Healthcare in the Cloud: What You Need to Know

Surveys have shown that between 70% and 80% of hospitals and health systems have adopted cloud computing services. Healthcare organizations often turn to the cloud for its flexibility, scalability, and ease of operation, as compared to on-premises infrastructure.

Though these benefits are certainly tangible, it’s important for hospital and health system leaders to think strategically about how they use the cloud. For example, there are multiple cloud deployment models, service models, and use cases. In addition, underestimating the resources needed to migrate on-premises data and applications can derail a transition to the cloud. Bringing IT and business leaders together—and finding the right cloud service providers (CSPs) to partner with—is essential to achieving cloud computing success.

What Is Healthcare in the Cloud?

In healthcare, cloud computing enables clinicians, administrative staff, patients, clinical and operational applications, and medical devices to access data and other applications for both care delivery and back-end hospital management purposes. Moving data and applications to remote, cloud-based services breaks down one of the biggest barriers to access: the need to be at a hospital or physician’s office to manage or process medical and administrative information. Using cloud services also empowers hospitals, health systems, and care delivery organizations of all sizes to devote fewer resources to managing and maintaining on-premises IT infrastructure. This lets healthcare IT shift its focus to other initiatives, such as improving care delivery and operational efficiency.

What Is Cloud Computing?

Cloud computing refers to delivery of computing services over the internet, rather than through on-premises physical infrastructure. Cloud-based services are typically hosted by technology vendors and can include storage, databases, data analytics, and industry-specific solutions, such as electronic health records (EHRs) or telehealth systems in the case of healthcare. In addition, cloud computing is primarily available on demand; since organizations pay only for the services they need, they may find cloud computing services less expensive to implement and operate.

Why Is Cloud Computing Important for Healthcare?

Cloud computing enhances accessibility, efficiency, and security in healthcare by reducing IT burdens and allowing organizations to focus on care delivery and cost optimization. With cloud-based solutions, medical professionals can securely access EHRs, imaging data, and clinical applications from anywhere, enabling faster diagnoses, seamless care coordination, and improved patient outcomes. Scalability allows healthcare providers to expand storage, computing power, and analytics as needed, supporting AI-driven diagnostics and real-time data sharing. This fosters collaboration among facilities, specialists, and researchers, bridging gaps in care and accelerating medical innovation.

Security and compliance are also key benefits. Cloud providers offer encryption, authentication, and monitoring to protect patient data while ensuring compliance with HIPAA, GDPR, and HITRUST. By leveraging the cloud, healthcare organizations gain a flexible, secure, and cost-effective foundation for delivering smarter, more connected patient care.

Key Takeaways

• Hospitals and health systems are moving computing workloads to the cloud to reduce the cost and complexity of managing onsite IT resources.
• Cloud deployment and cloud service models vary, and organizations often opt for more than one, depending on the use case.
• Moving to the cloud can be cost-effective and can improve scalability. But organizations must be mindful of migration and configuration challenges.
• Key use cases for healthcare in the cloud include workflow automation, data analytics, and inventory and supply chain management.
• Successful migration to the cloud requires an emphasis on long-term strategy and partnership between business and IT leadership.

Healthcare in the Cloud Explained

Healthcare organizations face unique challenges that cloud computing is particularly well-suited to address. The industry’s need to maintain continuous operations as health systems manage vast amounts of sensitive data, coordinate care across multiple locations, and adapt to rapid regulatory changes makes traditional, on-premises IT solutions increasingly impractical. Cloud computing provides healthcare organizations with the flexibility to scale resources up or down in response to patient volume, the ability to quickly deploy new applications and services without extensive infrastructure changes, and the capability to integrate diverse systems and data sources, while simultaneously adhering to strict security and compliance standards. Cloud approaches also align well with healthcare’s growing need for real-time data access, interoperability between systems, and the ability to quickly adapt to changing care delivery models—all of which contributes to potentially reducing the solution's total cost ownership.

Types of Healthcare Cloud Computing

There is no one-size-fits-all cloud solution for healthcare. Healthcare organizations have multiple options to choose from when it comes to where and how they deploy and access cloud resources, and each cloud model carries its own advantages and drawbacks. So, health system leaders often decide that multiple options are required to meet their business needs.

There are four deployment models and four service models to consider.

Deployment Models

The four primary deployment models for cloud computing are public, private, hybrid, and multicloud. These models vary, depending on where services are hosted.

• Private: As its name implies, a private cloud is available only inside an organization’s private network. In most cases, a CSP hosts this by providing infrastructure dedicated to that customer and accessible only by identities associated with it. A private cloud can be hosted offsite or on-premises. In the latter case, organizations will need staff with the expertise to manage cloud infrastructure.
• Public: A public cloud is offered by a CSP over the internet to anyone wishing to purchase the service. The CSP makes resources, such as virtual machines, cloud management applications, and storage, available to business customers. Though security features, such as multifactor authentication, single sign-on, and role-based access, are increasingly common, hospitals and health systems may require additional security in order to comply with the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Trust Alliance (HITRUST) Common Security Framework.
• Hybrid: A hybrid cloud combines a private cloud with one or more public clouds, all provided by the same CSP. In this model, the healthcare system is likely using many cloud services—whichever ones make sense for each of the organization’s use cases. Healthcare operators may opt to run clinical and financial applications on the private cloud and big data research projects or data backups on the public cloud. With the right tools for cloud analytics and management in place, organizations can optimize cloud resource utilization by moving workloads among environments as appropriate.
• Multicloud: In this model, an organization uses both private and public cloud resources from multiple CSPs. It enables health systems to take advantage of particular factors, such as geography, contract terms, or unique features, to make the most of the services they require and to augment business continuity and disaster recovery plans. On the other hand, a multicloud approach means managing relationships and contracts with multiple vendors, which has its own set of challenges.

Service Models

There are also four primary service models for cloud computing. These differ according to what workloads an organization has chosen to deploy in the cloud and how it intends to access the applications and data.

• Software as a Service (SaaS): Under a SaaS model, an organization accesses software hosted in the cloud by a third party; it is not installed on the organization’s computers, internal servers, or other computing devices. SaaS subscribers typically pay a per-user fee, billed monthly, that includes licensing, maintenance, and upgrades.
• Infrastructure as a Service (IaaS): Sometimes described as “lift-and-shift,” using IaaS usually involves moving an on-premises workload, just as it is, to a CSP’s infrastructure. Here, a customer pays for the computing, network, and storage capacity allocated to its workloads. The customer’s IT team is responsible for the operation of the software and any ongoing development. As a result, when using an IaaS model, it’s a good idea for healthcare IT teams to keep close tabs on how—and whether—cloud resources are being used. Though most IaaS deals involve the lift-and-shift strategy, in some cases IT teams develop new applications from the ground up using IaaS, or take the opportunity of a lift-and-shift to redesign and/or modernize the application.
• Platform as a Service (PaaS): Where IaaS lifts to the cloud those applications that were originally built to run on local servers, customers using PaaS models can build their applications specifically for the cloud. PaaS provides a development environment—plus the underlying infrastructure, middleware, and tools for application development, testing, and deployment—that lets customers take advantage of native cloud characteristics, such as automation and interoperability. The CSP manages the infrastructure so that the healthcare system’s IT team can focus solely on developing the application.
• Serverless: This model of delivering cloud services isn’t technically serverless. It gets its name from the fact that application developers don’t interact with servers. Developers write code, and the cloud service provider provisions, scales, maintains, secures, and manages the application’s servers as needed. What this means, in practice, is that workloads running on serverless cloud models can scale in real time by adding resources automatically, in response to specified triggers or events. For this reason, serverless models are often used, for example, for Internet of Medical Things (IoMT) data processing and website back-end services.

Benefits of Cloud Computing in Healthcare

Hospitals and health systems are moving many types of applications and services to the cloud. These include EHR systems, medical imaging, remote monitoring, claims processing, and revenue cycle management systems. Organizations migrate these workloads off-premises to reap the benefits of cloud computing in healthcare, benefits that include operational efficiency, optimized IT spending, workflow automation, and increased collaboration enabled by seamless data sharing. Below is a summary of some of the key benefits derived from cloud computing in healthcare.

• Cost-effectiveness: Migrating data and applications to the cloud reduces the cost of deploying and maintaining on-premises infrastructure. This means hospitals and health systems can shift their internal IT resources to other needs. Plus, cloud payment models are usually “pay as you go”—organizations pay only for the cloud resources they need, as they need them. Organizations no longer have to risk overinvesting in onsite storage or server infrastructure that goes largely unused, but still needs to be managed and secured.
• Scalability and flexibility: The pay-as-you-go model for cloud computing lends itself to scalability. At both the business unit and individual levels, users can access additional resources without having to rewrite a contract with a vendor or go through a lengthy requisition process. This has downstream business benefits, as well: Once cloud services are in place, leadership teams need to factor fewer large-scale and disruptive technology projects into their business plans.
• Innovation and efficiency: Automated workflows are becoming increasingly “cloud native,” meaning that they take advantage of inherent cloud attributes, such as rapid scalability, distributed architecture, and smooth data transfer between systems and applications. This makes it far easier for healthcare organizations to tighten efficiency. Efficiencies can come in the form of healthcare process automation, such as data extraction or claims processing, or they can involve labor-intensive processes, such as installing software or running analyses. What’s more, data analyses can be retrospective but also predictive, augmenting tasks such as projecting revenue, anticipating demand, or identifying unmet clinical needs and enabling leadership to respond proactively.
• Collaboration: Cloud computing helps organizations reduce IT sprawl, break down data silos, and replace legacy systems. This helps previously disparate operational business units better collaborate to solve problems and encourage innovation. From a clinical perspective, support for collaboration can lead to more informed treatment decisions. Clinical teams gain remote access to data about medical history that previously required physical access to paper records.
• Security and compliance: CSPs can offer a range of cloud management and security services, including protections that organizations with limited resources are unlikely to achieve on their own. These offerings range from access controls and threat detection and response to a dedicated security operations center. Additionally, CSPs are required to sign HIPAA Business Associate Agreements if they maintain electronically protected health information. Signing an agreement not only demonstrates regulatory compliance, it also reflects a commitment to security steps, such as data and software encryption.

Challenges in Implementing Cloud Solutions in Healthcare

In the early days of cloud computing, healthcare organizations were concerned that service providers might not be able to meet the scalability and reliability demands of mission-critical clinical systems. Though these worries have subsided as cloud technology has matured, other issues have emerged. Some stem from the complexity of moving data and applications to the cloud and making sure only the right users have access to them. Other challenges are related to the long-term management and unanticipated costs of running cloud services.

• Long-term costs: The return on investment (ROI) of a multiyear CSP contract can diminish over time if the cost of maintaining cloud services grows faster than an organization’s revenue. That can happen in healthcare, where operating margins hover around 2%. Plus, cloud contracts may come with tiered pricing structures that are based on the amount of data stored and computing workloads used, not to mention additional fees for technical support or enhanced services. Either can lead to additional costs.
• Data migration: Making the most of cloud computing in healthcare requires data migration from legacy, on-premises infrastructure. Migration supports the creation of a unified database accessible to users and machine identities with appropriate privileges. Data migration can be time-consuming and costly for two reasons. One is the presence of custom workflows to facilitate data sharing among legacy systems. The other is the use of numerous instances of the same type of application, as is often the case with EHRs in large health systems. This can lead to having multiple versions of the same information in cloud storage.
• Cloud configuration and access management: Misconfigurations are errors in implementing cloud architecture, such as default settings that don’t provide enough protection for sensitive data or applications. For example, inadequate access management controls might grant an identity (human user, application, or device) greater access to systems than is necessary for accomplishing its task(s). Staying up to date on configuration settings and access controls can present a challenge for IT teams with limited resources.
• Lack of standardization: Many organizations have taken an ad hoc approach to adopting cloud services. Although this allows projects to get off the ground quickly and meet specific needs for a given business unit, it contributes to a lack of standardization around how cloud resources are used, accessed, and otherwise optimized. Further complicating the matter is the abundance of data formats, cloud management tools, and application programming interfaces preferred by CSPs. This can leave organizations struggling to create best practices for data access, security, and integration.

10 Cloud Computing Use Cases in Healthcare

The most successful healthcare cloud transitions tend to look beyond the technological benefits and focus on long-term business objectives. That means it’s important for business leaders in the organization, and not just IT leaders, to be aligned when setting goals, defining business value, allocating funding, and managing change throughout the organization. The use cases described below illustrate how leveraging the cloud can contribute to business outcome improvements beyond the IT department.

1. Data Management

Healthcare organizations are notorious for on-premises data silos. It is rare for applications from different business units to be integrated, and it’s all too common that applications such as EHR and medical imaging systems cannot share data. This makes collaboration and data-driven decision-making difficult, as holistic views of clinical or financial information are hard to obtain.

Cloud computing improves health data management by enabling organizations to bring disparate data sources together to create a single unified database. Data is accessible throughout the enterprise, and to remote users and machine identities, such as specialized applications, as long as the user or other identity has been granted authorization. This makes it possible to layer on tools for data visualization, analytics, reporting, predictive modeling, and more—all of which can help drive better business outcomes.

2. Security

Paper records can easily be stolen, damaged, or destroyed. Unattended laptops are easy targets for thieves. Data centers require physical security, as well as layers of data and network security that can be difficult to maintain amid evolving cybersecurity threats.

But a transition to the cloud can improve healthcare data security. Not only are CSPs subject to strict data protection requirements under HIPAA, HITRUST, and state-level laws, but airtight security is also in their best interest to avoid the financial penalties and reputational damage associated with data breaches. It helps that CSPs can provide security protection at economies of scale that few health systems can match.

3. Workflow Automation

Manual workflows are all too common in healthcare because of the siloed business applications mentioned above. In many cases, data must be typed in manually or otherwise copied from one system to another. Or, clinical and administrative staff must send emails or make phone calls to request the information they need. Those processes are time-consuming and can introduce unintentional errors that contribute to denied insurance claims, delayed shipments of necessary supplies, or even data breaches.

Transitioning data, applications, and services to the cloud sets up health systems to automate a wide range of clinical, financial, and operational workflows. The presence of a central database, coupled with integrated applications in a single cloud architecture, gives artificial intelligence (AI) models access to information that can be pulled into automated workflows throughout the organization. By eliminating many of the manual steps from tedious processes, organizations can improve efficiency and help workers focus on higher-order tasks.

4. Supply Chain Management

Medical supplies and medications make up more than 20% of hospital expenses, and more than half of healthcare organizations have had to cancel or reschedule cases due to product shortages. Amid rising inflation, geopolitical tension, and unpredictable disruptions to upstream suppliers, it’s imperative that healthcare organizations improve visibility into supply chains to avoid delays, cost overruns, or other complications.

The ability to bring together disparate data sources into a single cloud instance gives healthcare supply chain managers real-time insights into key information, such as order status. Layering on analytics tools makes it easier to predict when items may run out, as well. This helps organizations minimize supply chain disruptions that can significantly impact business outcomes, whether it’s shortages of key medications or medical devices critical for surgical procedures.

5. Inventory Management

While supply chain management tracks items yet to be delivered to a facility, healthcare inventory management tracks products and supplies that a health system already has on hand. Up-to-date data is essential, as sudden shortages of supplies can impact care quality. At the other end of the spectrum, overstocking items can also pose problems. A facility may find itself with too many obsolete medical devices on hand, for example, or vaccines or other critical medications may expire before they can be used.

Using the cloud, health systems can centralize data from different departments to get a holistic view of inventory and determine the right time to reorder. Automation can augment the process by creating orders when items in high demand hit a certain inventory threshold, or by sending alerts when items are approaching their expiration date.

6. Procurement and Purchasing

Where supply chain and inventory management in healthcare tends to focus on items that support care delivery, procurement typically involves services that support other parts of the business. These may include third-party providers of physical security, food services, cleaning, or legal services. It often includes large-scale purchases, such as HVAC, energy, and technology systems.

Organizations need to manage procurement as an end-to-end process, ranging from bids to order fulfillment to payment processing. This is a tall order for health systems plagued with different workflows and timelines for purchasing decisions that are based on the service in need. Cloud-based procurement systems can improve efficiency through greater visibility into key performance indicators (KPIs), such as order cycle time, supplier availability, and fulfillment accuracy.

7. Talent Acquisition and Management

Labor accounts for 60% of hospital spending, and labor shortages approaching 175,000 nursing assistants and other critical workers are expected as early as 2028. That makes it essential for organizations to rethink their approaches to recruitment and talent management, if they hope to remain competitive—and operational—in the years ahead.

Cloud-based systems for human capital management enable organizations to streamline finding, hiring, training, and retaining workers. These tools can automate and support such processes as screening candidates, monitoring hiring KPIs, and personalizing onboarding and training resources. In addition, the cloud’s capabilities for data sharing and collaboration can transform performance management and review from a static annual process to an ongoing conversation that encourages continuous improvement.

8. Data Analysis

To effectively respond to changes in the market—be they supply chain disruptions or surges in patient demand—health systems need to make data-driven decisions. That requires analyzing data for insights that enable leadership to respond quickly.

Healthcare organizations that opt for a cloud-based enterprise resource planning (ERP) system, which can integrate multiple application modules with a single central dataset, can add robust ERP analytics tools. That lets healthcare managers make queries, track performance metrics, create data visualizations, and produce reports, helping health systems adapt smoothly to changes and manage risk. It can also help identify opportunities for process improvement, cost savings, or new business. Clinical use cases are plentiful as well, as analyzing medical images, records, and other data sources can help inform treatment recommendations.

9. Custom Application Development and Hosting

Custom applications are common in healthcare. After all, it’s hard to manage complex chronic conditions and highly variable lifestyle factors with single-purpose solutions. In addition, business units within a health system have widely different needs when it comes to scheduling staff, projecting patient volume, predicting revenue, and managing intricate workflows. But long lead times for custom development projects can stifle innovation.

In response, leading CSPs offer low-code or no-code capabilities that let users with limited programming experience develop and host apps on a dedicated production server. Legacy custom apps can also be migrated to the cloud and optimized to run in an off-premises environment alongside the enterprise systems they’re integrated with.

10. Patient Experience Management

A fragmented customer experience is more than just an obstacle to patient acquisition and retention. When patients and care teams lack a holistic view of medical records, prescriptions, and other key data, it’s difficult to make evidence-based decisions that uphold a patient’s best interests.

The cloud is well positioned to improve patient and customer relationship management (CRM) across the care continuum. CRM systems can scan records and automatically reach out to patients who need to schedule a visit. Telehealth and remote monitoring systems hosted in the cloud can access data from patient devices and share relevant alerts with care teams without requiring an in-person visit. Critically, longitudinal patient records accessible via the cloud give care teams the insights they need to make informed decisions about ordering appropriate lab tests, filling prescriptions, and updating care plans.

Future of Cloud Computing in Healthcare

The global market for cloud computing in healthcare is poised to grow between 13% and 17% annually by the end of the decade, driven by increased adoption of data analytics, in-hospital and remote monitoring, and storage for medical images and EHRs. Another key driver is the abundance of business and operational use cases for process automation and improved efficiency.

For example, IDC projects that by 2027, 70% of the healthcare industry will use some form of cloud-powered generative AI to address data and workflow fragmentation across care settings, significantly improving diagnostic accuracy and patient safety. Generative AI is also expected to be applied to administrative tasks, for example, to predict supply needs more accurately, thus enhancing supply chain management and inventory control. By aggregating and analyzing the vast amounts of data that cloud computing makes possible, healthcare providers will be able to better allocate resources and improve overall operational efficiency.

Another important trend involves the confluence of edge computing and IoMT, which includes devices such as pacemakers, insulin pumps, and heart rate monitors. Edge computing—the trend toward deploying compute power closer to the point of use—is a perfect match for IoMT, because edge computing will enhance real-time data processing of information from IoMT devices. But the edge-IoMT trend is also expected to yield more efficient resource utilization and cost savings in hospital operations by improving inventory management and asset tracking within healthcare facilities. It’s important to note that while edge computing sounds like the antithesis of cloud computing, edge devices are typically managed by cloud software and share their data back to the cloud for aggregated analysis.

Amid so many opportunities, the health systems that make the most of their transition to the cloud will likely be those that adopt a highly focused and pragmatic approach. This will help organizations avoid biting off more than they can chew and failing to realize the benefits of the cloud. McKinsey & Company has described healthcare cloud transformation as a three-step process: Define a strategy with clear objectives, execute cloud migration one domain at a time, and build foundational capabilities (in terms of both technologies and processes) that strengthen cloud operations in the long term.

Leverage NetSuite for Cloud Computing in Healthcare

The key benefit of cloud computing in healthcare is the ability to host data, applications, and services in a unified architecture accessible throughout the organization, including by staff and patients beyond the hospital’s traditional four walls. Thus, the cloud has transformative potential for healthcare—but challenges such as data migration, cost management, and the massive undertaking of lifting legacy infrastructure onto modern technology can derail a cloud transition.

Organizations can benefit from choosing NetSuite’s ERP for healthcare and life sciences, a cloud-based business management suite that is purpose-built for the industry. NetSuite brings together a healthcare organization’s financial, clinical, and operational systems on a single HIPAA-compliant platform. Healthcare providers can securely access and manage their data from any location, protected by robust security controls and detailed audit capabilities. The platform enables automated compliance processes, optimizes supply chain operations, and provides instant visibility into key metrics through configurable dashboards. By streamlining these essential administrative functions, NetSuite helps healthcare organizations reduce back-office complexity so their staff can concentrate on their primary mission—providing exceptional patient care.

Adoption of cloud computing is accelerating across the healthcare industry as organizations look to get out of the data center business. Moving key workloads to the cloud—using the various deployment and service models that make the most sense for each case—offers the opportunity to cut infrastructure costs and take advantage of cloud-native capabilities, such as process automation and advanced analytics. When executed in a strategic way, migrating to the cloud can transform the way healthcare does business, position organizations to support new care-delivery models, and improve financial performance.

Healthcare in the Cloud FAQs

Which cloud platform is best for healthcare?

No single cloud service provider is “best” for healthcare. Organizations may opt for a specific platform depending on their needs, whether it’s hosting a backup or running an analysis. In fact, it’s common for health systems to use multiple platforms and to migrate workloads from one platform to another as needs and priorities change.

Can healthcare data be stored in the cloud?

Whether onsite or off-premises, healthcare data can be stored in the cloud. It’s important for organizations to adopt best practices for security and data privacy, such as role-based access controls, data encryption, and endpoint security, to ensure that only authorized identities can access data stored in the cloud.

Why is cloud adoption increasing?

Healthcare organizations are increasing their adoption of cloud services for many reasons. These include reducing the cost of maintaining IT infrastructure, taking advantage of process automation capabilities that are native to the cloud, and scaling their use of resources up or down without acquiring additional hardware.

How is cloud computing used in healthcare?

Hospitals and health systems use cloud services primarily to host data and applications. Increasingly, this includes business applications, such as electronic health record and enterprise resource planning systems, especially if they have been developed specifically to run on cloud infrastructure.

What are the problems with cloud computing in healthcare?

Migrating legacy applications to the cloud can be a challenge because they have been built to operate on on-premises architecture. Data migration can also be a problem, as things like medical records are often stored in several places within a health system. Cloud services can also come with unexpected costs for data storage, computing, or technical support.