When a SAAS EHR Software Goes Belly Up

I recently posted my belief that the EMR and EHR industry is about to shrink. This can happen in a number of ways, but will most often happen through either a merger or a company just closing its doors.

There are definite challenges associated when your EMR or EHR company gets merged into another company. I’ll save those discussions for a future post (or would welcome a guest blogger to write about their experience with it), but in this post I just wanted to raise awareness about what could happen if the company hosting your SAAS EHR goes belly up.

When selecting an SAAS EHR, it is important to learn how the EHR company is funded. Depending on how your company is funded will give you a good idea of how long they’ll be around. A company that is running off of venture capital funding or new sales could run into real troubles in this current economic crisis. Once an EHR company runs out of money they’ll generally have the choices listed above: sale/merge the company and assets or shut down the company. Of course, an EHR company that is structured to survive on reoccurring revenue is in a much stronger position financially and will weather the economic crisis better.  In a future post I’ll discuss some warning flags that might indicate that your EHR company is in trouble.

Imagine what effect it would have on your clinic if your hosted SAAS EHR were to close their doors.  An EHR becomes as integral to a practice as breathing.  You can only hold your breathe so long before you start experiencing some major consequences.  Have you thought about a plan in case this happens to your EHR company?  Do you even have the rights to the data in your SAAS EHR company?  What would you do with that data if God forbid, the company was going to shut down?

The good news is that I believe most SAAS EHR companies will try to give you at least some notice before shutting down the company.  However, you shouldn’t expect more than a month’s notice.  If a company is shutting its doors, then every month their in business their losing more and more money.  So, you better be prepared with a plan of what you’ll do in the event this happens.

Unfortunately, mergers or sales aren’t that much better than a company shutting down.  Depends on the merger or sale, but often the software from the company being purchased goes from being highly developed to mostly maintained.  Help requests will often go unanswered or at least a delayed response while the companies figure out the best way to merge the two companies.

Planning for this even is even more serious when using a SAAS EHR software.  In a hosted EHR situation, even if the company goes under you can still use the EHR for as long as you want.  You just won’t get support if something goes wrong with the software.  This gives you a longer runway to be able to plan the move to another EHR system.  An SAAS EHR software has a much shorter runway to make a change.

I wish these things weren’t a reality.  It would be nice to think that every EHR company is going to do great and be around forever.  However, it’s just not the case.  EHR companies of any sort are still a software company.  In fact, many are startup software companies and the statistics don’t lie that the majority of software startup companies fail.  Are you prepared in case your EHR company fails?

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

2 Comments

  • As a software industry veteran, it’s my view that I don’t think there’s any “risk” difference between choosing a SaaS or “traditional, on-premise” software solution for EMR/EHR. In fact, one could argue that on-premise vendors have been offering F.U.D. (fear, uncertainty, and doubt) like “your service will just turn off” to try and convince their prospects’ already over-burdened IT staff w/in clinical environments to attempt to run yet another software software solution on their own.

    Further, should consolidation occur in this space, it will likely be prompted by one vendor’s desire to acquire the other’s customer base, and so the last thing the acquiring firm would want to do is to anger their new customers. My 2 cents on package selection is to understand the “momentum” of the vendor (are they becoming more and more popular or are they stagnating) as well as their financial situation (debt, balance sheet), but to do so only as a secondary thing & after sorting through which package best meets your clinic or hospital requirements.

  • Dave,
    We can both agree that EMR vendors have been using FUD to sale their EMR software. It’s unfortunate when an EMR vendor overwhelms someone with these things.

    I do disagree with you that there isn’t any “risk” difference between SaaS or on site EMR. At a minimum they are very different risks. My point of this post really isn’t to discourage SaaS in favor of some other EMR. It’s more about making doctors aware of the potential risks of an SaaS. Hopefully this awareness will help them make a contract that works well and helps them plan how to get regular backups of their data, etc.

    When consolidation occurs, the new vendor does want to keep the customer base, but all too often they do a poor job at that and without question just before an acquisition response times slow and often don’t pick up until after an acquisition. Of course, this is true regardless of the type of EMR.

    I love your description of “momentum.” That’s a great way to describe it.

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