Remotely Hosted EHRs: The Pros and Cons for Clinics

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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."

Gee had previously licensed two EHR systems installed on his own server, but had limited success. He yanked one system, which cost him $50,000 upfront, after seven months because it was so difficult to use. By using the software-enabled service model, "technology does not get in the way of the doctor/patient relationship because the software is not so complicated that it interferes."

Ron Press, M.D., a partner in the two-physician Unity Medical Clinic at Sante Fe, New Mexico, likes using a remotely hosted EHR because he gets immediate updates of the software, rather than having to worry about installing them locally. The model also makes his costs more predictable because of the monthly per-physician subscription fees, he says.

"This type of system will help keep primary care physicians in business because the insurance industry is really crunching us," Press says. "And we're the heart of American medicine."

Press uses remotely hosted software from MedPlexus Inc., Sunnyvale, Calif. He says one key to the success of the model is the close integration between his practice management and EHR systems - a factor that Gee also cited. "It really simplifies billing," Press says. Tightly integrated EHRs and practice management systems will help practices generate all the data necessary to earn maximum incentive payments from Medicare or Medicaid under the stimulus program, says Lazarus, the consultant.

Two Days in Five Years

As for Internet access, Press says: "I guess we've been lucky. We've only been down two days in five years."

Looking for a low-cost option, David Wyatt, M.D., settled on free software from Practice Fusion Inc., San Francisco. The catch? Every time he accesses the software remotely via the Internet, it displays advertisements at the bottom of the page for medications and other products. "The ads are inobtrusive; they don't bother me in the least," says Wyatt, medical director of WeightLoss MD, Atlanta.

The physician, who practices with one partner, is considering franchising his business. He doesn't use a practice management system because he doesn't accept insurance payments. "Offering a free EHR to our franchisees is very attractive," he says.

Having patient records accessible via the Internet, rather than paper charts, is far more practical for the practice, which already has three locations 30 miles apart, the physician says. "We don't even think about where the information is," he says. "We know it's always available."

Buyer Beware

Despite the many potential benefits of remotely hosted EHRs, consultants advise practice administrators to carefully consider several factors before signing a contract.

Perhaps the most significant issue to confront is response time, which is primarily contingent on the practice's Internet connection. "Physician practices using the model have to think long and hard about response times they want for their EHR system and work closely with the vendor on expectations," says Laura Jantos, principal at ECG Management Consultants Inc. Seattle. Some practices may discover that their broadband connection doesn't meet the vendor's requirements, she says. And some may also find that their older PCs cannot provide speedy access to the application, she adds.

"It's not a bad idea to test the application to weigh whether your Internet connection is adequate and whether you need more bandwidth," adds Nelson of MGMA. "Take a look at a reference site and ask about how much bandwidth they need in a similar setting."

Lazarus, the consultant, points out that some rural areas lack reliable access to the Internet. "A lot of places in rural America offer no redundancy, so if Internet access goes down, the only backup might be dial-up," he points out.

Nelson also advises practice administrators to inquire about whether a remotely hosted records system can be easily accessed with PCs running a particular operating system, as well as whether it will work in conjunction with speech recognition software.

Concerns about the reliability of an Internet connection led Sunrise Urology to rule out consideration of remotely hosted EHRs. "We are a fully electronic practice and if the system goes down, I can't even cancel an appointment," says John Linn, M.D., a solo practitioner in Gilbert, Ariz. "Facing the risk of the Internet going down is not an option. Our whole practice would be dead in the water. It's as bad as losing your ability to have telephone access."

Sunrise uses locally installed EHR and practice management software from Allscripts, Chicago. "I took out two loans to start this practice, and the EHR was my most expensive purchase," Linn says. "I have no regrets about that purchase, given what I know now, including the amount of time I save on tasks like refilling prescription."

Biggest Concern

For the six physicians at OB/GYN Associates at the Vernanda, Albany (Ga.), the biggest concern about using a remotely hosted records system was speed, says Thomas Rhoads, director of information technology services for the group's parent company, The Veranda. "When it comes down to using the system on a day-to-day basis, speed of access is much faster with a locally hosted solution," he insists.

The Albany practice uses software from Greenway Medical Technologies, Inc., Carrollton, Ga.

Security Issues

In addition to carefully considering speed issues, practice administrators should demand that vendors spell out how they protect the privacy and security of patient records that are accessible via the Internet, says Lazarus, the consultant. "A number of public breaches have been caused by business associates," he says. "Those hosting organizations are business associates. That's the biggest concern."

The consultant advises practice administrators to ask vendors about what type of encryption they use for data traversing the Internet. He also says they should demand a "full audit trail accessible to the user with monitoring and management tools, even if the vendor is monitoring activity." And he says vendors should enable practices to offer role-based access to records, defining which staff member can view specific information within a record.

Lazarus says contracts should spell out penalties the vendor will pay if data is breached. "All costs should be covered by the vendor if they are solely at fault," he says. "If you lack those clauses in the contract, your only recourse is to cancel the contract and sue them."

Contracts also should spell out all steps the vendor will take to back up the data, such as providing multiple data centers, Lazarus adds.

Another big issue, consultants say, is ownership of clinical data, especially when a vendor goes out of business or a clinic terminates a contract. "I tell all my clients to hire an attorney who understands software contracts to review the terms," says Nelson of MGMA.

Risky Business

Even if a practice negotiates the right to data extracts, contracts for using remotely hosted software are nevertheless "potentially riskier" regarding data ownership than if a practice licenses and installs and application locally, Jantos contends.

Linn of Sunrise Urology says his data ownership concerns were strong enough to rule out the remotely hosted model. "I want to have the control over the data," he says. "Information is money. Those who hold information can make informed decisions."

Rhoads says OB/GYN Associates of Albany shares this concern. "When you're dealing with another company handling your data, you have to be concerned about whether they are securing systems properly. And if they go out of business, are you going to get your data back?"

But users of remotely hosted EHRs insist that data ownership is a non-issue for them because they spelled out in their contracts that they retain ownership.

No Haggling?

Clinic administrators must be aware that price haggling in the remotely hosted software arena is far rarer than when licensing software for local installation, says Jantos, the consultant. Most subscription prices are fixed and non-negotiable, she says. Also, because vendors often standardize implementation of remotely hosted applications, getting custom interfaces to the information systems at local labs, hospitals and others can sometimes prove challenging, she contends.

Jantos also urges practice administrators to make sure they understand all the costs involved, including any upfront fees and training charges, in addition to monthly subscription fees. Some vendors also will charge extra to integrate their remotely hosted records system to a legacy practice management system, she points out.

As practices prepare to qualify for Medicare and Medicaid incentive payments under the economic stimulus package, they need to make sure that their vendors are committed to meeting the emerging requirements, Lazarus stresses.

Contracts should require the vendor to pay a penalty if they fail to meet pending federal certification requirements within six months before the incentive program kicks in, he says. "If they fail to meet the criteria, they should have to write a check, not provide a credit toward future payments."

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