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Nov 12 2024
Cloud

FinOps in Healthcare: Enhance Cloud Financial Management and Optimization

FinOps — a combination of finance and DevOps — can help healthcare organizations rightsize their cloud resources and optimize costs.

Hospitals and health systems continue to face significant increases in the cost of care, with more than half of hospitals operating at a financial loss in recent years, according to the American Hospital Association. As healthcare organizations move workloads to the cloud, FinOps — a portmanteau of finance and DevOps — can help them manage costs and optimize cloud investments for long-term savings.

Involving stakeholders from finance, development and IT, FinOps provides healthcare organizations with a set of best practices and tools to gain visibility into their cloud costs, optimize spending and align cloud investments with their financial goals.

This enables healthcare organizations operating with tight budget constraints to maximize the value they derive from the cloud.

By adopting FinOps practices, hospitals and health systems can ensure they are only paying for the cloud resources they need, when they need them, which can help them to operate more cost-effectively

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Understanding FinOps in Healthcare

“Getting FinOps right for healthcare organizations is crucial,” says Rick Vanover, senior director of product strategy at Veeam.

He explains that a common business model is having different groups partner with each other internally.

For example, platform operations (PlatformOps) teams will partner with DevOps teams to run sprints in a coordinated fashion, with the security team (SecOps) keeping watch.

“FinOps can have a seat at the table as a shared service across the organization — think of it as a finance project management organization,” Vanover says.

Danny Assaban, principal solutions engineer at Trend Micro, notes that healthcare becomes an even more complex industry when striving to meet regulatory compliance requirements within strict budgets.

“Any tool or framework that addresses accurate forecasts of expenses will ultimately assist in budgeting as well,” he says. “A FinOps approach brings together IT, finance and operations to effectively use cloud services within those defined budgets.”

EXPLORE: The new 2024 CDW Cloud Computing Research Report provides insights on cloud trends.

Cloud Financial Management Best Practices

Assaban says most importantly, healthcare organizations must do the “prework” to appropriately define the financial and operational goals they hope to achieve via FinOps and cloud services. Vital to this effort is an efficient method to quickly and accurately trace back cloud costs to specific departments or teams, and ultimately to specific budgets.

“We’re seeing more organizations embrace automation,” he explains. “Its use in monitoring is one practical example.”

He adds that organizations will find it vital to be alerted immediately about unusual or unexpected usage that can otherwise quickly add up. This requires regular reporting that will give teams and budget owners the opportunity to review costs and usage, and maintain course with budgets.

“Lastly, and especially relevant to the healthcare industry, is to prioritize compliance requirements,” he says.

From Vanover’s perspective, the fundamental best practice for a healthcare organization is to align the cloud model with the implementation.

“The cloud-powered solution must meet expectations in terms of financial viability, security profile, performance, usability and more,” he says. “This is absolutely critical; if a solution is implemented and these criteria are not met, it’s often too late to fix the issues effectively.”

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How FinOps Optimizes Cloud Performance in Healthcare

Allyson Fryhoff, managing director for Amazon Web Service’s Global Public Sector Healthcare and Nonprofit, explains that FinOps optimizes cloud performance in healthcare by ensuring resources are matched to actual workload demands through rightsizing, which adjusts cloud resources to fit real-time needs and avoids overprovisioning.

“Data tiering enables healthcare organizations to use cost-effective storage tiers for data lifecycle management, storing data based on access frequency and importance,” she says.

By adopting serverless architectures, healthcare providers can eliminate the need for manual provisioning, enhancing scalability and reducing overhead.

Cost-efficient compute options, such as spot instances or specialized processors, offer further savings by aligning resources with workload types.

Managed services relieve organizations from infrastructure management, allowing healthcare teams to focus on core operations rather than maintenance tasks,” Fryhoff adds.

Modern application architectures, such as microservices and containers, enhance scalability and cost efficiency by allowing applications to be restructured for optimal performance in the cloud.

Additionally, leveraging pre-configured software from third-party marketplaces can accelerate deployment and optimize licensing, making cloud resources more efficient and cost-effective across the organization.

READ MORE: These are the five must-haves for getting started with cloud cost allocation in FinOps.

Implementing FinOps for Long-Term Cloud Savings in Healthcare

Healthcare organizations can leverage several FinOps practices and tools to establish a continuous cycle of monitoring, adjustment and optimization.

“This lets them stay within their budgets while maximizing long-term cost savings and the value derived from their cloud investments,” Fryhoff explains.

She points to AWS offerings including Cost Explorer, Instance Scheduler and Budgets, which help establish budgets and configure alerts to identify potential budget overruns proactively.

Allyson Fryhoff
Managed services relieve organizations from infrastructure management, allowing healthcare teams to focus on core operations rather than maintenance tasks.”

Allyson Fryhoff Managing Director, Amazon Web Service’s Global Public Sector Healthcare and Nonprofit

Assaban notes that regular reporting and meetings for cost reviews can help with identifying unnecessary spend such as underusage or oversizing.

“This should return in optimization, once addressed,” he says.

He suggests considering the services that cloud service providers offer to assist in real-time, automated cost tracking and alerting.

“CSPs also offer built-in budgeting tools and can alert users when approaching those defined budgets,” he adds.

Healthcare organizations can use FinOps to maximize long-term savings by starting with predictable, all-inclusive pricing, says Vanover.

“Another approach is to consider volume commitments,” he adds. “Many providers offer discounts, fixed pricing or other favorable terms for large volume commitments.”

Vanover says healthcare organizations should look for solutions with built-in cloud economic intelligence, which can enhance delivery times, supportability and alignment with FinOps strategies.

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