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A look at the real costs of using Web-based software

Application service providers offer low monthly rates, but can their products really compete?

From the October 2000 ACP-ASIM Observer, copyright 2000 by the American College of Physicians-American Society of Internal Medicine.

By Ingrid Palmer

By now, you've probably heard the pitch: For as little as $99 a month, you can computerize your practice. The catch? Instead of actually purchasing the software and installing it in your practice's computers, you "rent" it via the Web.

The premise behind Web-based software is simple. You lease software from an application service provider (ASP) for a fraction of what it would cost to actually buy the package. Because you tap into the software via the Internet, you don't have to pay someone to install and maintain the software on your practice's machines.

For physicians who don't want to spend tens of thousands of dollars buying and installing software, renting a program over the Web may seem like an ideal solution. While it's probably true that Web-based software will save you money in the short run, skeptics say that this new breed of software has some distinct disadvantages.

For one, many Web-based products don't offer a full range of features like their non-Internet counterparts. While ASP vendors tout their products as money-savers, some upgrades—a fast Internet connection, for example—may wind up costing more than you had planned. And there are serious concerns about doing business over the Web, like whether physicians will be able to access patient data if they have problems getting on the Internet.

Here are some factors to consider when looking at Web-based software:

  • Features- One of the first things you should look for in Web-based software is functionality. To streamline software to run it over the Web, vendors often eliminate features that are part of the package when it is installed directly on physicians' computers.

    The vendor MedicaLogic, for example, offers a Web-based version of its medical records software, Logician Internet, for $99 a month. While the price is certainly attractive, the software has limited features.

    Carolyn Albert of the ACP-ASIM's Center for a Competitive Advantage pointed out that Logician Internet does not allow internists to write prescriptions or access lab results. "Logician Internet really holds office notes, which is not the same thing as electronic medical records," she said. "It is a baby step toward electronic medical records." (For a checklist of features, see "Features to look for in Web-based software," this page.)

    Another critical feature of Web-based software is access. Some products allow you to log on from any computer with an Internet connection. Other products, however, require you to log on from a computer on which you have loaded special software. While products that restrict access tend to have more security features, they limit your flexibility in accessing information.

  • Costs- Cost is probably the biggest advantage of purchasing Web-based software. Although you could spend tens of thousands of dollars to buy and install traditional electronic medical record software, most Web-based programs require a PC with three things: the Windows operating system, Web browser software and an Internet connection.

    Experts, however, say that you need to make sure that you won't have to incur other costs. Many ASPs also charge fees for training sessions, and some charge transaction fees for services like accessing lab results and checking whether patients have insurance.

    In addition, many physician practices use older computers that can't easily process graphics and other elements used on the Internet. These practices must often replace their computers to use Web-based software.

    Even if your practice is already connected to the Internet, you may have to do some upgrading. Because connecting to the Internet via regular telephone lines is slow and can be unstable, you'll probably want a high-speed connection, which can cost hundreds of dollars a month.

    You'll also probably want to connect your office's computers via a network so your staff can access the software from more than one terminal. Networking a practice can be expensive--the process typically starts at about $5,000--but it may be less expensive than paying to connect individual computers to the Internet.

  • Compatibility- Another major advantage of Web-based software is that it is so easy to set up. Because you're not installing the product on your computer, the thinking goes, you merely have to log onto the Internet and begin using the software. As some physicians have discovered, however, that isn't always the case.

    Stanley N. Schwartz, FACP, founding partner of InterID Inc., a four-physician infectious disease practice in Tulsa, Okla., has found that several Web-based products would not work with his practice's computers. To use one program, his practice would have had to spend thousands of dollars to change the software it uses to run its computer network. Another product he liked would not work with his group's Internet service provider.

    Compatibility also can be an issue if you use handheld computers. Some vendors, for example, offer Web-based software that is not compatible with personal digital assistants or handheld computers. Other vendors offer products that will work only on certain types of handheld computers like the PalmPilot.

  • Internet connections- Another weakness of Web-based products is that your access to the software is only as reliable as your Internet connection. If your Internet service provider goes down, you lose access to your software, crippling your practice.

    To solve such problems, some ASP vendors offer products that store data on both the Web and your practice's computers. Doctors using MedicaLogic's Logician Internet, for example, can type their patient notes onto their own computers and then upload the data to the Internet later. Other ASP vendors like ChannelHealth allow physicians to keep critical information like patient data on their computers.

  • Security and storage- Because physicians using Web-based software may be storing patient information on someone else's computers, there are concerns that patient data stored remotely may not be safe or readily accessible. Many wonder what will happen to their data if they want to stop contracting with the ASP or worse, if the ASP goes out of business.

    Many ASP companies don't physically store data themselves but contract with a third party for data warehousing. Because there are no laws governing remote data storage, it is up to your vendor to make sure that your practice's data aren't being misused--or sold to marketing companies.

    Not all ASP vendors handle data storage the same way. Abaton.com and VitalWorks, for example, said that they do not store data with a third party but keep all data on a system they own and maintain. And PulseMD, which offers a Web-based prescription-writing program, does not store any patient data; doctors store practice data on their own computers.

Ingrid Palmer is a freelance writer in Alexandria, Va.


Features to look for in Web-based software

From the October 2000 ACP-ASIM Observer, copyright 2000 by the American College of Physicians-American Society of Internal Medicine.

Not all Web-based software products are created equal. Here are some features that you should look for in products from application service providers (ASPs):

  • Electronic charting- Most ASP products enable you to enter, store and sort patient chart information.
  • Coding and billing modules- Many ASP products can assist with selecting correct current procedural terminology codes, ICD-9 codes and evaluation and management codes. Some also enable you to generate claims and statements.
  • Access to managed care information- By gathering information from various carriers over the Internet, ASPs can often provide up-to-the-minute information on drug formularies and eligibility and referral requirements.
  • Prescription writing- Links to frequently updated drug databases enable some ASP products to provide information on dosing and interactions. Some even allow you to send prescriptions directly to a participating pharmacy.
  • Appointment scheduling- Some ASPs can help keep your schedule moving smoothly. Multiple-user products enable front desk staff to record appointments while physicians work with clinical patient data.
  • Subspecialty information- Subspecialty products are beginning to emerge among ASPs. VitalWorks, for example, has created versions of Practice Manager for use in dermatology, ophthalmology, oncology and podiatry practices.

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Tips on taking the plunge with an ASP

From the October 2000 ACP-ASIM Observer, copyright 2000 by the American College of Physicians-American Society of Internal Medicine.

Because Web-based software is relatively new, you should be particularly thorough when investigating application service providers (ASPs). Here are some tips from physicians and experts:

  • Assess features- Make sure the product has enough features to get you started and that it offers enhanced capabilities like lab access that you may want to add in the future.
  • Ask to see a demo- Ask vendors to demonstrate previous applications that they have set up with the ASP platform you're considering.
  • Check data storage options- Find out if the ASP contracts with a third-party data warehousing service. If so, remember that physicians have no contractual control over the third party.
  • Look for backups and escape hatches- Negotiate to receive regular data backups in a standardized format like optical disk, or request technology that will allow you to back up your data at will. Because ASPs have limited track records, it is also wise to get a specific, written "exit strategy" that allows you to terminate a contract without penalties.
  • Get legal help- Have your lawyer review the contract and/or warranty. Pay particular attention to any "hold harmless" clauses or liability statements.

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