Software as a service (SaaS), On Demand software, web-based software—these are all terms for the same thing: software that is provided over the Internet rather than residing on your office computers. The question is whether web-based medical billing software is the right choice for your office.

Once the exception, web-based software has become more common over the last 4-5 years and now is widely used for a variety of applications including webinars and meetings (WebEx, GoToMeeting), accounting (Quickbooks Online, NetSuite) and customer relationship management (SalesForce.com, Zoho.com), to mention a few.

In fact, the popularity of web-based software is growing so fast that International Data Corporation (IDC,) a leading provider of market intelligence for the information technology market, projected in a July 26, 2010 report that by 2012, nearly 85% of net-new software firms coming to market will be built around SaaS service composition and delivery.

Exactly what is web-based, or "On Demand" software? In the On Demand world, your business applications are delivered over the Internet by your software provider for a monthly subscription fee. There are no upfront costs; you simply pay-as-you-go for the features you use. By spreading costs over many customers, web-based software companies can better afford to invest in the infrastructure required to support higher levels of software reliability than a small business could achieve on its own. The software provider automates routine maintenance tasks such as backups, hardware upgrades, and security protection. Change is embraced and even built into the delivery of applications with regular and automatic software updates.

With On Demand technology, a medical practice or third-party medical billing company can free itself from the upfront expense of medical billing software licenses and hardware. It can get up and running more quickly and take advantage of first-class infrastructure at a fraction of the cost of managing the software in-house. Software from On Demand providers can be updated frequently in response to customer needs and the competition.

This all might sound a bit like a description of the application service providers (ASPs) in the late 1990s—companies in which investors lost so much money and whose customers were left dazed and confused. However, there is a clear difference: many of the so-called ASPs simply built out massive data centers and ran rental services for other people’s software. In contrast, today’s web-based software companies design their software from the ground up to be delivered over the Internet as a service.

Advantages of Web-Based Medical Billing Software

So web-based software is a fast-growing trend; but is it right for your business needs?

Web-based medical billing software offers several advantages that are driving the growth in acceptance of this solution:

Regular Updates—With most web-based software, you’ll receive regular updates of your software–often every 6-8 weeks–providing new features and improvements. You’ll get these updates without any additional charge and without needing IT staff in your office to upload it. One Kareo customer has said, "The quarterly updates are almost like Christmas… ‘What will Santa bring us this time?’"

Data Security—Web-based medical billing software provides regular back-ups and high level security, something most smaller medical practices can’t afford. You don’t have to worry about securing your data from disgruntled employees or whether your back up ran last night; with web-based software, all of that happens automatically without any direction or involvement from you. And most web-based software companies provide a level of security for their data centers that a medical practice or smaller medical billing service could never hope to achieve, with keycards, fireproofing and other high standards that prevent data loss.

Reduced IT Staffing Demands—As described above, one of the biggest benefits of web-based software is the reduced need for IT staff’s involvement, freeing that limited resource for other vital tasks. With simple installation (generally a sign-up that takes just a few minutes), updates that are handled by the software vendor and back-ups and security also handled by experts, your IT staffing demands are minimal.

Accessibility—Web-based medical billing software can be accessed from virtually any computer with an Internet connection, which means you can check on the status of your business from home, on vacation, or anywhere you happen to be. Plus, this accessibility means your providers can access their data easily from home or office, and your staff can work off site as well. After switching to web-based software, Keith Davison, owner of Aztec Medical Billing Service, said, "Now my billers work from home the hours they want to work as long as the work gets done. They can work in their pj’s or an evening gown or anything between. They love it! Plus, our overhead for the business is much less with no office to maintain."

With the current incentives for EMRs, many practices are certain to turn to web-based software as a more affordable, easy to use solution. The rapid growth of Practice Fusion, the free, ad-supported EMR with which Kareo partners, is a prime example of how internet-based software can be used to provide a service which could not necessarily be afforded by smaller practices.

Evaluating Internet-Based Medical Billing Software for Your Office

In many ways, evaluating software requires the same considerations whether the software resides on your own servers/computers or on the Internet. The best place to begin is determining what your requirements are, ranking them by priority in terms of "must have," "want to have," and "not important." Some of the key points to consider include:

Ease of Use—You want a system that won’t take months to implement and won’t frustrate your staff. Many software companies will allow you a free trial; this can be an important way to see how user-friendly the system truly is. Be sure to have the staff members who will actually be using the system test it and give honest feedback.

Off-Site Connectivity—Do you want to have access to your software and data from any location? If so, then web-based software may better meet your needs. Also, be sure that your office can support the bandwidth required by web-based software. With broader availability of high-speed Internet, this isn’t as much of an issue as it was a few years ago, but you need to insure that your Internet connection will support consistent use of a web-based software. A system that is too slow or frequently down will frustrate your staff and slow down your office processes.

Transparency—Busy physicians and office managers don’t need complicated systems that make it difficult for them to track the practice’s financial health. Be sure the software you’re considering provides the reporting you need, or the capability to quickly generate custom reports that meet the practice’s needs.

Affordability—Be sure to consider the full cost of either type of system. Are there set-up costs and a long-term contract? Some web-based medical billing software (such as Kareo) does not require up-front fees or contracts, and this provides you with a greater amount of flexibility than those companies that require contracts and fees.

Security—How will you insure your data is secure and backed up on a regular basis? With web-based software, your data is secure off-site and automatically backed up daily, without you or your staff needing to do a thing. If you purchase software that is not web-based, you will need to arrange for regular backups and HIPAA-compliant security.

Training and Support—Be sure that the system you select provides the training and support your staff will need in order to be productive quickly. Most web-based software companies provide online videos and resources, as well as live training and support via both email and phone.

The key to choosing the right medical billing software is to clearly identify your needs and evaluate the various packages on how well they meet your key and peripheral needs. Don’t be distracted by bells and whistles that you don’t need; look for those features that will make or break your business, and then choose the software that best delivers those features. Increasingly, you may find that software will be web-based.