Why DSOs should consider cloud-based software

It’s no secret that in the past three decades, the internet has changed everything. It has changed the way we communicate with each other, how we engage in commerce and the way we do our daily work.

The dental practice is, of course, no exception. Practice management software is particularly improved because of the internet, especially when the practice has multiple, disparate locations.

In previous articles, we’ve looked at how the entrepreneurial dentist can expand into his or her own DSO. An important piece of that puzzle is having software systems in place that help each site do its job. While in-house, local, client/server systems get the job done, cloud-based software provides the tools that the DSO needs to be effective and safe, and perhaps it can even save the group a few dollars.

Ease of use

The first, most obvious benefit of a cloud-based solution is that the DSO can access all of the practice’s information from any location.

“It’s browser-based, which means that you can access it from any type of device anywhere,” says Mike Uretz, a dental software and electronic health records (EHR) expert and the founder of DentalSoftwareCompare.com and DSOconnect.com. “You can access the information, you can use the functionality of any type of device from any location. And that’s not just limited to any dental location – it could mean if you’re on vacation, on a beach somewhere, or at a restaurant.”

In terms of functions and features, some practice management solutions are more helpful and more utilitarian than others. It all depends on which vendor is used.

“It depends on the company,” says Dr. Lorne Lavine, founder and president of Dental Technology Consultants. “I don’t think you can make a generalization because you get past, ‘Hey, this is on the cloud.’ At that point, you’re just comparing cloud-based with every other practice management software system. There’s no, ‘This one is easier than the other.’ Certain programs are easier to use than others, and certain programs have more features than others, but you can’t divide it up based on whether it’s cloud-based or client/server. It really depends on the individual software.”

Ease of use and the impact on the practice goes beyond just the day-to-day operations. Additional setup and training is another factor.

“Most of the cloud-based programs, in my opinion, have a more pragmatic approach to training,” Dr. Lavine says. “Usually, they dole out of the training in smaller chunks – it might be a few hours here, a few hours there. A lot of the client/server-based software still believe in closing the practice down for two to three days and training on the software. That’s usually not the most effective, but that’s not set in stone. You could go to a Dentrix or Eaglesoft and say, ‘We don’t want to do three days of training. We want to do a half-day training and then do that four times over the next two months. They’re not going to turn you away.”

Security

While the internet makes day-to-day operations easier and more robust, it comes at a price. Security is a huge consideration. In the event of a security breach or violation of patient privacy, HIPAA fines can add up to thousands of dollars. The good news, however, is that web-based practice management solutions do a great job of protecting the practice’s data.

“In my experience, the worst cloud-based practice management software provider has better security than the best dental practice I’ve ever seen,” Dr. Lavine says. “They have significantly more rules and regulations that they have to follow. It’s significantly more secure.”

“Some people question security,” Uretz adds. “Some people say, ‘Well, it’s in the cloud, isn’t that more potential for security breaches?’ And they think it they keep it in their office, it’ll be much more safe. But that’s not necessarily true in many cases. Most offices do have internet connections and therefore there is potential access to the data, just as you have in a cloud-based solution. However, the difference is that in the cloud, you’re typically going to have highly qualified experts at the center better monitoring security and monitoring all these different areas, whereas you’re probably not going to have all those resources internally. And if the data center hosting your cloud solution is certified and HIPAA compliant (which is critical), then they are typically set up with more robust security measures than you would typically have internally.

Also, if there is ever a breach, if it’s in your own practice, you’re on your own,” he adds. “It’s totally your fault. If you have a data center that runs it, it isn’t just you. It’s also the data center that would potentially be at fault.”

However, that doesn’t mean that the practice gets to wash its hands of all data security considerations.

“There are still multiple other sources of data on your systems,” Dr. Lavine explains. “You still need a firewall. You still need anti-malware protection and anti-ransomware protection. And you still need to patch everything. You still need to encrypt everything that’s on your systems. But, from a security standpoint, because you’re just using a web browser, that data is on their servers, not yours, and it may have significantly better protections in place than any practice I’ve ever come across.”

Before selecting a cloud vendor, it’s important to do your due diligence.

“Make sure the data center that hosts your cloud-based solution is HIPAA-compliant and certified,” Uretz says. “Make sure they have HIPAA security experts on staff and ask them how they do security. Although the data center, because they have experts, is much more secure than having your local server, it’s still important to vet your vendor. Many people don’t understand when you have a web-based solution, it consists of two distinct parts: one is the actual vendor software and accompanying applications that you buy, and then there’s the data center and remote IT infrastructure that runs it in the cloud. People don’t think enough about that data center component and vetting it properly. At the end of the day, you’re also contracting, in a way, with that data center.”

And while cloud vendors make it their business to stay on top of security issues, the fact of the matter is that unless there’s some sort of a breach, ignorance can be bliss.

“You’ll never know,” Dr. Lavine says. “I have friends that are high up in cloud-based systems, and they tell me about what they do and all the redundant servers they have and that all the servers they have are in secure facilities under lock and guard … But you never know what they put into place and then forget about for five years. You don’t know. You don’t know if there are any requirements from a federal or state standpoint that would require them to be on top of security, beyond what HIPAA requires.”

Cost

A major consideration when selecting any piece of software is how much it will cost - not just upfront but from day to day. Whether or not a cloud-based solution will save you money depends on the vendor.

“When you look at a monthly subscription, make sure you look at all the line items,” Uretz says. “I’ve negotiated many cloud-based deals and it’s important to understand that while the subscription cost typically covers support and the cost of using the software, there might be other types of costs that you don’t think about, like training. Another cost could be any type of interfaces that they have. There could be potentially other items that cost as well, either based on one charge or ongoing monthly fees. Make sure you ask about all the costs involved, so you’re not nickel and dimed after you buy the software.

“With typical client/server-based software, you’re paying a license fee for that software, and then you’re paying them monthly for support,” he continues. “With a cloud-based solution, it’s typically a monthly charge; it’s more affordable for growing groups because you pay as you grow. If you have three locations, you’re paying $X per month for your providers. If you grow twice as big, then you’re paying more because you have more providers. A lot of people like the subscription model because it’s more affordable, flexible and there’s a lower cost to get in; typically, everything is rolled into one. You’re not paying for a license for software. In addition to that, for a client/server, you have to pay a monthly support charge. With a cloud-based solution, you’re paying one charge per month and that’s it. From a cost standpoint, a lot of people like it because you look at it like a utility -- you pay every month to use it.”

On the flipside of that coin, Dr. Lavine observes that some cloud solutions can actually cost more.

“Of course, if you ask of the cloud-based companies, they’ll tell you something different,” Dr. Lavine says. “One of my pet peeves is a lot of cloud-based companies will talk about the cost savings. They will say, ‘You don’t need a server,’ and ‘You don’t need a higher-end computer,’ and ‘You don’t need to worry about backup’ and ‘You don’t need to worry about encryption.”  A couple of comebacks that I have to that are, first, you still need all that stuff because you have more than practice management software data. You still need all that hardware that they just said you don’t need. Second, when you have a client/server software, normally you’re going to be spending somewhere around $100 or $150 a month for support versus a web-based one. If you get all the bells and whistles that many of them have, you’re often looking at $500 to $600 a month. You’re basically paying $400 or more per month additional in order to have that web-based service - that’s $5,000 a year. And it doesn’t take long before - either there were some initial cost savings from not having to replace your computers as often or not needing a high-end computer system - those savings are gone within one year, two years at the most.

Add to that then, of course, you’re still paying that premium monthly fee as long as you have the software,” he continues. “So, in the long run, you’re always going to pay more. And if you have digital X-rays, you need a computer that can handle digital X-rays. It doesn’t matter if you’re using a web-based practice management software or not, you still need a computer with a decent processor, a decent amount of RAM and a good video card. If you’re looking for HIPAA compliance, which most people should, then you still need a server. You need a server that can track everyone’s use of the software, that can do encryption and all the things you need to do.”

In those instances where are cloud solution is more expensive than a client/server solution, it comes down to an issue of whether the practice is getting value for that expense.

“People are willing to pay for what they want to have,” Dr. Lavine says. “For many practices, a cloud-based solution is worth the premium because they don’t have to deal with the backup of that software, they get the level of support that they want, or they like the software. It makes it easier for them to add locations and providers. They don’t have to worry about updating the software on a regular basis; they’re never out of date because it’s all done on the cloud-based side. There’s certainly a number of advantages of going cloud-based.”

Unfortunately, there’s no one-size-fits-all solution. When people come to him, Dr. Lavine says he goes through a selection process. He’ll ask them questions such as which features they’re looking for in a system and what their long-term plans are.

“There’s no perfect system. I would never come to somebody and say, ‘Cloud-based is the right system for everybody,’ or ‘client/server is right for everybody,’” he says. “We may come to a point sometime in the next 15-20 years where all software is cloud-based - I wouldn’t be shocked if that happens. But right now, client/server is still far and away the bulk of all software used in dentistry, and that’s probably not going to be changing anytime soon.”

Contracts

It isn’t enough to find a vendor that offers the practice management software with the features and price tag that are best suited to the practice. Making sure that your practice gets the best ongoing service is crucial as well.

“Because somebody else is running your software in their data center, it’s very important to have a really good cloud-based contract,” Uretz says. “Cloud-based contracts are different than client/server contracts.”

Especially as the practice grows to additional locations, it’s important to negotiate your contract with expansion in mind.

“When I negotiate with vendors, I recognize that my client could potentially grow over the next two or three years,” Uretz says. “So, I try to get costs locked in as much as I can in the initial contract. Let’s say you have five locations now and your costs are $X per month. You sign a contract and you’re done. Two years from now, you have twice as many locations. If you don’t have any kind of roadmap for how those costs can increase, how they can change, then you’re kind of at the mercy of the vendor. Because when you think about it, you’ve had their software for two years, you’re not going to change it now, and then they come back and give you a price and they’re in control of it. Try to lock in pricing to the extent that you can grow as much as you can.”

Uretz warns that negotiating cloud contracts is different than other negotiations. He says it can be very technical and is likely beyond a typical practice lawyer’s experience or skills.

“The group is typically going to have an attorney that they use for their dental group,” Uretz says. “Software contracts, especially web-based software contracts, have a lot of specialized things in them. I would encourage them to not try to do it themselves because vendors understand the contract game very well, and it’ll be completely one-sided. I am seeing contracts come from general healthcare attorneys that really weren’t that good either. I would really encourage them to have a person who is experienced in healthcare software contracts and, specifically in this case, web-based software contracts because they’re very specialized. After having negotiated many of these contracts over the years, I can comfortably recommend not relying solely on your general dental attorney or trying to do it yourself because there are so many different areas that are important and you can get hurt long-term if you don’t do it right.”

Cloud-based practice management software is an exceptional option for DSOs. However, there’s no one-size-fits-all solution and practices must do their homework to ensure that they get the best selection for both their current and future needs.