Running Your Facility Over the Internet.

Information management has hit a new turning point--and this time the costs might be lower, not higher. With no more than some cheap hardware and a solid connection to the Internet, long-term care facilities can run their financial and clinical operations and do all the documentation they need. No more worrying about purchasing new software packages, continually monitoring vendors for upgrades, maintaining large "server" computers on-site or employing the necessary staff to do all of the above. You conduct your operations and, for a monthly lease or rental fee, the Internet site does all the rest.

Sound too good to be true? Only in the sense that the new service--the applications service provider (ASP), to be exact--as only begun to be available, and thus far to only a small number of nursing facilities. There are bugs to be worked out, and good reasons for caution (see "Early Considerations," p.31). But the promise is worth thinking about, perhaps now especially in the aftermath of Y2K.

Recently, Nursing Homes/Long Term Care Management asked a few of the vendors venturing into the new field to describe how ASP works and how it might serve the long-term care field. Here, focusing more on the concept than on the product, is how they size up the opportunities for long-term care.

The Concept

Todd Spence, Director of Research and Development, MDI: "To run financial and clinical software, we maintain large, superpowerful computers that would be price-prohibitive for any nursing home or group of nursing homes. These are connected via the Internet to the nursing home customer--who can run the organization's financial and clinical operations online. It is a return to the model of the 1970s, when all data were processed through big central processing units (CPUs), but with a modernized, much more reliable server technology. In the 1980s, things were decentralized with personal computers (PCs), with multiple servers processing their data. With ASP, we have moved back to the centralized model, but one that is new and improved."

Bob Harris, General Manager of REPS (remote electronic processing services), Achieve Healthcare Information Systems: "An ASP is merely a vehicle to get information systems to LTC organizations in a cost-effective manner. An organization doesn't need to purchase or maintain servers or application software. Nor does the customer need information management staff to oversee operations or system maintenance. It is provided for a monthly subscription fee, with minimalhassle. An ASP does not, however, negate the need to choose a quality, flexible software solution."

Charles Daniels, Vice-President, HealthMEDEX: "There is a fundamental difference between ASP and the client/server technology that many organizations have become accustomed to. A true Web-based ASP maintains a direct connection to the customer; there are no intermediate servers involved. Some ASPs today are actually modifying client/server-designed software, where the data must be 'squeezed down' and processed by a 'terminal server' before the big servers can handle it. That's an expensive extra step that Web-based designs don't require."

Drew Wright, President, QuickCARE: "With ASP, organizations can drastically reduce their upfront investments in software, hardware and networking solutions by moving to a monthly subscription-based service that covers everything from software and hardware upgrades to comprehensive customer support. This has been made possible by the availability of increased network bandwidths and lower communication costs. International Data Corporation estimates that the ASP market as a whole will grow to a $4.5 billion industry by 2003."

Joe Bolton, Vice-President of Development, CARE Computer Systems: "Basically, ASP allows facilities to outsource their IT function for support of our applications. We supply the hardware, the routing and the software. With our model, we are not using the Internet, because we have concerns about its security and performance with mission-critical software, such as that used for reimbursement and regulatory compliance in nursing facilities. Instead, we are creating a private network for each customer facility."

What's Required

Spence: "On the nursing home side, all that is needed are some inexpensive personal computers with much less memory than perhaps ones they're using now, although these will work too, or perhaps one of these Web-based shells that are available now for $400. You also need DSL or cable modem access to the Internet."

Harris: "You need a workstation that can run Windows 95, a printer and an Internet Service Provider (ISP) connection, for which we recommend a minimum of a 56K dial-up. You can also have multiple workstations and multiple lines to speed things up, depending on your needs. Hardware needs are modest; a 486 will do fine."

Daniels: "PCs can be low cost, and essentially need only to run a browser. Our product can be run efficiently on a 28.8K modem, but I would recommend an ISDN (128K) or equivalent modem for best results for a group of five or six users. Other options must be considered for larger user groups.

Wright: "Choosing the right ASP is the critical first step. You should choose a vendor based on the quality of the software, which is at the heart of the system, and thoroughly investigate the hardware, networking and service elements being offered. Some companies are partnering with established networking specialists that have invested millions in creating world-class networks. If the vendor is trying to handle the data on its own network, be sure they have high-speed networks, disaster-proof facilities, fault-tolerant servers, double redundancy, and so forth."

Bolton: "At the client end we install a terminal server client or a Citrix Client on a PC. It is likely that the customer will not need a hardware upgrade, since this can run on a low-speed 486 with 4 MG of memory using DOS. You can also use Windows terminals that are not even PCs."

Security

Spence: "This has become a virtual nonissue in this field. We employ the 128-bit encryption that is considered state-of-the-art, along with user IDs and passwords."

Harris: "We comply with HCFA standards on Internet security, with two levels of passwords for user ID and 128-bit encryption."

Daniels: "We use the 128-bit encryption. There is also an option called the virtual private network (VPN). This gives the facility a private channel on the Internet, and is fairly readily available from such companies as AT&T and MCI WorldCom. It costs about two or three times the usual Internet connection rate--for example, if a 120-bed facility with six users is paying $100 a month for an ISP, the VPN would cost about $300 a month."

Wright: "The best-of-breed ASPs offer data centers that are vastly more sophisticated than the data servers housed in most long-term care facilities. It is common in this industry for facilities to have catastrophic failures, only to find that proper data backups have not been made. An ASP-based solution relieves the facility from the responsibility of having to back up its data, which the ASP will do daily."

Bolton: "Because ours is a private network, using what's called a frame relay network rather than the Internet, the system is completely secure. No encryption is needed."

Waiting Time

Spence: "The important factor here is the ISP connection. The servers themselves are very fast and powerful, and there are several of them, each of which can readily take over the customer load of another if it goes down. The customer will never know that downtime has occurred."

Harris: "Using an ASP is really different from 'surfing the net.' We are using the Internet as a medium to deliver services, not browse Web sites. Because of our terminal server capability, the computation is performed at the data center, not the client's workstation, which is why a 486 PC would be adequate, with no loss in speed. Similarly, because the applications consume as little as one-tenth their normal network bandwidth, the Internet connection can be smaller--and cheaper--but again with no effect on speed. Meanwhile, the servers at the ASP are very robust and high-performance. It is the ASP's responsibility to maintain them as such, as well as to install upgrades and any additional software maintenance. Waiting should not normally be a problem."

Daniels: "It could be somewhat slower at times, depending on the Internet connection. That's why I would recommend an ISDN modem or equivalent, especially if there will be five or six users on the system. Again, larger user groups will have different bandwidth requirements to maintain adequate speed. At the back end, though, with the vendor's servers, this could prove to be much faster, especially for batch-processing operations, such as billing. Customers should also ask vendors for a written commitment to a 99.5% uptime--i.e., crashes occurring only 0.5% of the time--which has become the industry standard."

Wright: "The major variable involved with wait time is the manner in which your facility connects to the data center--whether it's a modem connection, ISDN, DSL, frame relay, etc. Obviously, the fastest solutions tend to be the most expensive, but for most facilities it is well worth the additional costs due to vastly improved response times."

Bolton: "With a private network, the ASP can offer a Service Level Agreement (SLA) that covers not only guaranteed uptime--which should be 99.9% minimum-but what is called 'latency,' which is the amount of time it takes for a keystroke to get the desired response. The customer should be looking for a 30- to 50-millisecond guarantee from the private network ASP. This cannot be obtained from America Online, for instance, or any ISP, because on the public Internet a keystroke might hit as many as seven or eight hops before arriving at the server, which could be several states away. With the private network, the customer should expect a latency SEA."

Cost Savings

Spence: "You can anticipate about a 30% savings over time, mainly from maintenance, staff time, hardware, network configurations and overall hassle. It is also more inexpensive for vendors; they can make upgrades in a matter of days, do not have to send software out for modification and don't have to worry about distributing upgrades throughout the customer base."

Harris: "If you were to look only at software costs, the monthly subscription fee would probably add up to more over the length of the agreement, much like an automobile lease. But the subscription fee covers more than the software. With an ASP your investment covers the server, software, software/hardware maintenance services and the necessary staff for system maintenance. When you consider total cost of ownership, use of an ASP can reduce total cost by a minimum of 30%. It also avoids future costs for hardware and new services as technology changes."

Daniels: "We're looking at about a 50% savings over a five-year period in terms of people and capital investment needed. A standalone hardware/software system might cost $35,000-50,000, and on top of that you have outlays for maintenance and support. ASP can run at less than $1,200-1,500 a month, or about $125 per user per month."

Wright: "Facilities can at the outset drastically reduce upfront investments in software and technology systems and eliminate the need to depreciate these investments over time. Such expenditures are replaced by a 'pay-as-you-go' subscription service, typically in the form of a monthly fee. Many facilities have eliminated the need for an IT department altogether, reducing salary and training costs dramatically."

Bolton: "The facility doesn't have to worry about hardware upgrades or tracking software upgrades or beefing up IT staff. All of this is the vendor's concern. By the same token, we anticipate that ASP will make it easier and more convenient for the vendor to operate. Whether that will prove out and perhaps even be translated into price reductions someday is something we're looking at."

Customers Most Suitable

Spence: "The first market we'll attack is single, standalone facilities-- those without TM staff or local area network (LAN) setups. They are ideal for this."

Harris: "Any organization concerned about reducing cost and improving information system quality is a candidate for ASP. Smaller organizations don't have IS staff and don't want an expensive IT contract arrangement, yet they need some added expertise. Larger organizations appreciate the opportunity to consolidate some of their operations and offload system maintenance and support for some applications."

Daniels: "This makes most sense for small-to-medium operators. Alliances, too, would be able to host their own servers in an operation like this, with all the member facilities connected to a large server in alliance headquarters."

Wright: "For standalone facilities, ASP means that they can leverage the IT expertise of a large company partnering with best-of-breed data centers and using leading-edge technology, while enhancing data security and eliminating the need for a dedicated IT department. For chains, it provides the ability for all data to reside in a centralized location, allowing the chain to more easily perform centralized billing and provide better day-to-day oversight of business operations."

Bolton: "ASP will make sense for the small facility in need of a big hardware upgrade in order to move up to the new-generation software. Also, the small-to-medium chain that wants to do more centralized data processing without having to add to IT staff would be a good customer for this."

Early Considerations

Malcolm Morrison

The ASP concept has great promise. It won't solve everything, but it will do something to relieve the stress of organizations' having to deal with vendors all the time. Many facilities are aware, I'm sure, of problems that can occur in dealing with a new software package--it doesn't arrive on time, it isn't functional when it does, the facility isn't fully up and running when it should be. Long-term care is an industry that is suffering from tremendous burdens of every sort, and this is one that could be reduced legitimately with ASP.

ASP is new, though, and there are several considerations to keep in mind when thinking about adopting it. For example:

* The Internet Service Provider (ISP) or ASP communications technology has to be completely reliable, or else. If the Internet or server connection is inadequate, nothing else matters.

* The vendor is a step further away from the facility's direct control. This means that, for information management, the facility is more reliant than ever on outside organizations. This makes it even more crucial to sign on with a reputable, reliable ASP vendor.

* Staff training could be an issue. An ASP provider might not want to spend as much time as many vendors do now on-site to train staff in information management operations. Or, if they do, they might want to charge more.

On the other hand, if you are receiving 24-hours-a-day, seven-days-a-week support (often termed "24/7"), the savings you can achieve with ASP can more than pay for any training you might want to conduct on your own.

It is interesting that ASP is a technology that might prove to be much more acceptable to long-term care facilities than to hospitals; the latter have so much invested in current IM systems that they cannot "throw it all away." Most LTC facilities don't have this concern. ASP might enable them to leapfrog over hospitals in IM technology.

Malcolm Morrison, PhD is president and CEO of Morrison Informatics, Inc., Mechanicsburg, Pennsylvania. Phone [phone]; fax [phone]; e-mail [e-mail].