How to select an ASP or Data Center and negotiate a contract for Hosting Services

This is the transcript of Robert Gleeman's discussion with Mike Uretz talking about ASP and Data Centers and how to negotiate a contract for Hosting Services. You can listen to this interview by clicking the youTube play button a few paragraphs below.

Robert Gleeman:  This is Robert Gleeman with EMR Update. I am talking today with Michael Uretz, Executive Director of the EHR Group. Michael's number is 425‑434‑7102. Thanks for being with us today, Michael. Good to have you here.

Mike Uretz:  Hi, Bob. I certainly appreciate it.

Robert: Our topic today is, "How to select an ASP or data center and negotiate a contract for hosting services?" As you may know, this is one of the most frequently discussed subjects on EMR Update, to get the server or to go ASP.

Michael, let me ask you: why get an ASP or hosted solution instead of just hosting myself if I am a small office doctor with a practice?

Mike: I think one of the big things I'm seeing as small to medium practices move towards adoption is because of the availability of ASP or data hosted solutions in terms of why you might go with that instead of hosting yourself.

When you think about hosting an application yourself, there are a number of things you have to think about. One is just the resources it takes. When we go into the world of EMR, now all of a sudden we are talking about 24/7. We are talking about folks being able to get to their records from home at 11 at night. The question you ask yourself is, can I as a group or practice have the resources available and the servers available to support that 24/7.

The second issue that folks really don't think about is when you think about leasing your own equipment, well on an average they say there is about a three year lifespan for equipment.

Robert: Right.

Mike: Probably in three years or so you will need newer equipment or updated equipment whereas many times an ASP solution or a data center hosted solution will provide under contracts the ability to upgrade equipment automatically every two to three years. You are kind of covered that way. It really depends on if you really want to devote your own resources or not.

Robert: What is the difference between an ASP and a data center hosted solution?

Mike: An ASP solution or Application Service Provider solution typically means that what you are going to be doing is you are getting both the software and servers and services as well from one company. You will be paying a monthly charge, almost like a rental fee, and what you will be getting out of that is you will be getting the application, the EMR application. You will be getting typically training and implementation services from that company as well as all the server equipment it takes to host it all.

The other option that folks look at is what's called a data center centric or data center hosted solution. Typically, the model of that is that you actually purchase the products, the EMR software, as well as training and implementation services. That comes directly from the EMR manufacturer.

Then, in turn, you look for a data center to host it up. In other words, when you look at a data center solution it is almost like as if you have your own IT department only it's at a different location. Does that kind of make sense?

Robert: I see; that does make sense.

Mike: There are pros and cons of either approach. You have to look at your particular situation. For example, when you look at an ASP solution you have a benefit, for example, of your cost. Instead of having to shell out money for all these upfront licenses you typically get some kind of monthly cost. In other words, you are renting the software out. Another potential benefit of an ASP is that they are more of a local support presence. Typically, ASPs many times are regional in nature.

A lot of times they will give you value added services. Some of these folks, for example, might offer some kind of billing service in addition to the EMR they offer. There are all kinds of services they can offer. The other benefit is that it is one point of support for everything.

On the other hand, what some folks choose to do when you go to the data center model is some people like to actually own their own licenses for whatever reason. Let's say you are planning on selling your practice a couple of years from now, and you want to transfer those licenses to somebody.

The other thing is with a data center model it's kind of a best‑of‑breed approach because you have a true IT data center that is providing all of the services to serve up the IT whereas you are working directly with the EMR vendor for anything having to do with their software. But, many times when you pay a monthly ASP charge that's rolled together when you look at your costs over time sometimes it can effectively be more of a cost for the actual software than if you had just purchased the licenses in the first place.

Robert: Michael, how do you choose an ASP or data center?

Mike: Well, there are a lot of variables in this. A lot of the vendors themselves, a lot of EMR vendors, seem to have partners more and more in the ASP and the data center realm. One of the things you can do if you choose an EMR system is you can go to that vendor and say, "Who have you used? Who is involved in your partnership program?" That's one way to, at least, get a short list.

The other thing you want to find out then is how many deals have these particular ASP or data center vendors done with the particular EMR system. Find out how many deals have they done. Also, find out do they specialize in a certain system; that's real important. Are they an ASP that actually has five EMRs that they resell, or do they sell one? Obviously, if they specialize in one they are going to be better at doing that.

The other thing then is you really have to look closely at the infrastructure and the resources these folks have. Talk to them. Find out how large their data centers are. What types of equipment? How long have they been around? Find out how many people? What kind of skill sets do they have? Do they have the types of skills that they can run those servers?

Another thing to look at are the service options. What can they really do in terms of services? Many times ASPs or data centers have all kinds of different services they can offer.

Then finally, Bob, really at the end of the day the most important thing is the reference checking because there has been many, many times that I have done reference checking on an ASP provider or a data center, and then people have shared with me all kinds of stories.

For example, the things that happened when things went wrong; the extra things that the person at the data center that stayed on the job until three in the morning to get something done. These stories are priceless. Make sure that you do very, very robust reference checking because things will shake out through that.

Robert: This is going to be mission critical for a doctor. How do you make sure that either way that you go that they live up to their commitments?

Mike: You really want to make sure that you have a good type service contract that covers many of the areas because it's the same old thing. Can you walk the walk and talk the talk? What happens when you finally purchase it? In terms of living up to the commitments, you can certainly get a good contract. Of course, the other thing is in the selection process you can do a lot of due diligence as well to see what the track record has been.

Robert: What are the components of a good contract, Michael? As a consultant, is this something you can help a doctor with?

Mike: Oh, sure. It's really interesting because I negotiate a lot of EMR practice management contracts. One of the things I encourage people to think about is that they look at, number one, the types of services they are getting because in many cases it can be like when you buy a car. You buy the car, but then you have everything around there. Do you get the satellite radio? Understand and define very distinctly what all the services are that they are claiming and you expect.

Another component that is extremely important is what is the expected performance. You understand what the expectations are in terms of performance, and you get that down in writing.

The same thing with response time for problems. Make sure that that's all covered. If there is a problem, how fast are they going to get to you? How fast are they going to take care of it?

Now, people can make commitments in a contract what they are going to do, but where's the teeth that makes them do it. Well, there needs to be financial penalties if they don't come through with performance, and these penalties typically are credits towards your monthly charge.

You need to have the right to terminate the agreement based on certain conditions. Again, you negotiate this with your vendor. What I would mention in relation to the termination is make sure that they will help you in transferring that data. Remember if they are doing an ASP or data center they have your data on their data center so you have to have certain rights with that termination to get that data in a format that you can use.

Robert: Now, what if I decide to host the solution myself later on?

Mike: That's a very, very important question because typically what happens is people grow where you might have an ASP solution or you might have a data center solution for a couple of years. Maybe, you will actually have your own server at some point. Maybe, you might want to change. You need to make sure that there is documentation at all times of how they do things, what they are doing. There are diagrams of how everything works.

If you ever get to the point where you are actually bringing all this in‑house, there needs to be that transference of knowledge. Make sure you always have good documentation from your vendor, and if your vendor doesn't want to supply that for you I wouldn't deal with that vendor.

Robert: Michael Uretz, Executive Director, EHR group. Thank you very much. Excellent information. Thanks again for being with us at emrupdate, Michael. 

For more information about the subjects discussed here you can contact Michael Uretz at the details listed below.
See our other Getting Started resources here.

Contact information for Mike:

Michael Uretz, Executive Director
The EHR Group
700 NW Gilman Blvd. Suite E293
Issaquah, WA 98027
Tel: +1 (425) 434-7103

E-mail: sales@ehrgroup.com
Website: www.ehrgroup.com