The Mayo Clinic is selling its largest and newest data center to its electronic health record systems vendor, Epic systems Corp., in an arrangement that brings benefits to both parties.
Epic is buying the 62,000 square foot data center, located in Rochester, Minn., for $46 million, in turn leasing some of the space back to Mayo.
Epic expects to use the space as a reliable disaster recovery data center that gives it large capacity outside of its production data center in Verona, Wis., where the company is headquartered. Still, it’s close enough—approximately 200 miles away—so that it can be easily accessed by Epic staff, the company said.
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For Mayo, the sale enables it to handle shifting IT priorities, says Christopher Ross, CIO at Mayo Clinic. The idea, he adds, came up during negotiations with Epic after the healthcare organization opted to change EHR vendors.
“The first stage of the process was the decision we made to host our EHR with Epic,” Ross says. “Once we made that decision, we reassessed our long-term data center needs, and at the same time, we had re-evaluated our technology strategy as a whole. We wanted to emphasize the use of the public cloud and software as a service as an increasing component of our portfolio.”
To an extent, the construction of the Rochester data center, completed in 2012, was based on planning that occurred in 2009 and 2010, Ross says. “Between then and 2014, our EHR position changed, and it became clear that we would not need as much capacity from the data center as we thought when we built it.”
The agreement between Mayo and Epic allows Mayo to lease space for four years, but terms of that lease agreement will be re-evaluated then, and the provider could possibly lease space from Epic for as long as it needs it, Ross says. Mayo has smaller data centers in Arizona and Florida, where it also operates healthcare facilities.
Epic’s data-hosting business is ramping up and is expected to continue to grow, according to a senior company official who spoke on condition of not being identified and said its newly acquired disaster recovery data center in Rochester will serve as a data back-up for multiple customers, including Mayo. Last year, the Mayo Clinic selected Epic to be its vendor in creating a single, integrated EHR-revenue cycle management system.
The Mayo data center is large and was designed with expansion in mind; space can be added to triple its size, Ross says.
Proceeds from the sale can be better used within the organization to improve its ability to give better care to patients, and it allows Mayo to continue along the path of using the cloud and SaaS to achieve IT goals, Ross says.
“The cloud and SaaS is going to continue to grow very rapidly, and the advantages of either a global scale vendor or a specialized niche vendor, in terms of economics, security or performance is profound,” he says. “Those aspects will be better than what most healthcare organizations can do for themselves.”
Mayo is in the early stages of determining how it will transition to use of the cloud, he says, “but we expect fairly rapid growth in our use of it.”
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