Before implementing electronic health records, physician group practice administrators invariably hit a significant fork in the road. One path they can choose is the longstanding "do-it-yourself" approach of licensing and installing the application locally. The other path involves relying on a vendor to remotely host the software and provide related services.

Because both approaches have pros and cons, selecting the right strategy is a big challenge. Users of remotely hosted systems tout ease of use and instant access to software updates. They also point to dramatically lower start-up costs because there's no need to license and install software on a local server. But practices that have chosen to install EHR software locally cite concerns about remotely hosted systems that include the unreliability of Internet connections and the potential for disputes over ownership of data, among other factors. Locally installed software, they argue, offers speedier performance and peace of mind about control of valuable information.

Regardless of which path they choose, some clinics feel a new sense of urgency to implement electronic records. That's because the federal economic stimulus package provides financial incentives for practices that make "meaningful use" of such software. To gain the maximum financial incentives, practices must have qualifying records systems up and running by 2012.

As a result, some practices are taking a closer look at remotely hosted records systems because they can cut the upfront cost involved while awaiting incentive payments. The model often can speed up the timeline for implementation. And it offers predictable costs via monthly subscription fees.

But when they start investigating the hosted options, they face a bewildering array of approaches and terminologies that can leave even the most tech-savvy a bit dazed and confused. What was called an application service provider in the 1990s has morphed into "software-as-a-service" or "software-enabled service." Vendors offer widely varying opinions on the definitions of these three terms. And many refer to the broad realm of remotely hosted applications as "cloud computing," with the cloud referring to the Internet.

Consultants advise practice administrators not to worry too much about the cloudy terms applied to these hosted offerings. Despite the many labels used, "most of these are pretty much the same" in their basic approach of providing access to an application via the Internet, says Steven Lazarus, president at Boundary Information Group, Denver.

"As cynical as it sounds, it seems like vendors are saying 'let's call it something different so we can sell more,'" says Rosemarie Nelson, principal at MGMA Healthcare Consulting Group, Englewood, Colo. "The terms are used as interchangeably as EMR and EHR."

Rather than getting hung up on terminology and marketing-speak, consultants urge administrators and physicians to ask detailed questions about precisely what they'll get for their monthly subscription fees. Practice administrators who shop around will find that more vendors than ever offer more options than ever for remotely hosted systems. And even some hospitals are serving as hosts.

Skip the Server

Practices that use remotely hosted EHRs can skip the expense of buying, installing and maintaining a server where the application resides. That's because they access the application as needed via a secure Internet connection.

By omitting the need to buy and maintain a server, the remotely hosted model generally is far less expensive at the get-go. But is it less expensive over the long haul? Some analysts say that the long-term costs of locally hosted vs. remotely hosted software may prove to be about the same. But some practices that lack capital for upfront investment in technology - and lack I.T. staff as well - find the remotely hosted option appealing.

The cost of remotely hosted EHRs range from free, for applications that present ads at the bottom of records, to several hundred dollars or more per physician per month, with prices varying widely depending on functionality. A practice might also have to buy or upgrade computers to give doctors and nurses easy access to the application. And, of course, it will need a reliable Internet connection.

Client-server systems installed locally, on the other hand, require upfront licensing fees that can run in the tens of thousands of dollars per physician, plus an investment in a server and related technologies.

These related technologies might include an air conditioned data center, power loss protection, backup provisions and enhanced security, among other factors, says Nelson of MGMA.

Remotely hosted EHRs generally offer more system redundancy and backup than many smaller practices could afford to install on their own, Nelson adds. Administrators of practices that use remotely hosted EHRs say the model greatly simplifies their lives. "I get much expanded functionality this way. And I don't have to purchase it, don't have to have the hardware to support it and don't have to have the I.T. expertise to maintain it nor the expertise in process management," says Alan Gee M.D., a solo practitioner at Frontier Neurology in Cody, Wyo.

The practice uses integrated EHR and practice management software bundled with outsourced billing services from athenahealth Inc., Watertown, Mass. Gee says the offering is much more than remotely hosted software because athenahealth offers a range of clinical and financial services, including transmitting and tracking test orders and alerting him of the status. Also, when he uses the e-prescribing function, the vendor provides alerts for patient allergies or potential adverse drug interactions.

As a result, Gee says "software-enabled service" is the best term to describe his approach to EHRs. And he likes this model because "the vendor has skin in the game to provide service, not just remote access to software."

Despite his practice's location in rural Wyoming, Gee says, "I haven't had any significant downtime because of connectivity issues."

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