Increasingly, the model known as software as a service is becoming the first choice for a number of pharmacies that want to reduce the amount of time spent maintaining in-store systems. Read about what vendors are offering and how pharmacists are beginning to put SaaS into action every day.

A Little History

It has become standard practice for pharmacists to have the software and databases they use to run their stores located on-site. This means maintaining servers and client workstations, as well as working with vendors to make sure the software is the latest version. This is what can be called distributed computing. But there’s another way to go: software as a service (SaaS), which is also known as the application service provider (ASP) model or, more generally, as on-demand computing. This is a model that harkens back to the early days of pharmacy computing, when the computers that could be installed in a pharmacy were so basic and any real processing power so expensive, that a centralized online model was the only one practical. Now things have come around to where pharmacists are choosing SaaS not because they have to, but because it can offer some distinct advantages.

What Is SaaS Now?

QS/1 Senior VP Tammy Devine offers a very simple description of what differentiates SaaS from an in-house or a host system: The pharmacy doesn’t own the software; instead, the user pays a contracted monthly fee, and in some cases (as with QS/1), so much per transaction above this. Both the software and the data reside on an off-site server that is managed by the vendor. “All the pharmacy needs is a workstation,” explains Devine. “There are no servers to maintain and access is over the Internet, but the pharmacy isn’t logging on to a Web site. We provide a more secure connection with the necessary encryption.”

The nature of this connection is important, and RNA Health Information Systems President Gary Schoettmer explains how it works for his company’s SaaS offering this way: Users essentially take over control of a computer at the professionally managed data center. “This is virtual,” says Schoettmer. “We use a remote desktop protocol, which makes the workstation a thin client.” What this means is that all the data processing happens on the host computers and only screen images, keyboard, and mouse input get transmitted over the secure connection. “From a throughput standpoint, pharmacy is a data-intensive business,” Schoettmer continues. “This kind of thin-client protocol makes it very workable because you don’t need the bandwidth that would be required to move all the data across a wide area network.”

Moving software and hardware management off-site in this way can make a lot of sense for a pharmacy for many different reasons, notes McKesson Pharmacy Systems President Stanton McComb. “The core business needs of all pharmacies — third party, regulatory, workflow — are constantly in flux,” says McComb. “A distributed system can make it challenging, expensive, and time-consuming to keep up with all this. A centralized system leverages modern technology and adapts to new challenges so much more efficiently.” In this context of constant change, it can be very smart to move the day-to-day technology issues out to a partner that specializes in them. “With SaaS you are minimizing the technical expertise required on-site,” says RNA’s Schoettmer. “This can make total cost of ownership significantly lower.” For example, going with SaaS means a pharmacy’s IT staff no longer has to manage servers or software updates. There’s also no need to buy servers every few years, which helps level out cash requirements. “SaaS users know what their cash outflows are going to be for the life of the contract for both the hosting and the software,” says Schoettmer.

Other advantages can include getting pharmacies completely out of the data backup and security business. “Professionally run data centers are very secure,” says RNA’s Schoettmer. Not only do you have the data off-site, he points out, but that data is then typically replicated at a secondary storage facility. Overall, then, SaaS can have a positive impact both on startup and ongoing technology costs. “This has appeal to pharmacists who don’t want to tie up capital in computer hardware and software,” notes QS/1’s Devine. And this turns out to be a model that offers benefits to a variety of pharmacy operations, large and small.

Who’s This For?

QS/1’s Devine tells an interesting story about how the company got started with its SaaS offering. “We learned that the systems we’d installed in schools of pharmacy practice labs that were not being used for real transactions were not being updated as new software releases were distributed,” she says. One such example is the community practice pharmacy lab at the University of South Carolina (USC) School of Pharmacy, which is run by Nancy Culberson. This lab allows first- and second-year students to gain experience handling prescriptions. With about

20 laptops at 40 lab stations, Culberson would face a daunting task keeping everything running smoothly and up-to-date without QS/1’s SaaS offering. “The bottom line,” says Culberson, “is that I don’t have to spend my time doing updates or chasing down problems.” As a pharmacist who ran her own store, Culberson knows well what it means to do her own upgrades. “I’d be there until four in the morning and then have something go wrong,” she says. “I dreaded upgrades.” Now, in the USC lab, she comes in and there’s a note on the screen telling her there’s something new and how to access it. Culberson also likes having QS/1 manage the drug database. In Culberson’s lab, time saved on IT headaches is being reinvested in the curriculum, which will soon feature more hands-on experience for students with medication therapy management, drug utilization review, and disease management and how it works in community pharmacy. The experience with SaaS should also benefit students as they learn how to minimize time spent on IT issues in their community practices, and instead focus their efforts on their important clinical roles. “This is what’s coming and what will fulfill and enhance our students’ careers in the community setting,” says Culberson. Of course, it was readily apparent to QS/1 that community pharmacies could also benefit from such a service, with the result that its NRx product is now offered either as a service or an outright purchase. “We thought this would have appeal to the smaller pharmacies, but found that quite a few higher-volume pharmacies were the ones taking advantage of it,” Devine notes.

RNA has also found that demand for the SaaS version of its recently released Helix system exceeded what was originally anticipated. “Our idea was to offer a low-cost system to pharmacists thinking about getting into long-term care,” says Schoettmer. “We looked at SaaS mainly as an entry point.” This has happened, but RNA has also found that larger operations see SaaS as a viable alternative, not only as an efficient way to outsource technology management, but as a way to get chain functionality without the need to invest in a central data center as well.

Q Pharmacy, which uses McKesson’s EnterpriseRx, offers a perfect example of a pharmacy that has looked to SaaS not as a steppingstone to an in-store system, but as the foundation for an innovative business model that company president Carlos Tami calls “personalized-care pharmacy.” This has the concept of centralization and SaaS at its heart. Focusing on the senior population and multiple-prescription patients, Q Pharmacy has grown to 11 locations since opening in 2000 — 10 retail pharmacies in physicians’ offices in San Antonio, Texas, and one recently opened retail pharmacy in a Houston independent supermarket, Foodarama. “We made a strategic decision at the start to find a solution that tied into this business model,” says Tami. “We wanted scalability and access to the system from anywhere at anytime, as well as a low cost of IT support and infrastructure.”

Connected and Flexible

Q Pharmacy’s Tami points to another important benefit of SaaS. “There’s great opportunity in the SaaS model to connect to innovative solutions via Web services,” he says. “It has allowed our parent company, Muro Group, to create solutions that not only help us run our pharmacies, but that would also be available as SaaS to any pharmacy that wants to use them in the future.” What this means is that not only do Q Pharmacy locations use the SaaS EnterpriseRx pharmacy management and workflow software, but also Muro Group’s business intelligence, administrative services, POS, and customer service solutions as well — all of which are provided remotely via Web services. “We’ve also been able to tie into EnterpriseRx data with an SaaS financial system and CRM solution that Muro Group manages for us,” says Tami. “This gives us up-to-date daily information, which allows us to provide proactive, easy-to-use, and reliable services to our patients.”

Brandon Shuey, president of KeyCentrix, agrees that there are benefits to leveraging SaaS to offer a set of business intelligence tools to multistore independents. “There are many pharmacy groups whose revenues can’t justify the cost of in-house business intelligence tools,” says Shuey. “They don’t have the resources to dedicate to mining a data warehouse, but they can still take advantage of the benefits these tools offer, such as finding missed opportunities and providing key performance indicators.”

One of the strengths of SaaS, then, is its ability to help pharmacy systems adapt to emerging needs. As one example, McKesson’s McComb points to the new portal paradigm, such as those for e-health records and MTM. “Pharmacies need to be able to integrate and connect with these new services, which are frequently SaaS themselves,” he says.

Q Pharmacy is gaining first-hand experience with these benefits, according to Tami. The Web-service-based connections to Muro Group’s front-end and back-end products have allowed Q Pharm- acy to develop solutions for chronic disease management programs at independent supermarkets. The ease with which this SaaS model allows Q Pharmacy to develop and market these solutions means more opportunities to care for customers’ needs. “It is the ability to connect that makes this work,” says Tami.

Concerns

Of course SaaS is certainly not a new concept, and its adoption has been slowed over the years by certain concerns about its viability for pharmacy. The validity of these historical concerns is waning, according to Stanton McComb. Take the uncertainty around connectivity and uptime. “If the network is down there’s a perception that the system is unavailable and the doors have to be closed,” explains McComb. “This isn’t the case. In our EnterpriseRx system, there’s a downtime subsystem that lets you continue to fill prescriptions and do all the checks if any part of the off-site system is down, and when it comes online again these prescriptions move through the workflow normally. We also monitor our system availability, and in the first quarter the network was up and running 99.97% of the time.” RNA’s Gary Schoettmer agrees that connectivity concerns are outdated, with the options and bandwidth available today. Moreover, there shouldn’t be any concern about SaaS causing the filling process to slow down. “Your max throughput is governed by the narrowest point of your bandwidth,” explains Schoettmer. “Data centers have very robust connections and the resources to maintain balanced networks, which means that there isn’t any bottleneck.” In fact, you can expect to get the same level of performance from SaaS as if you hosted on-site, according to USC’s Culberson. “The system is as fast as your hardware allows it to be,” she says.

Connecting

Talk of centralized systems may bring to mind expensive private networks, another concern that is a thing of the past. Schoettmer points out that a virtual private network (VPN) connection to the data center over commercially available high-speed Internet is all you need for RNA’s offering. VPN and other commonly available secure connection protocols safely encrypt data as it passes over the Internet. “VPN shouldn’t sound intimidating,” says Schoettmer. “But we can even come in and assist our users in setting one up.” Using the Internet means no special IT staffing to manage a private network or, for multistore sites, any need for inter-store networking. Each store in a group simply connects to the data center via the Internet. This is another example of the scalability that SaaS offers and that is so important at growing companies such as Q Pharmacy. “Each location is already networked, and it will be easy to set up EnterpriseRx in any new site we consider, so using SaaS is very convenient and efficient,” says Carlos Tami.

Safe Data

Those interested in SaaS don’t need to worry about security, data integrity, or data ownership, either. “Data ownership isn’t a technical issue,” says McKesson’s McComb. “It’s a business issue. In our SaaS contracts customers retain 100% ownership of their data. We don’t share it without explicit permission, and if and when they choose to leave, we don’t get in the way of moving the data.” Centrally managed data is definitely secure. “The commercial data centers that host SaaS applications and store the data exist to provide the best security and integrity,” says RNA’s Schoettmer. And, adds QS/1’s Tammy Devine, SaaS means that any size pharmacy gets this commercial class backup and security, including virus protection, at a reasonable cost.

One Size Fits All?

Another misconception out there is that SaaS products are one-size-fits-all. Not necessarily, says RNA’s Schoettmer. “There are the same options for customization of functions for in-store and SaaS systems,” he explains. “For long-term care, this means we can still customize things like med sheets and labels.” The process is the same for either model. Stanton McComb addresses this concern frankly: “It is a bit of a myth that any software you buy off the shelf is customizable,” he says. “It’s not so much about customization as finding a vendor who is responsive to your needs.” The more flexible the underlying technology is, the more readily it can adapt to new configurations, according to McComb. “Can you change fields or the way a screen looks? On a centralized platform, updates like this are easily done.” And just like other software, SaaS products generally offer users the ability to turn features on and off to tailor applications to their needs. For example, according to Brandon Shuey, KeyCentrix’s business intelligence offering includes preconfigured data mining tools that do not require expertise, as well as more advanced tools that allow power users to fully use the system to extract maximum value.

Even More SaaS

You don’t have to be looking for a full-fledged pharmacy management system to take advantage of SaaS. For example, QS/1 also offers its HME and POS software by SaaS, according to Tammy Devine. There are other offerings out there, too, that target specific needs.

For instance, Shuey notes that KeyCentrix’s adjudication services are its most popular SaaS offering. This allows customers with nontraditional pharmacy business models that need adjudication without pharmacy workflow or a pharmacy management system to process prescription drug insurance claims without having to develop and maintain the complex business logic needed for the task. For example, Med Management Group (M2G) manages physician-owned pharmacies from its headquarters in Nashville, Tenn. “We help establish and credential the pharmacies, and then provide things like staffing, claims processing, help with prior authorization, and patient marketing tools,”

explains M2G president Norman Noffsinger, a pharmacist with 35 years’ experience. And while M2G has developed its own prescription-processing services — run, incidentally, as a Web service off a Sequel server that M2G operates — Noffsinger felt that it wasn’t necessary to reinvent the wheel and build an adjudication component. Instead, M2G went with the adjudication and label printing Web services offered by KeyCentrix. The pharmacies that M2G manages generally dispense specialty products, often for rheumatology or oncology. This adds a need for strong prior authorization capabilities to the already complex and ever- changing process of claims billing. According to Noffsinger, using the SaaS model also means that adjudication and label printing can be done securely from anywhere, even from a mobile device such as a BlackBerry. M2G’s growth provides another example of the scalability SaaS allows. Noffsinger explains that the company went live in 2007 and already serves four physician groups with this model, with strong growth prospects in the near future that SaaS will underpin.

Clarence Lea, vice president at HCC, outlines a few other offerings available by SaaS, specifically 340B inventory management; competitive formulary management — for example, for $4 copays — and patient education materials at the point of dispensing. This last offering is a great example of a sophisticated tool that SaaS has made very low maintenance. It is designed to allow for content dynamically tailored to, among other criteria, age and gender, NDC, and new or refill prescriptions. “The multiple event triggers and program changes are controlled centrally rather than having to be distributed to multiple systems,” explains Lea. What’s clear is that, if there’s a service you think will benefit your pharmacy, there may well be an SaaS version you’ll want to consider, with all the attendant benefits.

The Trend

So SaaS is something you’ll want to keep in mind and keep an eye out for. QS/1’s Tammy Devine sees this model as the trend in computing. Why shouldn’t it be, when, as she summarizes, it not only removes the need for upgrading servers and managing file updates and backups, but also offers an opportunity to cost-effectively take advantage of other software modules. McKesson’s Stanton McComb sees the demand for SaaS growing in the future. In fact, the realm of centralized services is going to grow quickly, in his opinion. “Sophisticated services aren’t only for the large chain with a back office anymore,” says McComb. “SaaS is maturing rapidly, and this means that it is becoming a viable option for many pharmacists. As with any technology purchase, it’s wise to take a close look at your base processes and operations and determine what improvements are needed before selecting a platform. Set goals around what you want from your business, and this will set the stage for deciding whether SaaS solutions can help you reach these goals.” CT

Will Lockwood, is a senior editor at ComputerTalk. He can be reached at will@computertalk.com.