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Cisco Systems, Inc. (CSCO), Allscripts Healthcare Solutions Inc (MDRX): These Companies Are Creating the Hospital of the Future

Outdated technology could be costing U.S. hospitals $8.3 billion annually, according to a recent survey by the Ponemon Institute (link opens PDF). The study found that inefficient pagers, poor email communications, BYOD (bring your own device) bans, and a lack of widespread Wi-Fi connections wasted an average of 46 minutes per day for each clinician.

Cisco Systems, Inc. (NASDAQ:CSCO)

The lack of proper Wi-Fi connections locks many hospitals out of new mobile EHR (electronic health record) services and popular medical reference apps such as Epocrates. Restrictive security policies are a major obstacle for the modernization of these hospitals, with 59% of respondents stating that complex compliance regulations were the primary culprit. 63% of the hospitals also experienced data breaches over the past two years.

Creating the hospital of the future
Cisco Systems, Inc. (NASDAQ:CSCO), the largest networking equipment manufacturer in the world, is modernizing these outdated hospitals with its Cisco Medical-Grade Network. Cisco Systems, Inc. (NASDAQ:CSCO)’s product includes hospitalwide wireless connections, a real-time notification system that reaches all medical staff across multiple devices, and video streaming technology for remote diagnoses and treatments. It also provides EHR integration through a partnership with Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).

Cisco Systems, Inc. (NASDAQ:CSCO) is also working with International Business Machines Corp. (NYSE:IBM) to digitize hospitals by using RFID tags to track patients in real time and by adding biometrics (fingerprint/facial recognition) to enable secure sign-ins at point-of-care terminals. These measures ensure that patients are always treated for the correct procedure by the right medical team. Cisco Systems, Inc. (NASDAQ:CSCO) and International Business Machines Corp. (NYSE:IBM)’s solution also digitizes a hospital’s prior records, streamlining administrative processes and allowing easy access to records through a portal or a mobile device. In other words, Cisco Systems, Inc. (NASDAQ:CSCO) and International Business Machines Corp. (NYSE:IBM) are creating the hospital of the future.

For Cisco Systems, Inc. (NASDAQ:CSCO), expanding into the health care industry is a wise tactical move that can offset losses from the enterprise and government sectors, which are more vulnerable to economic downturns. Last quarter, global macro weakness caused Cisco to announce plans to cut 4,000 jobs, or 5% of its workforce. Digital hospitals are also an extension of Cisco’s bundling strategy — offering multiple products and services at a lower cost than its competitors — which has proven effective at taking out smaller competitors such as Aruba Networks.

IBM’s Dr. Watson outsmarts other medical apps
For International Business Machines Corp. (NYSE:IBM), partnering with Cisco is a part of a broader effort to focus more on health care solutions.

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