EHR pricing models explained: SaaS vs perpetual licenses

Just as there are significant differences in EHR software functionality, the pricing models these systems operate on also differ. Just as functionality is an important consideration when making a purchase decision, the EHR pricing model the vendor employs is equally important. Just as the technological side of an EHR must be aligned with your organization’s goals, the pricing model must be aligned, as well.

Even the perfect EHR from a technical standpoint can be all for naught if the economics of its pricing model pricing are unsustainable. With this caveat in mind, it is important that your EHR platform presents a good technical fit along with a pricing policy that meets your organization’s financial needs. Fortunately, the EHR market is competitive, with many pricing models to choose from. As such, it is important to understand that there could be numerous delivery-pricing model combinations available across the marketplace.

Perpetual license pricing

Broadly speaking pricing models align with the two main forms of EHR delivery: on-site EHR deployment and web-based EHR delivery, also known as Software as a Service (SaaS). Typically, on-site delivery offers a perpetual license (allowing the customer to use the software indefinitely), however, the user must pay for ongoing costs to support and manage on-site data servers with a larger upfront cost. These ongoing fees also include updating and patching software when required.

Get up-to-the-minute pricing information for SaaS and perpetual license EHR vendors with our comprehensive EHR pricing guide

As one can imagine, there are drawbacks related to paying a lump sum fee at the onset of services plus an annual maintenance agreement. The main drawback of the SaaS EHR pricing model involves the significant cost at the onset of the agreement, coupled with the fact that these expenses are general non-recoverable if the system does not meet your organization’s needs.

SaaS EHR pricing

SaaS platforms typically operate a fixed monthly subscription pricing model or “pay-as- you-go” model. Although the initial setup cost for SaaS is usually lower than the equivalent perpetual license, SaaS-based EHR vendors typically attach usage parameters. These parameters can be somewhat loose for example, EHR vendors may provide their software and all associated updates for one monthly fee with a little or no limitations based on use.

However, given that they do not stand to benefit from collecting the same monthly fee from a user who uses a small of amount of data compared to an intensive data user, the subscription is often scaled with usage. To achieve this, EHR vendors may link monthly charges to either the number of providers using the service or the volume of activity on the system. An example of connecting volume of use to cost is found in the pay per encounter pricing model in which the user pays for a set number of encounters for a specified fee.

"Even the perfect EHR from a technical standpoint can be all for naught if the economics of its pricing model pricing are unsustainable"

Given the variety of options, the decision to adopt an EHR system rests on organizational needs. If selecting a SaaS platform, keep in mind the associated EHR pricing model may help a practice avoid significant upfront costs; however if the scale of your practice (and project) is larger, some perpetual license pricing models may be comparable in price when looking at long-term total cost of ownership (TCO).

Unfortunately, there is no magic formula to make this decision for you, and it will ultimately hinge on your organization’s ability to either front large sums of money or pay in increments with more restrictions on usage.

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Jeff Green

About the author…

Jeff Green, MPH, JD works as a freelance writer and consultant in the Healthcare information Technology Space.

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Jeff Green