Building strategic financial models for critical data center infrastructure decision-making in the healthcare industry

About Essentia Health

Essentia Health is an integrated health system headquartered in Duluth, Minnesota and serves patients in Minnesota, Wisconsin, North Dakota and Idaho. Since inception, the organization has brought together, under one operation, a myriad of health organizations through acquisition and affiliations totaling 15 hospitals and 74 clinics. The strategy allowed Essentia to offer patients greater healthcare resources, including the expertise of 2,000 physicians, a wide range of medical specialties and access to cutting-edge technologies.

Outcome Summary

  • Involta partnered with Essentia to build models allowing Essentia’s technical and executive teams to fully explore “what if” scenarios.
  • The strategic decision to partner with Involta provided strong financial and technical benefits for the organization.

The Challenges

An Apex of Growth, Compliance and Regulation

Acquisitions and affiliations were occurring at a rapid rate. Essentia was on a fast track to roll out the electronic health record system across the organization. Dennis Smith, Director of Technology Systems, was busy with systems integration, infrastructure consolidations and building information technology services needed to support growth.

Information Security regulations requiring the implementation of administrative, physical and technical safeguards for Protected Health Information (PHI) were also mounting in the healthcare industry. This included compliance with the Health Insurance Portability and Accountability Act (HIPAA), Health Information Technology for Economic and Clinical Health (HITECH), and Joint Commission on Accreditation of Healthcare Organizations (JCAHO).

Data Centers at Capacity and Capital Resource Competition

To make the environment even more challenging, Essentia Health’s data centers were running out of capacity. The data centers occupied prime locations in hospital and clinic buildings. Plans to retrofit the existing data center locations were complex. Keeping the data centers in a “hot/hot” configuration, while making major changes to electrical and cooling capabilities, would be risky, costly and difficult. There was also the challenge of competing for capital resources against mission critical investments in medical equipment and new or renovated patient care facilities.

The Transition

Develop a 10-Year Model

Involta and Essentia worked together to develop a 10-year model of capital and operating costs focused on four primary options:

  • Expanding the two existing Essentia data centers to meet forecasted needs.
  • Maintaining one existing Essentia data center and developing a retrofit plan for the second Essentia data center to meet the forecasted needs.
  • Meeting the forecasted needs with the greenfield Involta data center being built in Duluth, Minnesota while maintaining capacity at one of the existing campus data centers.
  • Meeting the forecasted needs with a combination of the greenfield Involta Technology Drive Data Center and a retrofit Involta 6th Avenue Data Center in an Essentia-owned facility.

“What if” Scenarios and Other Questions Reviewed 

  • Forecasted growth related to acquisition or affiliations?
  • Forecasted impact of rapid technology innovation?
  • Analysis of power costs?
  • Forecasted power and cooling requirements?
  • Data storage growth forecasts? Future applications requirements?
  • Impact on Essentia’s information security risk profile and disaster recovery strategy?
  • Capital, operating expense and staffing requirements for each scenario?
  • Power consumption and data center efficiencies for each scenario?

A Hands-on Approach to Resolving Business Issues

Involta invited Essentia Health decision makers to its data center facility in Marion, Iowa to get a first-hand look at best practice data center construction, operations and management. “The visit to Marion definitely helped form ideas and raise expectations for what could be accomplished in Duluth,” Smith recounted.

Involta drove a hands-on approach to resolving the business issues highlighted in the modeling. One example was that communication costs were too high in the original planning scenario. Involta resolved the issue by creatively proposing a joint fiber network project in the metro area to dramatically lower costs and increase capabilities. This connectivity allowed Essentia to maintain its dual production “hot/hot” configuration but separate the facilities geographically in the metro area.

Fact-Based Decision Making

Fully assessing the Essentia proposed data center site was critical to the business decision making process. Involta provided objective, fact based information to the management team leading to a decision to lease the facility to Involta providing a second, geographically diverse colocation option for Essentia and other Involta customers. The Involta and Essentia teams created the data, the documents and the plan to communicate effectively with the Essentia executive team. Strategic, well-aligned decisions supporting the business plan was the outcome. Concurrently, the Involta and Essentia technical staff was highly engaged in and supportive of the vision.

The Outcomes

10-Year Strategic Data Center Plan

  • 10-Year Strategic Data Center Plan in place at Essentia providing flexibility for growth and change.
  • Facilities and process plans in place to meet regulatory compliance requirements including HIPAA and Electronic Healthcare Network Accreditation Commission (EHNAC).

Improved Risk Profile

  • Improved risk profile and an enhanced disaster recovery solution.
  • Profitably leveraged Essentia’s current facility and infrastructure capacity.

Minimized Data Center Related Capital Requirements

  • Minimized data center related capital requirements allowing for investment in core patient care needs (i.e. medical devices, patient treatment centers, office space, parking, etc.).
  • Involta built a concurrently maintainable data center facility in Duluth, Minnesota incorporating state-of-the-art technology, meticulous process and technical talent to secure Essentia’s and the community of Duluth’s mission critical assets now and into the future.

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