozzens said. “You saw GE with the IDX thing, and now they’re out. Google tried to get in with their personal health record, and got out. You saw Microsoft with their personal health thing,” which is still operating as HealthVault, but not setting the world afire.
“People don’t realize, first of all, you have 47 regulatory bodies in healthcare and extremely long sales cycles for providers and payers,” Cozzens said. “To build up a code base that works, it’s taken Cerner and Epic 25 to 30 years.”
But one thing going for Salesforce is that healthcare’s historical, visceral anxiety about cloud computing appears to be waning.
One reason for that growing sense of ease with the cloud is healthcare IT people themselves who use cloud-based mobile applications in their private lives.
A survey by the Pew Research Center Internet Project this year of 1,600 technology experts found a majority of respondents felt that the dominance of cloud-based applications and devices was inevitable, and that by 2025, there will be a “global, immersive, invisible, ambient networked computing environment built through the continued proliferation of smart sensors, cameras, software, databases, and massive data centers in a world-spanning information fabric.”
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Already, mobile medical applications have grown in popularity among clinicians and could be in ubiquitous clinical use within five years, according to Modern Healthcare’s annual survey for the Most Important Mobile Medical Application, now underway and in its third year.
And the federal government seems poised for change as it looks into a new architecture for health information interoperability modeled on Internet principles.
With healthcare reform, Pletcher said the timing is right for Salesforce to expand into services in healthcare delivery.
“Anyone who has recently formed an ACO and has a spreadsheet and is trying to figure out which doctor is in the club, and is trying to keep that spreadsheet up to date, they’re going to go quickly to Salesforce,” Pletcher said. “There are no tools within the walls of a healthcare organization that do that well. Even care-coordination applications, there is no market leader. That space is primed for a mature tool that is good at that stuff, relationship management.”
Cozzens notes that hospitals are wearying of being data-center owners/operators, so arguments for the economy of scale of cloud-based computing are finally gaining a healthcare audience.
In addition, Salesforce’s expertise in customer management “should translate well into patient-centered healthcare,” Cozzens said, “but they have to be patient and get on board healthcare experts who know this thing inside out. This is a 15-plus-year game for anybody coming in,” Cozzens said.
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