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Hospital software vendor McKesson uses Linux to heal IT budgets

Customers can replace pricey Unix mainframes with Linux, cheaper servers

By Todd R. Weiss
December 11, 2007 12:00 PM ET

Computerworld - In 2004, health care software vendor McKesson Provider Technologies began focusing on ways to cut IT costs for customers, including hospitals and medical offices.

The cure for IT cost bloat: moving many of McKesson's medical software applications to Linux, which could then be used on less expensive commodity hardware instead of expensive mainframes.

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 Inc. 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 program 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.

With the Red Hat/McKesson systems, hospitals and medical offices run their back-office infrastructure on Red Hat Linux, while their front-end clients use Microsoft Windows -- at least for now, Simpson said. "Our hospitals aren't ready yet for Linux on the desktop, but it's coming" in another three or four years, he said. "If you look at the total costs of hospitals and the pressure on hospitals to continue to lower their costs, it's coming."

About 75% of McKesson's customers have embraced the move, Simpson said, although 10% to 15% were in the "no way" category. McKesson has been working with them to place the applications running on Linux on mainframes to ease their transitions.

"For those customers with Linux on mainframes, they've stuck with mainframes for years," he said. "It's a slow change for them. Some are now buying commodity hardware, so they are getting comfortable with it now. The health care industry doesn't change quickly. This was a large change in a short period of time."

The biggest issue for hospitals has been retraining their IT staffs to work with Linux, but Red Hat provides fee-based training that is affordable, Simpson said.



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