Application Service Providers (ASP) offer technology solutions that can allow your medical practice to access a wide variety of software applications without assuming the risks, costs and hassles associated with purchasing, implementing, and supporting software. An ASP typically rents applications to clients on a monthly subscription basis. Selecting a successful ASP is a complex decision and requires just as much thought as selecting and purchasing software on your own.
Key Steps
The following steps and considerations will help you select an ASP vendor for your practice's business needs:
Identify Your Business Needs
Before you begin to evaluate ASPs, identify the types of hosted applications you need and thoroughly evaluate the costs of deploying and maintaining an application in-house against outsourcing it to an ASP. When examining the costs of an in-house solution, be sure to include the cost of software licenses and upgrades.
When considering what to outsource, think about the following:
- What IT capabilities do you have in-house? Include infrastructure (e.g., hardware, network, communications) and staff expertise.
- Does the solution involve highly confidential information that you may not be comfortable storing on a vendor's server?
- Is the solution mission critical to your business (e.g., the medical record system or your scheduling application)?
The answers to these questions will help you focus your efforts when selecting an ASP. For example, if you are going to outsource a mission critical application, such as your scheduling system, you need to be assured that the vendor can offer uninterrupted service during business hours.
Identify the ASP's Offerings
The first step in evaluating an ASP is to determine if the vendor is competent and credible and if its products meet your current and future needs.
- Collect and analyze basic information about the ASP and its offerings, such as size of company, reputation, experience and customer base. For example, if the ASP has specific healthcare expertise and is used by other medical practices in your area, it may be more convenient than one serving other markets.
- Decide if you want to contract with a software vendor that offers an ASP version of its product or an independent ASP that offers a large selection of applications.
- Inventory the current products offered and inquire about future products. Are they best-in-class applications?
- An independent ASP is often able to integrate multiple applications across a common platform. For example, it may integrate different software packages (e.g., EPIC systems, Medical Manager, Medic, etc.) into one complete computing solution.
- If the ASP is partnered with several different applications, ask how it integrates these services.
- Can the software be customized, and at what cost?
Assess the ASP's Technology Architecture and Data Storage Capabilities
To a certain extent you need to evaluate an ASP's back-end technology, but without a technical background it may be difficult to draw meaningful conclusions. One way to make sure the technology will meet your needs is to ask the ASP vendor for references and sample service level agreements. Here are some things to consider when making your assessment:
- If you plan to grow your practice significantly or expand the volume of transactions that are performed on a particular platform, you should determine if the application is scalable. Otherwise, you may be stuck with an application that is unable to meet your future needs (e.g., number of users or transactions).
- Determine if the ASP has its own data center or if it contracts with a third-party vendor for infrastructure services. Make sure you know who is responsible in case a problem arises.
- Investigate what type of hardware, operating systems and networking products the ASP uses. This is really only an issue if you are currently running an application in-house and will need to transfer data to an ASP product that is run on a disparate platform. This may also be an issue if you plan to bring an ASP service in-house at a later date.
- Will the application be run on a dedicated or shared server? A dedicated server offers additional security and faster connectivity; however it is more expensive. Many customers use "Shared servers" at the same time, which may affect the time it takes to load the application, especially if multiple clients try to access the same application simultaneously. This could be an issue for mission-critical applications, so before you settle on an ASP, test the shared server's capacity to function reliably during peak business hours.
- Will the application run over the Internet or over leased lines? A leased line, also referred to as a virtual private network, is like leasing a telephone line between your company and the ASP. It offers additional security and connectivity speed but costs more.
Assess the ASP's Ability to Ensure Security and Confidentiality
Security and confidentiality of medical information are foremost concerns when selecting an ASP. See related topics for more information on ASP security.
- Find out if the ASP has written privacy and security policies in place. If so, request a copy and determine if they meet your standards and whether or not they are HIPAA compliant. Look to see if their policy has been certified by an outside source.
- Find out how the ASP enforces its security policy.
- Determine if the ASP has adequate tools and procedures to identify security problems and respond to a breach of security or an attack. At a minimum, they should have dedicated security staff, firewall and virus protection, and encryption capabilities. Virus prevention software must be up-dated, and firewalls must exist on both the ASP and customer end. Data should be encrypted and maintained in an access-restricted database.
- Inquire how the ASP will ensure the security of your data. Does the ASP use an outside, independent organization for testing, or does it use internal security testing? Have the ASP's security claims been certified? If so, request a copy of the report. Additionally, ask if you will be able to run a security test from your location. This capability will allow you to verify and monitor the security of your data at any time.
Determine the Level of Service Provided
Another key consideration when choosing an ASP is the level of service provided. Inquire about the following:
- Account management. Will you have a dedicated account manager to provide ongoing service and support?
- Is there a help desk available 24 hours a day, seven days a week to provide customer service and technical support?
- Will the ASP make in-house service calls? Is its office located near your office or will a visit require significant travel time?
Service Level Agreements
Industry experts agree that the key to successful use of an ASP solution is the service level agreement (SLA). An SLA lays out the specific quality and performance levels you can expect from a service provider. The SLA is a separate agreement that establishes pre-defined service parameters and penalties if performance requirements are not met. Performance metrics typically fall into the following basic categories:
- Availability and downtime. A common metric is for a network to be available for 99.99 percent, that allows for 4.32 minutes of outage or disruption per month.
- Time to response. This is the time it takes your workstation to send a request or message to a service and receive a response.
- Operations support. Specific on-line or off-line support, and hours of support.
An example of a penalty for poor performance might include escalating the percentages of the monthly fee each time the problem recurs. Additionally, try to include an exit clause in the contract that allows you to freely break the contract if the ASP fails to meet minimum service requirements.
SLAs are not free, however. There is a charge associated with each new level of service requirement. Additionally, tracking and enforcing an SLA requires that you have the resources to monitor the network to be sure the provider is keeping up its end of the deal. You should identify mission-critical applications (e.g., scheduling) and peak usage hours and choose an SLA that meets these priorities. It is important to note that if you are only renting $100 worth of software a month, the ASP may only provide you with a boilerplate SLA. As your practice's spending level increases, more of the contractual terms of the SLA may become negotiable.
Compare Pricing Models
ASPs typically offer different pricing models either based on a per-user, per transaction, or monthly flat fee. The right pricing model for you will depend on how often you expect to use application, the transaction volume and your practice's preference for fixed versus variable monthly technology costs. Make sure you understand what is included in the price, how it is calculated (e.g., per user, per transaction), and how it can change over time (e.g., fee increases, discounts for volume). When comparing pricing options include the up-front and on-going costs for system use, fees for support, upgrade costs, and any hardware costs you may incur (e.g., upgrading to a cable modem, installing additional memory). Also factor in your practice's expected growth rate and compare all these costs to the traditional option of purchasing and installing the application in house.
Common ASP Pricing Models
Per-user model: A per-use model usually involves a flat fee per user or a tiered fee structure based on the level of use (e.g., heavy, medium, light). A tiered fee structure is recommended if different users will access the application to varying degrees, and a flat fee is more appropriate if all users will use the application at the same frequent rate. I n most cases, a per-user model is recommended if you will be using the application frequently (e.g., a scheduling system that you would use all day long).
- Per-transaction model: A per-transaction model would include a rate structure based on different automated processes and the related complexity of the function. For example, a billing application would be priced "per bill dropped." Typically, the overall price of a per-transaction model is lower, but increases as volume increases. However, with more transactions, you can often negotiate a discounted rate based on volume. This model includes an incentive for the ASP to keep the application up and running because it receives more money when you are able to perform transactions.
- Fixed-fee model: A fixed-fee model entails a fixed monthly payment covering products and services specified in the contract. It is often for a specific group of users or a site. Unlike a per-transaction model, a fixed-fee pricing schedule allows a practice to predict its costs for the month.
Additional costs: Many ASPs include application management fees that cover the back-end costs, such as data storage, servers and hardware. This fee can vary according to the level of support specified in the contract. One-time implementation, integration, training and data backup fees may also be included. These fees will vary according to the complexity of the implementation, such as data conversion and the level of training.
Key Considerations
As with other types of outsourcing, if you decide to go with an ASP solution, you are turning over responsibility for key operational components of your practice (e.g., payroll processing, medical record storage). Make sure you are comfortable with the ASP's security measures, customer service and other performance measures.
- Share information about your business functions with the ASP. The more the vendor knows about the drivers of your medical practice, the better they can serve you.
- Be sure to set up a process for dealing with reporting, notification, resolutions and problem escalation. Consider a periodic performance review meeting.
- Be clear about who will pay for upgrades.
- Test the product during average and peak usage times. Also try access during the weekends and from your home computer.
- Keep the contract term short. ASPs are relatively new and the long-term direction of the industry is unclear.
- Depending on your organization's tax status, there may be accounting implications of incurring an operational cost versus depreciating a capital cost. Be sure to check with you accountant before you make a final decision.
- Determine if there are upfront capital costs - will you need to upgrade your hardware, TI lines, etc.?
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