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What’s in the license fee of a proprietary hospital information system?

What actually do we pay for when we purchase a proprietary hospital information system? Let’s dissect where the money goes.

1. software development. This goes to the salary of the programmers who were hired by the vendor to develop the software. Interestingly, if the software is already running in another hospital, this cost has been covered (by hospital A for hospital B). So the subsequent use of the software is technically profit for the vendor already. Some vendors however opt for a loss-leading strategy and not charge for software development. They absorb the cost of software development (and not pass this to the hospital) but lock-in the hospital to a service level agreement to run the system for a certain period.

2. customization. Most vendors already know that the software is useless right after installation. The software has to be customized to fit the language and the workflow of the hospital (names of doctors and nurses, list of drugs, drug prices, room numbers, etc). So the vendors allocate their own workers to customize the software. This cost is often passed on to the hospital.

3. implementation. Vendors already know that a customized software is like a treadmill. It’s useless unless  the health staff run on the treadmill. So the vendors hire nurses (sometimes called clinical coordinators) to train the internal health staff how to use the software (like personal trainers in the gym!). This is very expensive because it is time-consuming and frustrating. Some vendors charge for a regular monthly fee exactly to make sure that these clinical coordinators remain. Often, the clinical coordinators end up using the system and encode for the staff if needed. In some cases, these coordinators are directly hired by the hospital.

4. maintenance. If the hospital does not have an internal IT staff, then the vendor can charge for this. Again, this is recurring and is always passed on to the hospital.

Bottomline#1: The cost of implementing a hospital information system is prohibitive. The cost are the same for FOSS HIS except for two items:

  1. there is no upfront cost for licenses with FOSS
  2. in the end, the FOSS HIS is owned by the hospital rather than the vendor.

Bottomline#2: implement in modules

  1. master patient index
  2. clinical drug administration and/or results review
  3. diagnosis and procedures
  4. claims management system

Bottomline#3: if you don’t know how to do this, try it out first using FOSS hospital information systems like OpenMRS!

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