EHR Models: Traditional Licensing or SAAS?

Deployment of an EHR boils down to essentially two models: traditional licensing and software-as-a-service, or SAAS. Each has its benefits and drawbacks. While they share many similarities, their differences could be the deciding factor in choosing one over the other. Regardless of the model or system, negotiating the contract is primary to developing a successful relationship with the vendor.

Traditional Licensing Model

Costs involved in the traditional model can be significant as it will require the installation of hardware and software. This means a server, new computers and peripherals, and the software applications to run it. Back-up systems and security devices also, will be needed which could incur more costs. This type of model has been around longer, so may offer more benefits and features. Due to its customization qualities, this model may be more beneficial to larger organizations as well as practices that prefer to tailor to their unique needs. The practice group or organization generally has more control over the software.

Software-as-a-Service Model

SAAS may have appeal for its simplicity since it is web-based. It generally does not require additional hardware, such as a server. The vendor manages all data storage and back-up systems. All that is required is a computer with Internet access. It is subscription based which means monthly payments. This model may be more beneficial to smaller practices, private practices, ambulatory services, and dental offices. The vendor seems to have more control in this software service.

Multi-Site and Group Practices

Group practices and multi-site practices are more likely to need the benefits of SAAS. In mobile or multi-provider environments, accessibility and immediate comparison can be key to saving time, energy and money. A call from a patient needs to be answered regardless of current location, and even if a provider has left for the day. For that reason, cloud-based access can increase efficiency and decrease problems for group and multi-site practices.

Both EHR models offer advantages and disadvantages, but both will need properly negotiated contracts. Of course, vendors will always want the language to favor them and therefore, legal review is an absolute must for both entities protections.

“Once a practice has decided what its EHR needs are and which software is mostly likely to meet those needs, the vendor will typically put together a written quote outlining the major business terms (including the software being licensed, number of licenses/users, required hardware and fees.) However, the quote is only a stepping stone to formally memorializing the arrangement in writing” (2009).

Many contractual language terms, arrangement, and requirements are needed to define the parameters of the software service whether traditional or SAAS. These include licenses, schedule definitions, data conversion, termination, data storage, access and backup, warranties, hardware requirements, software issues, maintenance, indemnification, limitations on liability and remedies, assignment and outsourcing, and source code escrow. All of this and more will need to be considered in implementing and using electronic records.


Lessons learned:

  •  Contracts can always be negotiated.
  •  Select a model that fits your organization or practice.
  •  Understand the advantages and disadvantages to each model type.
  •  Have knowledgeable legal representation review contracts.
  •  Have a thorough knowledge of the contract language and definitions.
  •  Understand the parameters of the contract.
  •  Review the contract thoroughly before completing the transaction.
  •  Make sure the vendor meets your needs.
  • Group and multi-site practices may consider SAAS more carefully.


Daray, M.J. (2009, Dec.). Negotiating electronic health record technology agreements. The Health Lawyer, 22(2); 53-61.