Choosing the Right Electronic Medical Record System for Your Health Care Organization

Electronic medical record (EMR) systems come in two different models: on-demand and on-premise.

An on-demand EMR solution is a Web-based application that the health care provider accesses through the Internet. The solution is administered remotely by a third-party vendor that oversees data management, software upgrades, and security functions.

An on-premise EMR application resides in house, whereby an internal IT department administers and maintains all software, hardware upgrades, and all actions pertaining to the support of the network infrastructure.

The size of the health care organization (is it a small practice or a large hospital?) will usually determine which model is the better fit and what methodology is needed to manage, collect, store, and administer patient health records.

Advantages of an On-demand Solution

On-demand solutions’ chief benefit to health care organizations is that they can minimize the amount of resources applied to IT, allowing a greater concentration to be spent on patient care.

Doctors generally do not have the knowledge, interest, or resources to deal with IT infrastructures; they tend to prefer on-demand EMR systems for the following reasons:

  • An infrastructure and specialized IT staff is not needed.
  • Software upgrades are performed regularly and automatically.
  • A Web-based system can be accessed 24/7.

Being Web-based applications, on-demand solutions are easier and faster to implement because there is no software to install. Data can be accessed from any computer, anywhere in the world, with an network connection.

Generally speaking, on-demand applications have a much lower setup cost because an operating system license is not being purchased for each workstation. On-demand applications are billed as a recurring service, either in monthly, quarterly, or yearly billing cycles. The payment cycle is dependent on what features or services the vendor is offering and the user organization’s negotiating position. Lease costs can be allocated as a business expenditure, allowing the health care organization a tax break by leasing out the software. By contrast, the cost of an on-premise model must be amortized over a specified period of time.

An on-demand application provider may be able to offer clients a more sophisticated security system for less cost than one would be from an on-premise applications vendor. This is because although each client pays a relatively low monthly fee to the on-demand solution provider, the combined revenue gives the provider the financial resources to provide a quality security system acceptable for large hospitals and health care organizations.

Disadvantages of an On-demand Solution

An on-demand solution relies on a third-party provider—an arrangement that places any business at the provider’s mercy. If the vendor that a health care facility has been depending on goes out of business, it will take the organization a substantial amount of time to find another vendor with another solution, which results in a loss of productivity during staff retraining.

US health care organizations need to comply with the guidelines laid out by the Health Insurance Portability and Accountability Act (HIPAA). These guidelines must be followed to the letter, as they protect the integrity of patient data and health records. Therefore, it is important for health care facilities to know if a prospective service provider follows these stringent policies. The onus is on the health care organization to ensure that patient data is secure; if the service provider it is using does not follow HIPAA guidelines and is thereby compromising patient data, there could be substantial legal ramifications for the health care facility.

There are security concerns that are particular to on-demand solutions. Data resides in an external data center that the user organization has no control over. Security breaches and natural disasters (earthquakes, fires, and floods) can occur, resulting in the loss of an organization’s data. For this reason, it is important to know if a service provider offers a plan of action to protect user organizations’ data, also known as a redundancy, where data is stored in a second location that provides a backup in case the data in the first location is lost or becomes corrupted.

Since an on-demand solution is a pay-as-you-go service, user organizations do not own the rights to the software. In essence, the software is being leased out to the user organization, and at a premium because of its convenience, ease of use, and most importantly, its limiting of an internal IT presence. Some licensing options have a buy-back clause, but these tend to be more costly over time compared to an on-premise solution.

Advantages of an On-premise Solution

On-premise applications maintain data within the health care organization’s network, giving the health care providers better control over who has access to the data, and thereby increasing the data’s security.

There is less downtime when using an on-premise model compared to an on-demand solution; on-demand applications cannot guarantee the communications link between the user and the vendor’s data center. An on-premise model, on the other hand, does not have to contend with remote connectivity issues—a definite consideration for a growing practice.

If a health care organization chooses an on-premise solution and has the means to purchase the software outright, then the software becomes a fixed asset for the health care organization. This is beneficial because the health care organization then has the ability to allocate funds in other areas that can improve and facilitate patient care.

An on-premise solution allows administrators of the user organization to fully customize the application and to have full control over how patient data is handled, distributed to a health care professional, and secured. As a result, it’s not necessary to access the data from a third party’s off-site storage facility, which makes it safer to send data over the network electronically.

Disadvantages of an On-premise Solution

On-premise applications generally carry a higher price tag up front than on-demand solutions do, and the reasons are clear:

  • Hardware must be purchased.
  • An IT infrastructure is required.
  • Specialized staff must be hired for system maintainance (e.g., upgrades, patches, security, etc.).
  • A software license must be purchased for each workstation.

An on-premise solution requires the user organization to maintain an internal IT staff, with its attendant costs and administration requirements. This on-site IT staff must perform all equipment and software maintenance, as well as provide support and system maintenance, such as daily backups, security scans, and patches (software upgrades).

It is a common misconception that on-premise applications are safer in terms of data security because they are local applications, and this is often the sole reason health care organizations do not consider implementing an on-demand EMR system. But the safety of an organization’s data largely depends on the security precautions enabled by the internal IT staff. It is possible that a health care facility’s network administrators may be less than vigilant in placing a high priority on data security, and they can leave sensitive patient data exposed.

Vendor scalability is another concern with on-premise solutions, because technology is constantly changing, and software could become obsolete in as little as a couple of years. In other words, what works today may be lacking tomorrow. And once a health care organization purchases an on-premise application, it is stuck with it. By contrast, with an on-demand solution, if the software no longer fits the organization’s needs, the organization can simply select another that does.

As mentioned previously, the on-premise solution that is purchased outright becomes a fixed asset for the health care facility. However, if the health care organization does not have the means to buy the application outright and needs to finance the purchase, then the application becomes a liability until the debt is paid off in full.


Selecting an EMR system comes down to making a choice between an on-demand solution and on-premise solution. If vendors such as and small business experts such as Small Business Notes are correct, then generally speaking, clinics and smaller practices use on-demand solutions, and larger practices and hospitals use on-premise solutions. But this is not carved in stone, and exceptions to this generality can be found.

Usually, smaller health care organizations have neither an IT infrastructure nor an IT staff to manage the network infrastructure of an on-premise EMR system. But to a large extent, neither is necessary, since health care providers in small-scale organizations are dealing with only a few computers in the entire office. An on-demand EMR system usually suffices, and it offers simplicity and convenience. However, if a user organization is not comfortable having its data handled by a third party, then the only other option is an on-premise EMR system.

An on-premise EMR system may be the better option for large health care organizations, as they have the means and budget to acquire an infrastructure and a dedicated IT staff to maintain both the hardware and the software. This allows for the flexibility to modify the system as changing circumstances require it. It also allows for a rapid, in-house response to hardware and software problems, as well as the capacity to create custom-made software to address the special or evolving needs of the organization.

Although the software used for each model is similar, health care organizations (be they small community clinics or large metropolitan hospitals) will lean toward the software solution that is tailored to their particular infrastructure and to the size of their practice. One model is not necessarily better than the other. At the end of the day, the health care organization must make a decision based on its core business needs.

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