Healthcare Tech Trends Shape Industry And IBM i

March 28, 2016 Dan Burger

The future of IBM i won’t be found in any crystal balls. And references to omens always seem so ominous, mostly because they are connected to end of the world scenarios. Predictions, in my opinion, have a greater chance of coming true when based on real world observations. What’s happening in the IBM midrange is the best indicator, but what’s happening includes all kinds of things–some good and some bad. Here’s an example.

MEDHOST provides enterprise and departmental healthcare-related software to more than 1,000 hospitals. Along with traditional licensed software, it offers software as a service (SaaS), managed services for both hardware and software, outsourcing, and consulting services.

Operational efficiencies, revenue improvements, and evolving regulatory requirements are top concerns in the healthcare field. Hospitals run a tight ship. IT has a critical function and it’s under the microscope.

The MEDHOST enterprise system applications have their foundation in the System/36, later in the AS/400, and now in IBM i. Currently an estimated 700 hospitals are using it and that customer base is growing. Ten years ago, the enterprise business was 400 to 450 hospitals. Some of the growth was acquired through software company acquisitions and some through existing corporate customers that have acquired more hospitals, which then became MEDHOST customers as their corporate owners incorporate MEDHOST into the IT systems of their acquisitions.

Some of the modules in the enterprise system applications are 100 percent RPG with screen-scraper technology applied to provide users with a Windows-like view. The role of the IBM i operating system becomes database server. Its value is still obvious even though new business logic is written in Java while RPG is used for maintenance on existing apps.

“We have customers with 30 years of IT investments that are tied to the AS/400,” says Steve Starkey, executive vice president of product at MEDHOST. “It’s a valuable system for high volume transaction type work. There can be millions of records that need processing [in the MEDHOST hosted services datacenter]. If we had to do that processing on Intel-based systems, we are confident the cost would be much higher than the cost of running the AS/400. We utilize its strength, which is reading through millions of stored procedures and lines in a table. But we rely on Java and HTML5 to deliver it to the user.”

Approximately 90 percent of MEDHOST customers buy software licenses and run it on their own Power Systems loaded with IBM i. But decisions to go with software as a service and managed systems are the direction of the future, Starkey says. Several years ago, the software company started a hosted service provider business. It offered customers the options of purchasing the software license and paying MEDHOST a subscription fee for infrastructure in the MEDHOST datacenter, or purchasing hardware and software on subscription.

“That grew very slow for a few years,” Starkey says, “but over the past three to four years, it’s taken off like a hockey stick. Now we don’t even quote license deals. It’s all subscriptions. We didn’t do any licenses and local installs last year, while eight new hospitals signed on for hosted services. We don’t have any license-based deals this year and none in the pipeline. These are hospitals that just want their users to have a system and they don’t care about managing the backend.”

“Healthcare has been changing a lot the past several years. There is much higher demand on systems. It became a pattern where systems needed to be upgraded at some level every couple of years–sometimes just memory or disk space, but sometimes more significant upgrades,” Starkey says. “The expense of keeping up with changes in the healthcare industry is not something hospitals were used to. They want to turn that over to someone else to manage.”

There are 60 hospitals with fully hosted contracts are in the MEDHOST managed services datacenter. Standalone hospitals–those not part of a multi-entity corporation–have their own partitions. The multi-entity organizations often share partitions with the same version of the software among three or four hospitals. That’s 60 hospitals that no longer buy Power System servers, or at least share a Power Systems server with other hospitals within their multi-hospital corporations.

Is that an omen?

Starkey says MEDHOST would like to move all its customers to the cloud eventually, but its many years into the future before anything close to that takes shape. He also sees IBM i on Power in the MEDHOST datacenter for ten-plus years in all probability.

The business logic investment in applications that run on IBM i, the user experience on the Power i applications, and the IBM i skills embedded in the MEDHOST datacenter doesn’t provide reason to move off the system.

In the meantime, given the software vendor’s interest in developing Java and HTML5 apps that run on Linux, what are the chances that Linux and IBM i will run on the same Power Servers in the MEDHOST datacenter? Surrounding IBM i with new Linux workloads is part of IBM’s plan for long-term growth for Power Systems. But MEDHOST isn’t leaning in that direction. MEDHOST runs Linux on Intel iron. Twice over the course of the past several years it’s had less than satisfactory results.

“It would be beneficial not to have to install all these Intel servers,” Starkey says, “but Power didn’t handle that environment well. And we found that IBM doesn’t have that many people who know both AS/400 and Linux. You can’t get much help. That hurt as well.”

It’s true that experience is a great teacher. In this case, the lesson learned at MEDHOST was to not to try to run IBM i and Linux together on Power again.

That could very well be an omen.

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