April 2022 | Point of View

How—and why—healthcare payers should focus on cloud migration

Six guiding principles as you prepare for a more efficient digital future

How—and why—healthcare payers should focus on cloud migration

Healthcare payers are feeling the pressure as the number of federal mandates and regulations increases and compliance timeframes shorten. To meet challenges posed by legislation such as the 21st Century Cures Act and the No Surprises Act—which change how providers must bill patients and provide digital health information—they’ll need technology that’s agile, flexible, and coordinated. 

Unfortunately, many payer organizations—in addition to having large, on-premises tech footprints characterized by outdated legacy systems, decades of technical debt, and a severe lack of resources—are still separated into operational and technological silos. The end result? Actions like regulatory compliance, business agility, and value realization are more challenging than ever.  

Our solution? Cloud migration, which can help payers comply with the new regulations swiftly and cost-effectively—all while taking advantage of consolidation opportunities, reducing existing redundancies across platforms and applications, providing much-needed flexibility, and improving preparedness for interoperability.  

Here’s how—and why—they should make the switch.  

The benefits of migrating to the cloud

The technology used by today’s payers is often monolithic, inflexible, and ill-equipped for new requirements. Moving to the cloud can help. Even just modernizing and preparing for cloud migration will allow organizations to take advantage of systems like containerization—the packaging of software code with all its necessary components like libraries, frameworks, and other dependencies—which allows organizations to swap out technology faster. 

Another reason to move to the cloud is that software vendors are prioritizing investments in cloud solutions. Without a cloud presence, payers will be limited in their ability to deliver new capabilities to their business partners. Payers using the cloud will also be able to maintain a competitive edge by improving their user experience, monitoring insights and predictive analytics, delivering better patient outcomes, identifying at-risk populations, and increasing interoperability.  

In this way, moving to the cloud is a critical component of any payer’s technology strategy—it not only provides cost savings but also has clear benefits that can be realized through business agility.  

Six guiding principles to cloud migration 

Payers convinced of the merits of a cloud-based strategy should take heed of an important wrinkle: a diverse cloud environment can add complexity, cost, and delays to a migration timeline. Not only that, but a number of Enterprise Multi-Cloud Operational Services are needed to effectively manage a federated multi-cloud footprint, which covers ticketing, monitoring, security, logging, access management, and authentication. 

To help payers effectively plan a successful multi-cloud migration, we’ll outline six guiding principles and highlight key recommendations for executing a phased approach. For the sake of establishing a baseline, let’s assume we’re working with a large healthcare organization carrying a good deal of technical debt and outdated technology. 

  1. Establish a cloud-native approach to new and existing workloads. This approach should start with the question, “Why not build this to run in the cloud?” Then design software with a cloud-centric focus—even if it may not initially run in the cloud. 
  2. Determine a preferred platform choice—but be ready to leverage other platforms. In a multi-cloud strategy, it’s acceptable (and even ideal) to have a preferred platform. But with the number of existing SaaS and commercial off-the-shelf (COTS) software providers that have their own preferred cloud vendors, organizations should be prepared to utilize other platforms when they need to meet technical or business requirements. 
  3. Establish a preference for a high level of abstraction in your services. The higher level of abstraction, the lower level of complexity. Create a hierarchical list based on the preferred abstraction level of your cloud service offerings: ideally SaaS, then PaaS, then IaaS. Payers should bear in mind that the higher the level of abstraction, the less support, management, and equipment will be required by the organization. This improved flexibility can lead to long-term cost benefits. 
  4. Modernize applications with cloud-native architectures. In order to realize the full benefits of the cloud, applications must be designed with a cloud-centric approach, whether that means adopting containers—the de facto computing units of modern cloud-native applications—going serverless, or anything in between. 
  5. Choose COTS products over custom-developed applications. Rather than building custom solutions tailored to each customer’s needs, payers should focus on their core capabilities. 
  6. Centralize monitoring and management for all applications and services. By doing this, organizations can reduce licensing costs, identify potential issues, and mitigate risk. 

Executing a phased approach to cloud migration 

How can payer organizations put these guiding principles into action?  

It starts by building a strong foundation. Organizations can prepare their infrastructure for an effective cloud migration by containerizing applications, for example. They should also evaluate available options, conducting a proof of concept when a clear migration strategy has not been developed (e.g., migrating from a mainframe environment to a more modern architecture). 

Payers should also prioritize future migration spend based on their desired business capabilities and take advantage of market opportunities specific to certain applications. By conducting a modernization pilot, they can also reaffirm the benefits of their foundational initiatives. Any ongoing initiatives that involve building capabilities in the cloud should continue. 

Additionally, payers should avoid rehosting and instead focus on platform and application modernization in order to bring their architecture up to speed and optimize the usage of cloud resources. But there’s a balance here: Payers should assess whether certain applications are worth replacing or migrating—or whether it may end up being too costly and difficult to redesign and update.  

Along the way, it’s important to estimate holistic business value and then track it consistently. Payers can expand their business case to incorporate business value, informed and approved by independent business units within the organization. They should also define clear metrics to measure the value of a cloud migration initiative and be willing to implement mechanisms for ongoing tracking and reporting. 

Finally, establishing effective program and change management is essential to coordinate multiple parallel workstreams (and the resulting change for organizations). 

Four considerations as part of your phased approach: 

Consideration 1

Focus on modernization that improves short-term scalability, reliability, and time to market— as well as facilitating future cloud migration.

Consideration 2

Continue developing core cloud skills with smaller initiatives, such as vendor or licensing discovery initiatives and migrating disaster recovery test environments, that introduce less business risk. Internal staff will gain experience during app and database migrations, cloud monitoring, and administration.

Consideration 3

Prioritize a pilot set of smaller platforms to validate initial cost savings based on minimized duplication of licensing and hardware, experience-based hardware reductions, efficiency, and productivity savings.

Consideration 4

Identify select platform business partners to jointly define and quantify business benefits associated with cloud migration recommendations.


Growing regulatory pressures for payers and narrow windows in which to prepare mean that cloud migration will undoubtedly become a necessary part of healthcare organizations’ digital strategies. While technical debt and siloed operations are huge hurdles to overcome, the benefits of a move to the cloud—business agility, consolidation, cost savings, and interoperability—are too large to ignore.  

As you set out on your infrastructure modernization, remember that the best way to avoid cost overruns, redundancies, and pitfalls is to keep the above guiding principles in mind. 

Explore our latest perspectives