Every three to four years, healthcare practices go through a refresh and upgrade cycle that causes stress on human and financial resources. As an alternative to the traditional refresh cycle, many practices are evaluating their cloud options and how it affects those same human and financial resources.
In Part I of our IT costs series, we explored how to know if your practice is ready for a hardware or software refresh. Part II discussed three considerations when planning your refresh. In this final part of our series, we analyze the total cost of IT ownership and how it compares to a private cloud model.
Below is a real cost analysis for a 20-provider family practice with 100 total users and 2 clinic locations. After evaluating their options, the private cloud offered them predictable costs and also provided a strategic IT partnership that they could rely on, removing the IT burden from the practice administrator.
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Midwest Clinic – 100 users with EHR | |
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This summary includes a physical, non-virtualized 8 server environment, (2) domain controllers, (1) SQL database server, (1) file server, (1) Exchange mail server, and (3) Remote Desktop Service servers. This assumes that the servers will be refreshed within the coming 5 years. | |
| Cost | |
| Support: | |
| IT Help Desk Tech | $40,000 |
| SQL / Application / Server Specialist | $60,000 |
| Storage, Backup & Recovery Tech | $70,000 |
| Equipment and Utilities: | |
| Racks | $630 |
| Server Monitoring / 24×7 response ($149 per server) | $62,580 |
| Cooling Hardware | $1,200 |
| Utility Consumption $15/Server/Month | $6,300 |
| Back Up Power – diesel generator and maintenance | $16,100 |
| Software: | |
| Windows 2016 Std. OS | $6,600 |
| Windows Server 2016 Cient License – Qty 100 | $3,874 |
| Exchange 2016 Server Standard | $722 |
| Exchange 2016 User Client License – Qty 100 | $8,952 |
| Remote Desktop Client License – Qty 100 | $13,435 |
| SQL Ent 2016 Core License – Qty 4 | $27,660 |
| Backup Software (8 servers 2TB protected) | $219 |
| Hardware: (new / refreshed) | |
| Terminal Servers (Qty 3) | $12,375 |
| Domain Controllers (Qty 2) | $6,210 |
| EHR SQL Server (Qty 1) | $9,758 |
| Exchange Server (Qty 1) | $5,789 |
| Secure Tape Storage | $1,242 |
| Storage Area Network (SAN) | $52,000 |
| UPS | $6,710 |
| Support Total (Yearly pay increases taken into account) | $920,775 |
| Equipment and Utilities Total | $86,810 |
| Software Total | $61,462 |
| Hardware Total | $94,084 |
| Total 5 Year Projected Cost |
$1,163,131 |
When working with practices to determine the best computing model, we focus on four categories:
- Support
- Equipment and Utilities
- Software
- Hardware
These categories represent the full spectrum of costs associated with their IT environment.
Here’s how to assess each for your organization:
1. Support
As practices grow, implement more technologies and open new office locations, their need for Help Desk support increases. Additional users and locations means a greater need for workstation and device support, while new technologies like server and storage virtualization also calls for an expert in those technologies.
These experts can be hard to find and expensive to retain, especially in smaller communities or underserved population areas.
Cloud providers offer teams of specialists with a focus in clinical IT. For your multiple locations, they offer a networking team specializing in ensuring those clinics are connected and accessible. For your new EHR deployment, a cloud partner may offer support staff who is familiar with the intricacies of that specific application. The breadth and depth of expertise that a cloud provider offers can seldom be hired internally.
The cost-analysis above shows the sample salaries of three IT team members that would be required at the 100-user practice if they managed their IT internally.
2. Software
One of the greatest cost savings with private cloud is software expenses, especially if your cloud partner is a Microsoft Partner. Microsoft partners often have access to pricing models that are not available to end consumers. This allows the partner flexibility in maintaining costs over time, even as tech changes, where a standard enterprise would require re-purchase of licenses and software assurance for license mobility.
Software CALs (Client Access Licenses) are required on each server for each user and can add up quickly. In a cloud environment, these fees are often included in your per user, monthly fee.
In addition, software versions are always the most current – at no additional expense. That means if your practice has workstations running an old version of Windows or Microsoft Suite, you’ll be upgraded to the most current version at no additional cost.
3. Equipment and Utilities
Building your IT environment internally not only takes real estate, but also costly equipment like racks, cooling hardware, monitoring controls and the commonly overlooked expense power consumption.
In a cloud environment, this is all handled by your cloud partner. They take on the responsibility of maintaining a data center (or multiple data centers) that provide an optimal atmosphere for your hardware.
Safeguards like waterless fire suppression, biometric fingerprint access readers and hot aisle cold aisle layout are common in cloud data centers, but are not economically practical within practice data centers. Cloud providers also typically have more than one data center, providing fail-over capabilities and redundancy in the event of a natural disaster.
4. Hardware
Hardware costs can add up quickly and requires a great deal of maintenance, monitoring and management. Depending on your number of users, complexity of applications and data storage requirements, practices are required to invest hundreds of thousands of dollars in hardware. This cost is almost always a capital expense, putting a financial burden on the practice, limiting their ability to invest in other areas to advance their quality of care.
In the cloud model, hardware resources are scaled to the exact amount needed by the practice and included in a monthly, per user fee. When your practice implements a new technology, requiring additional resources, they’re added quickly and efficiently. This utility-based model means you’re not paying for resources you’re not using. For example, in the cloud environment, you only pay for the amount of storage your practice requires. Conversely, if your practice purchases a SAN, you’re paying for a lot of storage capacity that you’re not necessarily using.
The cost-analysis reflects hard costs that practices incur in their IT environment, but doesn’t take into account the intangible benefits of the private cloud. For instance, when your IT environment is solely configured and managed internally, your practice has no backup for integral members of your team. What if your help desk tech quit or your server administrator had an unexpected medical leave – how would you cover their workload? Working with a private cloud provider offers a seamless experience without the risk of turnover or unexpected staff absences.
Experienced cloud providers can also serve as a strategic IT partner, providing guidance and consultancy on compliance issues, new technologies and insight into how other practices of your size and specialty are gaining efficiencies.
If you’re facing a hardware refresh, working on your IT roadmap or curious about the cost of moving your practice to the private cloud, be sure to reach out to us for your own cost analysis.