Temperature Check: Health Care IT Market Feverish for Partners
Copyright 2014 by Virgo Publishing.
By: Kelly Teal, Senior Editor
Posted on: 01/08/2013


Kelly TealIf you're not selling into the health care vertical, you are missing out on a lucrative opportunity. In 2012 alone, the health care IT market was expected to hit $78 billion; the sector is projected to maintain a 5 percent compound annual growth rate, reaching $92 billion by 2016, according to Compass Intelligence. If that does not convince you, consider that several indirect partners interviewed for this article said they have experienced 20-30 percent year-over-year growth since launching their health care practices — some as recently as 2011.

Here are some reasons why the health care IT sector is booming:

  • The federal government has mandated electronic health records (EHRs) adoption by 2016
  • The devastation of storms such as Sandy underscore the need for server virtualization and the use of widely spread-out data centers
  • Smartphones and tablets have enabled mobility for health care staff, so wireless networks must be secured and device platforms managed from a life cycle perspective
  • Doctors are conducting more and more video conferences with one another and with patients
  • Legacy PBXs hidden in many hospital basements and physicians' office closets are reaching their end of life

What's Hot in Health Care Technology

Based on these market drivers, here are a few of the hot opportunities in health care technology:

Technology to Support EHRs. The American Recovery and Reinvestment Act of 2009 includes incentive payments for health care providers adopting and actively using EHRs. As such, a number of doctors and hospitals have been investing in high-bandwidth networks and associated needs such as storage and mobility. Some of the federal deadlines have passed, but others remain in place for 2014 and 2015, which gives channel partners up to two more years to help their health care clients meet the technology requirements of the EHR mandate. By 2016, most health care institutions are expected to be using EHRs; for partners, that means the chance to earn recurring revenue from managed and professional services. On the whole, EHRs are "really the hottest, white-hot, topic," given the government funding surrounding them and the looming deadlines, said Ty Crawford-Mayberry, inside solutions architect for value added reseller CDW.

Data Center. For years, many facilities have kept their servers and other equipment in basements or closets where fire, floods or earthquakes could interrupt all internal communications and endanger patients' safety. With the move to EHRs, which contain patient name, address and medical history, but also large radiology files, and lab and test results, health care providers need a safe place to keep information. Today, these vital systems are  moving into secure, HIPAA-compliant third-party data centers. And, as Superstorm Sandy demonstrated in November 2012, hospitals and doctors' offices cannot rely only on data centers that are nearby; rather, they must use data centers that are geographically diverse to ensure redundancy.

Partners say disaster recovery also is a key selling point for cloud services like data backup and recovery. "Every channel partner ought to be selling into health care because every single [provider] needs a place to back up data to," said Kyle Miley, president and CEO of reseller Sonoran Integrations.

Michael Shonholz, telecom services manager at value added reseller CDW, said more customers are requesting software and infrastructure as a service. "A year ago, no one was asking for those as-a-service options, and three years ago, they weren't even available," he said. "We are seeing more customers wanting to not just evaluate traditional, on-premises solutions, but also to see that quote 'as-a-service.'"

PBXs. Chances are good that your health care client needs to upgrade its PBX. "A lot of the health care providers haven't touched their PBXs ... in 10-plus years, sometimes 20-plus years," said Dave Halpin, director of carrier services at distributor Black Box Network Services. Switch your client to SIP trunking and an IP PBX, and you'll have created a scenario ripe for mobility and video, the foundations of a unified communications (UC) platform.

Mobility. Mobile technology, encompassing networks and devices, will comprise a $23 billion revenue opportunity worldwide by 2017, according to a February 2012 GSMA report. North America is expected to account for $6.5 billion of the total. To that end, channel partner sources agree that health care customers are demanding mobility — from secure WANs to tablets and smartphones. Most VARs are handling the wireless networking and UC software components. For them, selling the tablets and smartphones often does not make sense due to slim margins and added complexity. "It opens doors but the money in it isn't there for us," Halpin said. "We're relying on our [wireless partners] to do that part. We don't want to handle the back office and capital outlay." Instead, VARs seem to do best with upgrading infrastructure and enabling it to support mobility, as well as video, voice and presence. For Sonoran Integrations, wireless networking, phone systems and Wi-Fi access for health care firms are key pieces of its business model.

Telecom agents tend to focus on device procurement and oversight, since many have contracts with carriers and long have offered communications life cycle management services. "We talk about [mobility] in terms of BYOD, and enablement and management," said Richard Murray, president of master agency CarrierSales. "Every doctor has a smartphone, and what are these IT directors going to do to manage that ... and keep it secure?" The mobility discussion with health care clients must go deep into how employees' Android and iOS devices are being managed — who sets permissions, where smartphones and tablets can be used within a facility, whether those devices can be taken off-campus and so on. But a number of health care organizations are too busy or don't have enough IT experts to deal with such questions, and that's where partners get to shine.

Video. Often called "telehealth," video in the health care vertical has grown more common with the ubiquity of high-speed Internet and its ease of use on mobile devices. Now, thanks to the underlying networks and associated hardware and software, the global telehealth market will increase from $9.8 billion in 2010 to $27.3 billion in 2016, according to March 2012 findings from BCC Research. And health care providers are finding ever more uses for video. For instance, a number of hospitals now record rounds with doctors, then encode those streams and release them for viewing by authorized health care professionals, said Joe Arena, vice president of advanced services for managed services provider Yorktel. But the greatest interest is coming from health care organizations eager to tie their smartphones and tablets — along with disparate video services, including proprietary and consumer brands — into room-based systems. This video federation is allowing health care facilities, which have notoriously small IT budgets, to make the most of their existing investments.

Tips for Selling Into Health Care

Don't kid yourself — selling health care IT "is not as easy as selling T1s," as Chad Chamides, vice president of sales for telecom agency Titanium Communications, put it. For one thing, you have to know which hardware and software suppliers, and data centers, comply with HIPAA regulations. For another, you have to know how to integrate all of those pieces, or have trusted partners available who will handle that for you. Either way, the payoffs promise to be huge. "Health care professionals do not want to work with carriers directly, so they are leaning on the agents," Chamides said. With that in mind, here is the nitty-gritty to understand before charging into a doctor's office on a cold call:

Challenge: Getting in the door. "A lot of medical facilities don't feel comfortable working with people who just walk in," Chamides said. "They only like to deal with partners who are referred — and the doctors all know each other."
Solution: Take advantage of local networking events to forge relationships with business leaders and health care decision makers, and make the most of your existing connections wherever you sell.

Challenge: Enduring a long sales cycle. Don't expect to get a signature on a health care IT deal for at least six months. Doctors and hospitals are slow to adopt new technologies, even though they need to do so, and they struggle with limited IT budgets.
Solution: "You need to have other prospects, clients and business coming in," said Chamides.

Challenge: Having the proper processes in place to understand the customer's business needs. "If I go through my questions and don't ask the right ones, I'm going to screw it up," Miley said.
Solution: Have a spreadsheet with items to check off as you investigate a customer's infrastructure and systems. For example, get the client to walk you through a typical business day. Where is the server room? Are the servers caught in a rat's nest of wires? Are they being cooled properly? Are all drives being backed up? Only after running through your entire checklist will you be able to provide a thorough recommendation. "If you understand the customer and what they do on a daily basis, then you should see the red flags," said Miley.

Challenge: Determining the right vendors. When it comes to health care in the United States, equipment makers and connectivity suppliers are responsible for making sure their products comply with federal privacy and security HIPAA requirements. But it is up to channel partners to know which of their vendors are HIPAA-compliant and only use those products and services in health care deployments.
Solution: Know your suppliers inside and out. "Cost is important but [the product] has to perform," Murray said. "You have to have a vendor that can prove they are HIPAA-compliant. The conversation begins and ends there."

Challenge: Being able to work with existing networks and hardware. Health care-centric partners have to "really have the knowledge of how [systems] intertwine and connect," Halpin said. "If you miss things, it could be devastating."
Solution: Either employ technical engineers with the proper background and experience to ensure an integrated platform, or subcontract with a partner who does. "When you're dealing with the health care vertical, you have to be sure uptime's there ... because there are severe consequences if it isn't," said Halpin.

Challenge: Service delivery times. Like it or not, suppliers can — and do — suffer installation delays, whether because of problems on their end or due to situations such as natural disasters. With health care customers, it is critical not to overpromise and under-deliver. "There is much more pressure because this is literally life and death" if a network connection or another technology does not deploy in the promised time frame, said CDW's Crawford-Mayberry.
Solution: Build buffers into the service delivery dates.

As the health care system in the United States undergoes changes spurred by federal law, and as technology transforms how the medical community can help patients, there's little doubt that channel partners will play an integral part in outfitting doctors and hospitals with the appropriate tools. The key will be to define where you want to specialize, and then identify subcontractor partners who bring different expertise to a project. On top of that, agents and VARs will be the ones to educate their health care customers about the security of cloud and other services; clients may take you more seriously if you are certified in your area of expertise or can show that you undergo frequent training. You will need to prove your mettle and that of your suppliers'. After all, you don't want your prospects or clients to feel they need a second opinion.

Kelly Teal is senior editor of Channel Partners.
LinkedIn: linkedin.com/in/kellyteal

Agents, VARs Partner in Health Care Deployments

The inevitable convergence of the IT and telecom channels has VARs and agents relying on one another in health care deployments, sources say. For example, Black Box Network Services landed a health care project through a telco agent who needed help with networking services, infrastructure cabling and hardware. "That's led to a full-blown partnership," said Black Box's Dave Halpin. And because of the collision of voice and data, Black Box has seen an approximately 20 percent increase in the amount of agents with whom it partners. "This makes life a lot easier on their end, where they don't have to pretend to be experts, and it's easier on our end because mistakes aren't made."

Titanium Communications' Chad Chamides agreed. His telecom agency has been "very successful" working with IT VARs and MSPs who don't want to manage their customers' carrier services. "They want to manage the LAN and look to a partner who has a background on the LAN side, so when there's an issue, they troubleshoot from the LAN side and we troubleshoot from the WAN side." All the end user sees is that their computer, which had been running slowly, now is back to normal. "VARs are as important to us as we are to them," said Chamides.