By Dana Olsen Friday, March 2nd, 2012

Network Hardware Resale is tapping into a potentially lucrative new market as health care providers around the country make the switch to electronic records, and Sansum Clinic is among the computer equipment company’s biggest customers.

The two Santa Barbara businesses are teaming up to build a network for Sansum Clinic’s electronic health record system, which will create a single and continuously updated electronic chart for each patient. Doctors and other health care workers will be able to access their patient’s records from anywhere at any time. Mike Lodato, the senior vice president of sales and marketing for Network Hardware, told the Business Times used network equipment is a good platform for electronic health record systems — especially because health companies are working to meet a government-mandated 2015 deadline.

“Sansum knew we had quality products, then this huge electronic record project came on,” Lodato said. “Health care businesses are tough to run. They have unbelievable cost pressures, and then, in the middle of that, they had the U.S. government tell them they’d be penalized if they don’t implement electronic health records. Our equipment is high-quality and pre-owned and less expensive.”

NHR has been heavily involved with the health industry since hospitals and health care companies began making the transition to electronic health records and electronic patient-privacy systems five years ago. Lodato said Network Hardware has always provided network equipment to health care companies, but demand has recently increased. Now, the company has more than 200 health care customers, making it Network Hardware’s third-largest industry.

The used hardware company, which brought in $215 million in revenue last year, is providing network equipment to seven of the country’s 10 largest hospitals as they switch to electronic health records. “These are hospitals, so they have to be sure the equipment is going to work — and it does. But beyond that, the cost savings for pre-owned equipment is absolutely huge,” Lodato said.

Sansum’s relationship with Network Hardware started in 2009, when the nonprofit clinic  originally started a project to upgrade its network infrastructure. Donovan Wade, Sansum’s manager of technical services, said he bought a few pieces of used Cisco equipment from Network Hardware before the electronic record project began.

“We had an initiative in place to upgrade our network — routers, switches, things like that,” Wade told the Business Times. “We were going through a crisis with some vendor products that were failing, and needed to sort it out quickly. NHR reached out to us and we quickly came to an agreement to work with them. That was how it all started.”

When Sansum started transitioning from paper to computerized patient records last year, Wade visited Network Hardware’s headquarters in Goleta. The computer company’s engineers walked him through their inventory of used equipment, and they selected a pre-owned Cisco system for the clinic’s electronic health record network infrastructure, Wade said. “My background is in computers and electrical engineering. I went into the arrangement with NHR thinking I would buy new equipment from them, but as I discussed it with their technical folks, I was impressed with their attention to detail. I bought used equipment because it was still top-tier.”

By purchasing used switches and routers from NHR, Sansum has saved about $1.1 million in hardware costs (compared to Cisco list prices) since 2009, according to a news release. The clinic is also saving about $57,000 per year in maintenance fees.

Sansum’s electronic record system is up and running, though its still in the implementation phase, Wade said. By the end of 2012, the system will be completely rolled out — which means doctors at the clinic are throwing out their intake forms and prescription pads in favor of computer tablets.

Network Hardware built the computer network for Sansum. The company’s equipment makes up the building blocks for the electronic patient data, Wade said. Once the hardware was in place, an electronic health records vendor came in and laid down the software system. Sansum used Epic as its vendor, and the record system is called Wave.

All of the hospitals and clinics in the Tri-Counties are in the process of rolling out electronic health record systems. San Luis Obispo’s Sierra Vista Regional Medical Center and Twin Cities Community Hospital, for example, entered the project’s final phase in September.

Computer hardware companies aren’t the only ones benefitting from the nationwide switch to electronic records. Mike Manchak, president and CEO of the Economic Vitality Corp. of San Luis Obispo, told the Business Times in October the project is so enormous it has the potential to create an entirely new source of employment, mostly in the area of information technology. “This is complex, expensive work that requires a lot of brains and a lot of manpower. Electronic health records is clearly a growing industry that won’t go away — it creates the type of information jobs that we want more of,” Manchak said then.