Whether your healthcare organization is tackling a digital transformation agenda, considering an EHR upgrade or rip and replace, or navigating merger and acquisition activities, decisions around IT infrastructure and application hosting can have significant budget implications. Should you host applications and keep IT infrastructure in-house or is it more cost-effective to outsource? Are there hidden costs to self-hosting? Where’s the greatest value and least risk to your organization? Let’s take a deeper look into factors you should consider and be ready to budget for when it comes to hosting.
Analyze your organization: self-hosting or outsourced hosting?
Before diving into an infrastructure schematic, first consider the long-term technology goals for your healthcare organization.
- Is your organization financially stable and healthy? How’s your payor mix?
- Are you well positioned for growth?
- Do you have a digital transformation or digital patient experience agenda?
- When it comes to your budget, do you have not only the capital but also the operational budget to sustain the hosting and IT infrastructure needed to support future technology implementations and growth?
- Consider your IT team. Do you have the in-house talent needed to maintain the application hosting and IT infrastructure you need now and in the future?
- How do you want your IT team to spend their time? Do you want your team focused on keeping the servers running and the software patched or would you rather devote their attention and skills to more innovative, transformative IT project work?
The opportunity cost for your IT team to do more for your organization than keep the servers and applications running is often gravely underestimated if not overlooked altogether.
Know about hidden costs for more accurate budgeting
Healthcare organizations can be caught off guard when tallying up the cost of fundamental components of infrastructure operations. If you are performing an assessment, going through a due diligence process with a vendor, or during an M&A negotiation, be sure to consider costs associated with the following:
1. Data center environmental and physical space
For example, if your organization is looking to move from MEDITECH Magic to Expanse, this EHR transition could potentially triple the number of servers your healthcare location could need in order to provide the clinician and provider experience you want. Not only might you need a larger space to house the servers, but heating and cooling costs are likely to increase, too.
The construction of the space intended for the data center matters, too. Your data center should not be located where water or heat could compromise operations – look out for nearby water pipes, sewer lines, and laundry facilities.
- Weigh the costs of cloud hosting for new software so you don’t need to increase physical and environmental costs.
- Work with your CFO and finance team to capture and allocate capital and operational costs appropriately. For example, put processes in place to help capture capital and operational costs by documenting hardware serial numbers.
- Consider an outsourced hosting and IT infrastructure partner who can provide a reliable data center so you don’t have to worry about managing a data center location, too.
2. Software licensing
Perform an assessment and estimate the cost of the software needed to securely run your environment, including antivirus protection, hypervisor, backup software, application software, and any bolt-on or third-party software.
3. Data retention
If you are transitioning from one EHR platform to another or moving to MEDITECH Expanse, you are likely to run into application fees in order to access your data archive.
Determine your data retention strategy, keeping regulatory requirements and comprehensive clinical record needs in mind. Do you need access to clinically relevant data for providers and clinical teams? Do you need to ensure access to static clinical data for legal purposes? Be sure to clarify data retention requirements, services, and pricing with vendors and partners.
We have worked with many clients in this situation and can help save money on application fees by extracting data from the previous system (including MEDITECH, Epic, Allscripts and others). Then, we configure the Legacy Archive Viewer (LAV) solution so they can view data from their previous EHR.
4. Technical expertise
Increasing labor rates and turnover coupled with difficulty finding the right staff can make running your own data center costly and challenging to keep fully staffed. Your budget can take quite a hit if you are forced to pay the market price for resources or when you calculate the cost of attrition for local IT staff.
Culture and team morale are hard to put a price tag on. That’s why asking your team to stay up at night or work on the weekends to perform routine maintenance can be a thankless job with a hidden cost. The kind of cost where you have talented IT professionals who feel stuck but could really provide greater value to the organization given the time and opportunity to work on more strategic projects. But they can’t. Because they are too busy keeping your data center running.
However, it is worthwhile to budget for and work to retain technical knowledge related to security. It’s an area that is constantly changing and mission-critical.
5. Backup as a Service (BaaS)
Where will you invest when it comes to having a backup of your data and systems? A myriad of services can be bundled into hosting and BaaS should be one of them. If consolidating your vendor portfolio is a goal for your organization, then be sure to clarify requirements, services, and costs. Do they routinely test their backups to ensure the process and data are accurate? If they don’t, that should be a red flag. One that could cost you precious time and resources you don’t have should you ever need to failover to your backup.
Plan for disaster recovery and business continuity
When it comes to disaster recovery planning, consider data center operations in a different geographic location than your healthcare location, because it will help reduce the risk of interruption to patient-centric technology should a natural disaster hit your healthcare location.
A similar strategy holds true when it comes to mitigating the risks associated with a ransomware attack by having your data managed outside the four walls of your hospital or health system, because having other levels of security controls outside of the four walls provide more protection layers.
Tally up the value of a hosting partner
Weighing the options of hosting in-house versus using a hosting partner, a few benefits rise to the top when you turn to a hosting partner to manage your IT applications and infrastructure:
- Shift the risk and cost to the hosting partner. You don’t have to worry about staffing a data center for 7X24x365 support. The financial capital equation is different without equipment, space, and environmental concerns.
- Gain economies of scale. You can take advantage of the buying power and resources of a hosting partner.
- Strategic focus. You can focus your colleagues on strategic projects that improve patient outcomes. The day-to-day operations burden shifts to the hosting partner.
We’ve done the math, and on average, CereCore is 30-40% less costly than self-hosting. Working with CereCore as your hosting partner allows you to tap into the collective expertise and scale of a $65B organization. Healthcare operations are in our DNA. Quality is a hallmark of everything we do at CereCore from client support to system reliability.
Not only are we MEDITECH-Ready Certified, a five-star MEDITECH hosting provider, and ITIL change management certified, but our operations are built upon continual improvement. Our breadth of expertise grows with each lesson learned while troubleshooting an issue with a third-party app or a client and each client benefits from that collective learning.
Resources: Request a Hosting Cost Comparison (TCO).
