Microsoft leaving HIS market!

Wow! I do not know how I should feel about this. Heather Leslie of Ocean Informatics wrote on Twitter that MS is leaving the HIS market, and as you can read here, it is true.

Now I’ve written about Amalga more than 2 years ago,  and I was excited about what it may become. I was hoping that with support and competition from Microsoft, the hospital information system business would go forward. Competition in this kind of very high cost markets is important, and only actors with lots of resources can push this kind of competition.

It appears Microsoft was not big enough! I’ve always felt that it was almost impossible to sustain a business model with a HIS product, and solutions in HIS market would survive only if they reach a really large scale. Reaching that scale is very hard on the other hand, since HIS software is no small piece of software, and its entry into a new hospital always takes a lot of effort in every way you can imagine.

It appears the amount of difficulty I kept observing in HIS business was not overestimated. Microsoft has sold lots of products with no profits at all. They have been selling xbox consoles for years now, and I’m not sure they started making profit in that market, but they still push it for the future value.

They won’t be doing this for HIS market. This is a very important sign for many stakeholders. If MS can’t dare to scale up its operation in such a well known domain, what does it tell you?

What it tells me is: do not attempt to build healthcare IT products with large scope. The cost of creating such products is incredibly high, and it can easily take you down. Everybody has a lot to gain from building smaller, well connected, specialized solutions. Clinicians, software developers, and even patients. Microsoft’s exit from HIS market is not the only sign. CSC having lots of trouble in delivering Lorenzo in UK, NHS slowly walking away from the idea of big contracts for the whole country..

These are the signs that show that gigantic, magical all in one solutions are simply not affordable, not for UK government, not for MS. So what makes you think you can afford it?

Instead we need to focus on systems using the agreed, open standards, specializing in various clinical domains, but sharing information to help with the whole operation of healthcare services. HIS market is way too expensive for newcomers, and even the well established players are having trouble in addressing the needs of customers. It looks more and more like airline industry: economies of scale with thin profit margins, with survival depending on addressing as many customers as possible.

I can’t claim, with full confidence that the future of health services lies in small web based applications, but there is certainly enough signs to claim that the market is going to give this approach a try.