Latest acquisition of Nuance makes it look like they have.

With one step, Microsoft has positioned itself to be as prominent in the provider workflow as any other tool in healthcare, including EHRs. Most analysis of this acquisition has focused on the access this gives Microsoft to the considerable Nuance customer base, and this misses the bigger picture of what Microsoft is building. Combined with the other features of Microsoft Cloud for Healthcare, the addition of Nuance gives them a platform of powerful AI tools. Rather than selling individual products, Microsoft is aiming to provide a rich cloud foundation for a multi-sided platform business model. This approach will deepen and broaden the scope of products and services in healthcare developed within their Azure-based Cloud for Healthcare ecosystem.

Key Takeaways

Microsoft now has a commanding lead among healthcare cloud platforms when it comes to tools that can genuinely transform the clinical experience. Word of mouth has preferred Azure in the healthcare field, but Microsoft still lags AWS in market share. With their focus on provider and patient enablement, Microsoft is now a clear leader for companies who need those functions in their products. If the strategy works, acquisitions from AWS and Google will not be far behind. 

Nuance and Microsoft have been partners since 2019, so integration and deployment should be straightforward. The goal was to develop ambient clinical intelligence and documentation solutions, and this acquisition implies it’s gone well. Expect this function to be added to the Microsoft Cloud for Healthcare Suite.

Markets for health data and decentralized care models are changing the landscape. Microsoft, Amazon, and Google are all searching for the keys to the kingdom. Deploying their proven business models within healthcare has been a challenge, to say the least. New standards for data sharing and the need for integrated, analyzed data to support truly omnichannel healthcare have emerged as key focus points for these industry players. As a result, it looks like these factors  will be the cornerstone of their future relationships to healthcare.

The Microsoft Plan

Before Cloud for Healthcare, Microsoft had a notably checkered past in the healthcare space. Despite the dedication of significant resources about a decade ago, Microsoft Health Services Group did not reach its potential and was disbanded, its assets either spun-out or shuttered. But the company never completely left healthcare, as countless independent software vendors (ISVs) in the healthcare sector continued to use Microsoft products in their solutions. 

Microsoft was notably late to the cloud computing business, giving Amazon’s AWS a huge lead in the market. This is not unusual for the company, as Microsoft’s  strategy has always been to be a fast follower. The ubiquitous presence of Windows – and their integration of Azure’s cloud functions and tools into Windows development – has helped bootstrap their market share, but they still lag significantly behind AWS. All the major cloud vendors have had data storage and analytic tools for healthcare for some time now, but Microsoft has been notably ahead of the pack when it comes to announcing healthcare-centric capabilities on Azure. 

In the fall of 2020, Microsoft went GA with its Cloud for Healthcare, its first industry-specific, cloud solution platform (see Chilmark Bight published June 2020). From an outside perspective, their announcement of Microsoft Cloud for Healthcare made it seem like they were specifically targeting healthcare organizations, hospitals, and providers. However, looking only at the end user of these tools may be missing the point.

Their real target is value-added resellers (VARs), who can take Microsoft tools and package them into their own solutions. The Microsoft Power Platform is their app development and connectivity suite, offering outside developers access to tools like PowerBI, Azure AI functions, automated graphical UIs, and low-code programming. With a low cost of entry and easy integration into Windows and tools like GitHub, it makes Microsoft an extremely competitive development choice for ISVs looking for a powerful development environment. The outcome is not a large amount of visibly Microsoft-branded applications, but an entire ecosystem of applications and development teams relying on the Microsoft cloud platform that is sold as an ongoing infrastructure service.

Figure 1: Cloud IaaS Market Share, 2019

Most importantly, we see the underlying logic of Microsoft’s platform business model emerge as it applies to healthcare. Data sharing, AI, and the Internet of Healthcare Things are maturing in ways that make the large platform players believes the time is ripe for the value they can offer. Amazon, Google and Microsoft have been steadily pulling together components for this multi-sided platform business model, one they have been successful in creating in the financial, automotive, hospitality, and other industries. This is a platform that brings together producers and consumers of data in a feedback loop where the enhanced value of data drives new services, in turn opening access to more data and more services built on top. The resulting network effects enable rapid growth and scale that would be difficult to achieve independently. 

That said, fragmentation of data in the healthcare industry has made it more difficult than in previous markets. It will be a much slower climb, but we can see the outlines of their strategies taking shape.

Through the access Nuance potentially offers into the direct clinical encounter, Microsoft gains access to a new and deeper dataset than just clinical information from within the EHR. Better insights, into not just the output of appointments, but their process and workflow, will allow for a better understanding of what providers and patients need. That information can be applied to remote or asynchronous appointments, attempting to replicate some of the added value of an in-person encounter, or to further enrich their other datasets. As healthcare continues its ongoing move to omnichannel care, anything that increases the value of home or remote care – like this service) will be invaluable. 

Nuance Adds Key Functions and Markets

Nuance has an impressive feature set, making them an excellent addition to the broad Microsoft Cloud for Healthcare suite. They are already integrated into nearly 80% of all health systems in the US. Given the nominal premium paid for the acquisition, it seems likely that Microsoft is looking to leverage Nuance’s AI capabilities across several markets and potential products. Additionally, healthcare is not the only market where Nuance technology is a powerful backend. Nuance has a presence in many customer service and virtual assistant solutions, and Dragon, their professional transcription software, sees use in a variety of industries beyond healthcare.

Regardless, healthcare is the de facto focus of this acquisition. It’s notable how omnipresent Dragon is in US healthcare – some estimates put them in the daily workflow of more than 55% of all US physicians and nearly 77% of all US hospitals and 75% of radiologists. Most EHR vendors have pre-built integrations to Nuance, and Epic has been working closely with Nuance to enable Hey, Epic, their virtual clinical assistant.

The most interesting new technology here are the ambient clinical tools, Dragon Ambient eXperience (DAX), that Nuance and Microsoft have been co-developing. Ambient clinical tools draft documentation and orders during the clinical encounter and have remarkable potential to improve the clinician experience and delivery of healthcare. Despite the promise, to date none of them have seen broad adoption. Ambient documentation was one of the cornerstones of the initial Hey, Epic announcement in 2019, but the software has been scaled back to a simpler voice search tool. Recording the results of assessments, producing notes, and taking orders has been relegated to vague future plans.

Nuance announced DAX in early in 2020 and was integrated into the Teams telehealth platform later that year. It looks like Microsoft sees a good future for DAX and other Nuance tools. If DAX rolls out as a component of Microsoft Cloud for Healthcare, Microsoft could end up being the first to the table in this space.  

That would be bad news for Epic, Cerner, and other competitors that have struggled in the ambient clinical intelligence and ambient documentation spaces. EHRs have long been the focal point of clinical workflows. If they can’t improve their clinical workflows and provider and patient experiences quickly enough, VARs leveraging the sophisticated enablement tools (e.g., DAX) offered by a cloud platform will relegate them to just another data source in the healthcare cloud. Between Teams, DAX, and the rest of the Cloud for Healthcare offerings, Microsoft tools would become central and essential touchpoints of the core interactions of healthcare

Big Tech in Healthcare

When it comes to comparisons of AWS and Azure in healthcare, it’s understood that many developers in healthcare prefer Azure. This is due to the multitude of relationships the company has that include product integrations with health IT infrastructure and the robust security features of Azure. In Europe, Microsoft has partnered with the insurer AXA to create an integrated digital healthcare platform. This will leverage Cloud for Healthcare’s capabilities with AXA’s technology architecture to build a platform that spans the entire customer journey, including virtual health. This will eventually become an open platform that can integrate third party applications. Again, we see the evolution of the platform business model focused on creating network effects; more users create more data, allowing more AI enrichment of data and the creation of more services.

Multi-sided Platform Business Model
Multi-sided Platform Business Model

While Microsoft is looking to become central in a healthcare development space saturated with investment capital, AWS looks content to remain a primarily data- and analytics-oriented offering. But one last question needs to be asked: What is Google up to?

Compared to Microsoft and Amazon, the third tech giant’s presence in this space is still understated. Google has its traditional scattershot offerings, ranging from their examination of a unified portable health record to compete with Apple’s Health app, to their newest partnership with Varian Medical Systems, tackling organ segmentation in oncology. Google Care Studio is intended to streamline provider access to data and is currently being piloted at Ascension Health. The goal is laudable, but the scope is limited and seemingly unfocused. 

CompanyKey OfferingsPartnersCustomer Target
MicrosoftCloud for Healthcare, Azure for Healthcare, Dynamics 365, Power Platform Epic, Allscripts, Health Catalyst, Innovaccer, WalgreensHealth IT vendors, Health systems, Providers, Big Data customers
AmazonAWS for Healthcare, Amazon Care, QuickSight, Macie, SageMaker, AlexaCerner, Deloitte, TableauHealth IT vendors, self-insured employers, Payers, Big Data customers, Consumers
GoogleHealthcare and Life Science cloud, Google Health, FitBit, Verily, Deep MindAscension, Mayo Clinic, MEDITECH, Sanofi, Harvard Global Health InstituteHealth IT vendors, Health Systems, Specialty providers, Patients, Big Data customers

When Amazon launched AWS in 2006, cloud computing was very much a niche compared to the investments every industry had made in expensive on-site data centers. It took two years for Google to launch a competitive offering to AWS, and two more years until Microsoft launched Azure. It was years more before Microsoft really understood the potential of offering infrastructure services and Linux support. Now, all three companies are, predominantly, cloud computing vendors. While Amazon, and to some degree Google, are launching health care provision initiatives, this appears to be an area that Microsoft is unwilling to enter. The strategy is to be a trusted partner, rather than a competitor. 

Ultimately, healthcare may be in the very early days of a long-term shift in power driven by proven cloud platforms finally moving in. EHR vendors have been at the center of the health IT universe for decades, in a market that was based on traditional products and services. The emergence of platform business models has disrupted almost every traditional business model, and that is now taking shape in healthcare (beyond the EHR-as-platform narrative). While talk of disruption in healthcare is cheap, there is no denying that a transformation is starting in this industry that could force a reexamination of how a ‘healthcare platform’ is defined.