How Will Microsoft Become a Top Player in Health IT? Through Partnerships, Providers, and Pluck, Says GM Michael Raymer

5/21/10Follow @gthuang

If you talk to doctors and healthcare companies, you’ll hear a fair bit of skepticism about whether Microsoft will ever amount to much of a major force in health technology. Of course, Microsoft is plenty used to skepticism. Crushing it, that is.

That’s why the Redmond, WA, software company (NASDAQ: MSFT) has been seriously ramping up its efforts at the intersection of health and information technology. We’ve reported on the progress of Microsoft’s Health Solutions Group in trying to gain traction with its three main product lines: HealthVault, the electronic health records repository for physicians and consumers (Microsoft’s word for “patients”); Amalga, the software platform for unifying all the 65 or so proprietary health programs in the average U.S. hospital; and Amalga Life Sciences, a platform to help researchers manage huge amounts of genomic and medical data.

But I wanted to drill down into what exactly makes Microsoft think it can compete in the long run with all the dedicated healthcare systems and companies out there. For that, I went to Michael Raymer, who has been a global market strategist and general manager in Microsoft’s Health Solutions Group for just over a year and a half. Previously, he was a senior executive at Misys Healthcare, GE Healthcare, and IDX Systems.

Raymer holds no illusions about Microsoft’s place in the industry. The company is known for its business software, entertainment systems, and, increasingly, its Internet products. But healthcare—even though the industry uses Word, Excel, and Windows as much anybody—-is a truly different animal. Raymer talked about making the proper acquisitions to enter the health IT market, like Boston-area-based Sentillion. Microsoft has also taken care to hire the right experts. For example, there are a number of clinicians in his group working in product management, sales, and engineering. Raymer also mentioned the importance of forming partnerships.

Take Microsoft’s recent alliance with Eclipsys (NASDAQ: ECLP), a healthcare software firm based in Atlanta. The partnership was announced in February and is already paying dividends to both companies. “We reached out to Eclipsys over a year ago to work on a partnership,” Raymer says. “There was not much interest. Then, before the holidays, they had a shift in strategy. They saw the need for free flow of information between systems.”

It sounds obvious, but free-flowing data is hard to find in healthcare. Instead, administrative staff, nurses, doctors, mid-level managers, and chief medical officers, even in the same organization, often can’t share information efficiently or collaborate on problems a patient brings to light after being discharged, say, because of incompatible silos of data. Microsoft’s Amalga platform tries to unify all those data systems. Then Eclipsys builds software applications—clinical, financial, and administrative—on top of that platform. That’s the alliance, in a nutshell.

Microsoft and Eclipsys share three customers so far: New York-Presbyterian Hospital, Johns Hopkins Health System, and El Camino Hospital in Silicon Valley. Raymer says that because sales cycles are typically 9-18 months, it’s a little early to assess the financial impact of the partnership. But, he says, “We have been able to increase the number of deals both companies are in.” He says their pipeline has about 15 new customers as a result. What’s more, he says, other companies have since approached Microsoft about forming similar alliances.

Raymer also responded to Microsoft’s skeptics more broadly. He says the company’s healthcare customer base, which includes big hospitals like Mayo Clinic, “wouldn’t invest in the platform unless they thought Microsoft was serious about healthcare. Microsoft was wise enough to realize that being a great technology company was not enough in healthcare.”

Given his deep experience in the industry, he’s able to clearly differentiate Microsoft’s approach from that of other big companies. “Our strategy and Google’s are very different. They’re more of a portal strategy. Ours is more a personal repository,” Raymer says. As such, he says, Cleveland Clinic uses both Google Health and Microsoft HealthVault—the latter to do home monitoring of cardiac patients. As for one of his former employers, he says, “GE’s business model is not optimized around construction of software. It’s primarily acquisition of the latest technology and putting the GE brand on top of it, and pushing it into the GE sales channel. Microsoft is a finely tuned machine in terms of building software. But GE has a longer track record in healthcare.”

I asked Raymer how much impact healthcare will ever really have in terms of revenues for Microsoft, and how it will interact with the company’s other product areas. He wouldn’t make any specific predictions, but he said, “Most affluent societies spend a tremendous amount of money on healthcare. It’s an important platform for Microsoft to come in and solve big problems. We think the investment we’re making in cloud technology will pay off in healthcare.”

The bottom line is about sharing data and reducing costs. Raymer’s broader vision is that “in five to 10 years, Microsoft will be seen as the organization that enables free flow of information across the silos that exist today in healthcare,” he says. “We are the one company to ensure that data flows between citizens and governments and patients [and providers]. We think IT in 5 years will do what it has done in other industries, and will drive down costs of healthcare delivery.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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  • healthITguru

    Hmmm.. MS has now spent four years working on this and gotten no traction. Mayo doesn’t count because they gave them the software as an “early adopter” which is code for “free.” I hear the same mantra from CIO at healthcare facilities all the time re: MS: products are too expensive and sales force is too arrogant. At some point when this is all folded into another division with better leadership and vision they may meet some success.