As health care providers continue to struggle with narrowing margins and expanding costs, cutting expenses has become key to improving their bottom lines. To streamline complex, time-consuming business practices, they invest in the latest technological tools. But these tools are expensive, too. Consequently, these providers end up eternally reaching for the brass ring of improved profitability and not quite reaching it.

Enter the application service provider (ASP). The ASP is a software delivery model that offers an alternative to traditional client-server applications with the promise of lower cost of ownership, easier implementation, and easier maintenance. The ASP also offers a service-based model of purchasing, which typically involves monthly fees. This is in contrast to the client-server model, in which applications are purchased outright.

However, the ASP raises a number of questions involving security and privacy of patient data, reliability and response time of the applications, and ownership of data. Before going with an ASP, study the advantages of and technology behind ASPs, and carefully consider the issues and trade-offs involved.

A “NEW” WAY OF SOFTWARE DELIVERY
Although ASPs have been around for years—in the form of remote application providers and service bureaus—the explosive expansion of the Internet is allowing this model to flourish as never before.

At the simplest level, an ASP is merely another way of accessing and using software applications. Instead of installing the software on a dedicated server at one location, applications are remotely installed and managed at a central data center consisting of high-powered computers and software with specialized telecommunication connections. To use the software applications, you connect to the central data center through a secure communications link, most often the Internet. All processing and storage of data are done at the data center.

Unlike the conventional client-server model in which vendors license their products to users, the ASP model typically charges the end-user a fixed or transaction-based monthly fee. In most cases, the end-user is responsible for securing hardware (computers, printers, etc) and a connection to the Internet. The ASP vendor provides the centralized data center.

ADVANTAGES OF AN ASP
Companies that use ASPs can run the same software applications they would have if the programs were loaded on their own computers, but with six added benefits.

1. Health care organizations that access applications through an ASP typically pay only for what they use, not for unneeded functions.

2. There are no costly software contracts to maintain, and up-front costs associated with large hardware and software deployments are reduced.

3. Because ASPs serve as the technical service department of an organization, the need for experienced, expensive technical staff to deal with installing, operating, and maintaining applications is diminished.

4. Without an ASP, software upgrading and system maintenance often require taking your entire network down, frequently resulting in lost efficiency. With an ASP, upgrades rarely affect user functionality, and service interruptions are rare. Each time you log on to the ASP, you will be using the latest and greatest version of the application without lifting a finger in your location.

5. ASPs allow remote access without the need for third-party emulation tools, such as PC Anywhere. Users can log on to the company’s software from any location with an Internet connection, so that working from a remote location, such as a hospital or home, is easier to do.

6. ASPs allow flexibility. After completion of the initial service contract, which is typically 1 year, subscribers have the option to discontinue the service. This allows an organization to evaluate the effectiveness of an application without necessarily committing to a long-term purchase. If you dislike your ASP, you simply switch to another system. You are not stuck with thousands of dollars in software that needs to be replaced.

DISADVANTAGES OF AN ASP
By using an ASP, you are relying on the ASP vendor and on Internet connections, such as a digital subscriber line (DSL). Access to the ASP depends on the reliability of the Internet connection. Also, not all locations have high-speed access to the Internet.

Finally, accessing your applications remotely over the Internet raises justifiable concerns about the security and privacy of sensitive data. Leading ASPs use a number of security measures to prevent unauthorized users from accessing and tampering with any aspect of your data, including the following:

• Network security. This ensures the security of the data as it is passed between your organization to the ASP over the Internet. Most ASPs transmit data through a secured, encrypted pathway. The encrypted data makes it unintelligible to unauthorized users until it is decrypted at the ASP server. Firewalls at both ends of the connection further safeguard the integrity of both the customer’s and the ASP’s internal network.

• Proof of identity. ASPs use many different methods to establish proof of identity and prevent unauthorized users from entering the system. Some common technologies include virtual private networks (VPNs), user names, passwords, dynamic access codes, and digital certificates.

Even given these security measures, it is important for ASP customers to establish their own protocols and procedures to define both receipt and discontinuation of access rights.

FINDING THE RIGHT ASP FOR YOU
Acceptance of ASPs as a viable business practice continues to rise, but health care organizations should review and thoroughly understand the business background of any ASP being considered. Research an ASP’s business practices, the length of time it has been in business, its technology expertise, the hardware and software it deploys, and whether its security measures are up to industry standards—including those proposed by the Health Insurance Portability and Accountability Act (HIPAA). It might also be helpful to review a client list to see if other organizations with similar business models have used the ASP to achieve the same results you seek.

Do not overlook data ownership. While most ASPs make no claims of data ownership when supplying applications, there may be stipulations about the transportation, copying, and exchange of data. Know what these are so you can avoid accidentally violating them.

Also, make sure the ASP can protect the data stored on its servers and continue to provide service in case of emergencies, such as power failures and natural disasters.

Look at the level of service the ASP offers. This is guaranteed by a service level agreement (SLA), a standard industry contract that binds the ASP to specific levels of support for customers, the level of technology the ASP will maintain, the performance that will be available, how continuous that performance will be, and related financial issues. You want a contract that holds the ASP responsible for maintaining around-the-clock availability of the latest version of the application. It also is important to ensure that the ASP can maintain the technology performance at a level sufficient to support the number of users needed to accomplish your objectives.

The ASP also should be available to provide technical services necessary for deployment and integration of the application. Often this includes training and educational materials for all staff using the application.

Finally, ask if you will need to purchase equipment to support the deployment of the ASP’s offerings, and if future updates to the application will render current technology within your organization obsolete. The ASP should be well versed in the application you are interested in and be able to integrate and provide numerous applications through the Internet.

If the benefits of an ASP outweigh the negatives for your company, it may be time to switch. I believe the ASP model is the best answer for health care organizations wanting to stay ahead of the technological curve. An ASP provides ongoing access to the latest technology, is more quickly deployed than traditional software implementations, reduces the cost of technology ownership, and offers scalable solutions that can be used, and paid for as the need arises. Last but not least, ASP providers also help health care organizations reduce the time-consuming focus on managing information and place more emphasis on their core competencies.

Mark M. Deutsch, MBA, is a regional sales representative for Third Millennium Healthcare Systems, Atlanta, and a cofounder of CareTech Services Inc, Blacksburg, Va, a leading provider of accounts receivable recovery, billing management, and compliance solutions for the home health care industry. Contact him at (804) 338-3987 or by email at mdeutsch@3mc.com.