Microsoft Makes a Big Move in the Healthcare Market

By Bruce Harpham Sunday, October 11, 2020

Healthcare is one of the few booming industries in 2020, and Microsoft is about to seize the opportunity. On October 30, Microsoft will launch a cloud offering specifically aimed at the healthcare market. Known as Microsoft Cloud for Healthcare, the product represents a significant opportunity.

Why Microsoft is Building a Custom Cloud Solution for Healthcare

While Microsoft Cloud for Healthcare is new, the company has launched products and features aimed at the health sector in the past. When the Fast Healthcare Interoperability Resources (FHIR) standard was developed over the past decade, it was clear that there were new opportunities in healthcare.

By November 2019, Microsoft released the Azure FHIR service. This platform as a service (PaaS) offers data storage and related services, specifically for healthcare. By offering a solution designed specifically to handle healthcare data, Microsoft will be positioned as a healthcare cloud leader.

Microsoft's support for a common standard for healthcare data is best understood in light of its other moves in healthcare. The company is allocating significant resources to strategic alliances and innovation to pull ahead in the healthcare market.

Microsoft Invests in Healthcare Tech — Hospitals and Elon Musk

A few years from now, Microsoft Cloud for Healthcare may serve as the foundation for a much larger healthcare product division. In partnership with Providence, a hospital organization, Microsoft is working to build a "hospital of the future." Besides, Microsoft has contributed $1 billion toward Elon Musk's OpenAI initiative, aiming to develop a general-purpose artificial intelligence. Among other goals, OpenAI aims to develop improved personalized healthcare.

Microsoft's increasing emphasis on healthcare goes beyond profits. In 2019, Microsoft put $60 million into the AI for Health initiative, a multi-year philanthropic program dedicated to healthcare programs. This program includes specialized programs to combat COVID-19, as well as efforts to eliminate leprosy. Such endeavors are undoubtedly influenced by Microsoft co-founder Bill Gates's commitment to global health projects at the Bill and Melinda Gates Foundation.

Healthcare Follows Suit in Other Specialized Cloud Solutions

Microsoft and other major cloud companies have previously built successful cloud offerings for a highly demanding national defense market. Like healthcare, national defense customers have highly complex regulations and laws governing their activities. Further, defense and healthcare also have above-average demand for robust cybersecurity.

Microsoft's prior success at winning a $10 billion contract with the US Department of Defense is significant for a few reasons. It shows that it can work with highly demanding US government stakeholders to close a deal. While that contract is subject to some legal questioning, Microsoft has already started to reach out to other governments worldwide.

Microsoft isn't the only company building custom cloud solutions for national defense. Oracle announced significant improvements to its Oracle National Security Cloud Solutions product in September 2020. Oracle now states that its solutions are capable of handling top-secret data.

Technology Companies Building Cloud Healthcare Products

While Microsoft is building on its existing solutions, other companies are taking a different approach focused on acquisition. Salesforce launched Salesforce Health Cloud in 2016 based on its billion-dollar acquisition of Vlocity.

Salesforce and Microsoft are not quite in direct competition. Microsoft's product is a focused health platform as a service. Organizations can use it as a secure platform to store and process health data. In contrast, Salesforce Health Cloud is best seen as "customer relationship management for healthcare." Instead, the Salesforce product is designed to help healthcare providers manage patient cases.

How Much is the Healthcare Technology Market Worth?

Estimating how much Microsoft will make from its expansion into healthcare is challenging. One analyst estimate puts the US healthcare IT market's value at more than $96 billion in 2019, growing to more than $225 billion by 2025. If Microsoft can prove itself capable of meeting healthcare demands for security and innovation, it may be able to seize a major part of the market.

Has Microsoft Learned from its Past Failed Healthcare Efforts

In the 2000s, Microsoft's first efforts to get involved in the healthcare field did not end well. The company bought companies like Azyxxi in 2006 and other assets in Thailand. Ultimately, these ventures were sold and divested. Since then, the cloud computing revolution has brought down technology costs, and Microsoft has developed cloud expertise.

Microsoft's big question is how much its healthcare efforts are meant to be profitable products vs. philanthropic efforts. Microsoft already knows how to build and sell cloud access. The company likely earns billions from Azure and related cloud products — company reports do not provide revenue at the product level. So the prospects for Microsoft Cloud for Healthcare are positive.

Other initiatives diverge further from Microsoft's existing strengths. Investments in AI projects like the AI for Health may help the company build connections and expertise.

Only time will tell if the company will earn meaningful profits from these other areas.

About the Author


Headshot of Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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