With $7M, ClearData courts healthcare with HIPAA-compliant cloud services

ClearData Networks, a health-specific cloud storage startup has raised $7 million from Norwest Venture Partners and Excel Venture Management.

Thanks to government mandates to go digital and new rules defining privacy and security, hospitals and healthcare providers are under more pressure than ever to protect their data in the cloud. Sure, they could go the route of other enterprises and turn to cloud storage providers like Amazon Web Services or Rackspace. But ClearData Networks, a health-specific cloud storage startup, is hoping hospitals and their software vendors choose its services instead. And it just raised $7 million more to help make its case.

The Series B round included Norwest Venture Partners and Excel Venture Management and will be used primarily for sales and marketing, the company said.

Compared to other industries, cloud adoption (much like the adoption of other technologies) in healthcare has been slow. According to a 2012 survey of IT leaders by technology seller CDW, while 44 percent of big business leaders said they were implementing or maintaining a cloud-based system, just 35 percent of health leaders reported the same. In a field regulated by the Health Insurance Portability and Accountability Act (or HIPAA), the security of their data is a huge concern, as is integration with legacy systems.

Cloud services used by companies in other industries may say that they are HIPAA-compliant, but ClearData CEO Darin Brannan said there are 4 “flavors” of HIPAA compliance and his company supports all of them. For example, while other services may ensure HIPAA-compliance at the physical level, ClearData enables procedures, technology and implementation processes that are compliant, he said. From encrypting data at rest an in flight to enabling secure disaster recovery efforts to protecting stored personal health information at all times, he said ClearData delivers security that meets all HIPAA requirements.

Given increasing activity in health IT, ClearData isn’t the only cloud company touting its HIPAA-complaint technology. In April, cloud storage startup Box said that it had upped its game to meet the needs of healthcare companies.

Next month, new HIPAA rules will go into effect that expand the definition of healthcare provider’s “business associate,” meaning any service involved in the storage or transmission of health information could have compliance obligations. And Brannan said they’ve seen an uptick in call volume in the past quarter in anticipation. In the last year, he said, 310,000 healthcare providers accessed ClearData’s systems, which is up from 10-15,000 this time last year.