The cure for IT cost bloat for supplier McKesson was to move many of its medical software applications to Linux, which could then be used on less expensive commodity hardware instead of expensive mainframes.
The move began in 2004. Today, San Francisco-based McKesson offers about 50 of its 70 most popular health care applications - dealing with everything from billing to pharmacy records, staffing, admissions, physician order entry systems and surgery scheduling - on Linux, reducing costs for hospitals and medical offices.
The move was solidified in February, when McKesson partnered with Linux vendor Red Hat to unveil the Red Hat Enterprise Healthcare Platform, which was customized to meet the needs of the health care industry.
"Three years ago, we started a push to move the company to more open standards, including open-source [software] as much as possible," said Michael Simpson, senior vice president and general manager of the clinicals division within McKesson Provider Technologies.
Simpson, who had served as the company's chief technology officer, said the move made sense because hospital costs could be reduced by replacing mainframes and their expensive proprietary Unix operating systems with Linux on basic servers. "Our first goal was reducing capital costs and annual maintenance costs for customers," he explained.
At first, convincing hospital executives to go with McKesson's Linux-based applications was difficult because of fears that Linux wouldn't be as reliable as Unix, which had been in their IT shops for years, Simpson said. "It took some time for them to understand that open source is safe, that open source has support," he added.
The deal with Red Hat "really kicked the programme into gear," he said, allowing McKesson to offer its software with Red Hat Enterprise Linux in a top-to-bottom package for mission-critical hospital IT systems.
Red Hat estimated that health care facilities that have switched have been able to save as much as 60% on IT costs compared with what they were spending before.
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