MedSuite - The On Demand Software Model

A revolution in the use of shared computing resources that uses the internet as a wide-area network is underway.  Most readers are familiar with using the internet to "surf-the-web" or send email.  On Demand software is a business application like an accounting system or a medical practice management system that is used over the internet.  The server-side of the application (databases, business rules, etc.) is hosted in a separate location from the end-users of the application.  The client-side of the application (user-input) may access the application from virtually any place that has an internet connection.  With On Demand software, the internet is used as a transport layer to send data back and forth between client and server.  The data resides on the server-side.  All of the processing of data, such as generating claims and statements, producing reports, etc. is also done on the server-side.

A company that "hosts" or offers On Demand software is often referred to as an Application Service Provider or ASP.  The ASP handles backups, application software updates and upgrades, hardware maintenance, operating system upgrades, and all of the other tasks that can make having a system in your office a burden.  During the internet bubble of the late 1990's, the first generation of ASPs acquired somewhat of a bad reputation that was not totally undeserved.  Many of these ASPs were offering legacy "turn-key" applications which used the internet as the transport layer.  These legacy applications were based on older technology that were using operating systems like Citrix or Microsoft's Windows Terminal Server to extend the life-span of their aging applications.  In addition, many of these first generation ASPs were venture capital funded internet start-ups simply trying to cash in on the internet bubble.  Only in rare cases were these ASPs using new technology designed for the internet.

Most turn-key practice management software products are licensed on a "per-seat" basis where the client pays for each user (or seat) that will access the product.  In the On Demand Software Model, the client is usually charged transaction fees (sometimes referred to as "per-click" fees) for the use of the On Demand software as opposed to the large up-front costs and long-term commitments associated with the "turn-key" application model.  Almost all of the first generation of ASP's were existing companies that historically sold turn-key systems.  Their expense structure, the so-called "burn rate", was not built around the concept of pay-as-you-go transaction fees.  They needed the cash infusion that occurs when a turn-key system is sold.  This first generation of APS's were destined to perish simply due to the fact that their funding mechanism would not last long enough for their monthly transaction fee revenues to catch up to their monthly burn-rate.  In addition, if one of these first generation ASP's was a public company, they had to have the cash infusion that occurs when a turn-key system is sold to satisfy the demands of investors and Wall Street analysts.  "Wall Street" would not accept a reduction in revenue for two to three years while the ASP built up their recurring monthly revenue stream.

MedSuite's software is licensed on a transaction fee basis.  These transactions include Anesthesia Cases, Encounters, Electronic Claims, and Electronic Remittances.  Client license fees are solely based upon the client's actual volumes of these transactions.  We believe that the transaction based pricing model creates an environment in which benefits both the client and MedSuite.  We have to earn our client's business every day.