Hospital information technology departments that are too timid for marriage or fear losing the independence of single life do have less daunting alternatives to full-blown, risk-laden outsourcing partnerships. One of those alternatives, with its increasingly familiar acronym ASP, enables healthcare providers to bring in outside computer help without ceding control to a vendor.
Application service providers have come to symbolize a new way of delivering information technology services, or at least a new take on an old way. An ASP is essentially an application you rent instead of buy.
Rather than spending millions on a new enterprisewide software implementation, proponents say, you pay on a per-transaction or per-month basis for someone else to host, run and manage the software. Then all you have to do is use it. No more headaches or unexpected system failures. No more outrageous capital expenses to install systems that cost more to troubleshoot once in place.
Those are some of the arguments in favor of ASPs, but real interest in the technology has not been as hot as the rhetoric. According to Modern HealthcareOs annual survey of information systems trends, only 10% of the 212 healthcare provider organizations polled are using ASPs as a vehicle for accessing vendorsO software applications (Modern Healthcare, Feb. 5, p. 66).
And that low level of penetration can't be blamed on the newness of the technology. Asked about their most important plans for the next year, just 4% of respondents named ASPs as a priority for developing an integrated delivery system.
Finding the right solution
Here are some of the varieties of ASP solutions that vendors are trying to package for healthcare providers:
* Single application -- an ASP vendor provides applications focused on a specific task, such as patient scheduling.
* Generic computer functions -- a customer engages an ASP for remote management of applications that are not industry-specific, such as e-mail, word processing and Microsoft Office software.
* As traditional outsourcer -- companies such as Dallas-based Perot Systems, known for their traditional outsourcing services, add an ASP option to the mix.
* Focused on a constituency -- a package of applications is designed to handle the bulk of operational needs for a specific healthcare environment, such as a physician office.
Is it outsourcing, though? Some observers, despite agreeing that ASPs represent several ways to hand off responsibility to an outside firm, are hesitant to lump ASPs and application hosting into the category of outsourcing at all, arguing that they're different animals.
"ASPs are strictly a service," says Peter Weil, vice president in the healthcare information technology division of Atlanta-based Kurt Salmon & Associates. "An ASP gives the (chief information officer) the outside tools (he needs) without taking away accountability or span of control."
Also up for debate is the degree to which an ASP can be called by that name if it doesn't employ the Internet. While the number of vendors offering ASP services is rapidly growing, some argue that if the ASP doesn't use the Web, it's no different from the remote hosting services Shared Medical Systems (now a division of Siemens) and other companies have been providing for years.
"ASPs are something that is Web-based," says Mike Davis, an analyst with Stamford, Conn.-based Gartner. Some vendors offer products they call ASPs, he says, but what they actually deliver is a mechanism that enables non-Windows machines -- including the "dumb" terminals in place at so many hospitals -- to run Windows-based applications that reside elsewhere.
Security and bandwidth
The Internet aspect is an integral part of the equation because of how much less it costs as a transmission option in return for some tradeoffs. The Internet does not offer the security available through dedicated lines, and it doesn't have the high "bandwidth" -- the capacity to send large files fast -- that private communication lines can supply. However, using the Internet is cheaper than installing and maintaining those lines.
"The Internet is low-bandwidth, unsecure and unreliable," says Daniel Spirek, president of TriZetto's ASP Solutions division. "If customers use dedicated circuitry to run an application, it's secure and reliable but expensive."
Using the Web to access applications may not be easy for healthcare facilities where the Internet infrastructure is weak, others added.
"Even though the proposition of Internet-based applications sounds nice, there can be some work (healthcare organizations) need to do from a desktop and network standpoint first," says John Kijewski, vice president of data center and ASP services for Siemens, the parent company of Malvern, Pa.-based SMS.
Regardless of whether ASPs use the Internet, supporters of the concept believe it offers a way to reduce IT costs and secure a performance guarantee.
The ASP model "allows us to focus on our core competency, which is running medical practices," says Al Harek, vice president and chief information officer of Talbert Medical Group, based in Costa Mesa, Calif. A multispecialty group practice with 110 physicians, Talbert uses an ASP application suite that handles practice management functions including office scheduling, patient billing, membership tracking and other business operations.
"The system isn't very sophisticated but it's pretty cheap," Harek says.
Talbert pays TriZetto approximately $100,000 per month to run its nonclinical applications, Harek says. The medical group pays on a subscription basis -- each new patient logged into the system adds incremental costs, as does each new computer added to the network.
Formed when the failed physician practice management company MedPartners Provider Network divested it in 1999, Talbert found itself in the position of needing to improve information technology but not having a lot of capital or employees to do it.
"We had so many fires to put out (after the MedPartners divestiture)," Harek says. Now, he adds, information systems represent "the most stable department we have in the company."
For Talbert, managing some 500 computer terminals and a physician practice management system is something the medical group no longer worries about. Through its relationship with TriZetto, Talbert outsources maintenance of its physician practice management system, as well as help-desk operations and network support.
Before TriZetto, Harek estimates, Talbert was spending between 4.5% and 5.5% of annual revenue on information technology. He believes that percentage has fallen to about 3.5%.
"I feel like weOre getting a pretty good bang for the buck," Harek says.
Outside the physician office setting, ASP solutions may not be as viable, observers agree. That's largely because practice management systems are easier to outsource than an entire suite of applications.
"Smaller hospitals can't afford really good solutions, so if someone comes out with a good ASP model for hospital information systems, it would really take off," argues Gartner's Davis.
The problem, according to Davis and others, is that the more complex information systems of a hospital are not as well suited for the ASP approach as are those found in a physician's office.
Because many of the emerging ASP companies offer software designed to address a single issue -- such as billing or decision support -- a large integrated delivery system would have to maintain relationships with multiple ASP vendors to handle a range of functions.
"The biggest problem most places have is interfacing multiple applications from different sources," says Weil of Kurt Salmon & Associates. "The companies that will really succeed are not the newcomers but the traditional ones like HBOC, SMS and Eclipsys. They can deliver to you anything from general ledger to nursing. What you want from an ASP is to deal with one or two parties at most."
Even some of the ASP vendors agree on that point.
"As a CIO, if I recognize I need 25 applications, the last thing I want is 25 single ASP vendors," TriZettoOs Spirek says.
Integration is key
The ability to integrate with other applications at the remote site may be one of several things that distinguishes traditional remote computing solutions from those that fall under the ASP umbrella.
Remote computing typically refers to a situation in which the vendor not only provides an application suite but also monitors network performance and provides integration among disparate systems, such as registration, materials management and supply procurement.
"An extraordinary level of integration is required between various applications," says Siemens' Kijewski. "One of the challenges (for ASPs) is the ability to provide not just the application but the ability to integrate it with other applications the customer relies on."
Among other factors differentiating ASPs from remote computing, Kijewiski says, is the degree to which the vendors can independently provide their services.
Because many ASP companies do not maintain their own data centers or network infrastructure, they often depend on outside vendors. That, Kijewski says, can lead to gaps in response time.
"The ASP is responsible for providing satisfactory availability and performance. If they're relying on numerous partners, there are more break points," Kijewski says.
For TriZetto's customers, Spirek says, ASPs "eliminate the traditionally high capital costs of consultants and application acquisition (and provide) ongoing support on a predictable basis."
On "the other side of the coin," Harek says, "TriZetto employees do not report to me. I cannot grab a technical person and say 'fix this.' Their goals and ours might not be the same."
Even so, he adds, "we've done a pretty good job of clarifying our goals and expectations on an ongoing basis."