The hidden cost of maintaining a practice server.

 

Across our country thousands of practices, including GP’s, specialist and allied health, own and maintain a practice server. The practice server is the powerhouse of the clinic, the primary function of which, is to host the clinical and practice management software. Other critical functions include the hosting of a myriad of add-ons and plugins that connect to, and extract from, the practice management software.

 

As a secondary function, the practice server often operates as a file server to store business documents or often as a file repository for incoming faxes. It can also have accounting software installed or be used as an email service for programmes such as Microsoft Exchange.

 

There is no doubt that the practice server is a critical piece of infrastructure and central to the successful operations of a clinic.

 

So how much does it cost to own and operate a practice server that is so critical to your business? Is there a way to reduce the operating costs? Are there alternative solutions that not only cost less but also reduce the risk of having to maintain a practice server? These are important fundamental questions that all practice owners must ask themselves both when setting up a new practice or  when operating an existing practice.

 

Let’s look at costs first! It is mind-blowing!

 

The objective is to calculate the total cost of purchasing, operating and maintaining a practice server exclusive of all other peripherals like printers, routers and user computers located at reception desks or doctors rooms. This way we can accurately calculate the cost of ownership and make a valid comparison between on-premise machinery versus a cloud service.

 

Table 1 summarises the estimated costs of buying, owning and operating a practice server for a GP clinic with 5 doctors and 4 administration staff applying best practice processes to ensure the business runs without disruption.

 

Table 1: Practice Server Costs

 

In-House Costs		Year 1	Year 2+
Equipment
Hardware	Server x 2	$14,000	$3,500
	Rack	$2,000	$500
	Backups	$4,000	$1,000
	Power	$1,000	$250
	Hardware setup, networking & server backups and testing	$5,000	$1,250
	Clinical software installation & configuration	$5,000	$1,250
	Sub total	$31,000	$7,750
Licencing
Licencing	5 doctors & 4 support. FTE $1000 pa per FTE	$9,000	$9,000
Office 365	5 doctors & 4 support. Office 365 with Storage @ $12pm	$1,296	$1,296
	Sub Total	$10,296	$10,296
Operating Costs
Server	1700W at $ 0.37running 24/7 (2 x 850W server) running @ 1/2 power	$2,643	$2,643
Computer Room	Assuming a nominal 2% floor coverage @ $100k per year	$1,000	$1,000
Backup Equipment	800W at $ 0.37running 24/7 running @ 1/2 power	$1,321	$1,321
A/C 9m3 room	24/7 running costs at $0.50 per hour	$4,464	$4,464
	Sub Total	$9,428	$9,428
Monitoring and Management
Server Management	$1000 per month	$12,000	$12,000
	Sub Total	$12,000	$12,000
	Total	$62,724	$39,474

 

Capital costs for year 1 exceed $30k. In combination with initial software licensing (including practice management software and MS Office 365), electricity costs and consulting fees to both setup and manage your infrastructure, takes the total year 1 expenditure to $62,724

 

Ongoing annual costs are estimated at $39,474 per year. Over a five-year period, the total cost of ownership is estimated to be $220,620

 

Cloud Service Costs

 

Calculating the total cost of ownership for cloud services is easy. There is no need for a dedicated practice server to host the clinical and practice management software, and the only requirement is to include licensing and initial software configuration costs.

Of course, as previously stated, the practice server is often used for other purposes, the most common being a file server for the practice, where documents are saved. To compare like for like, subscriptions to MS Office 365 for all staff are also included. MS Office 365 is a cloud offered service providing access to MS Word, Excel, Email and most importantly OneDrive. OneDrive is a dedicated cloud based file service hosted in Australia when linked to an Australian entity. This guarantees that any clinical documents are saved on OneDrive securely and in Australia. Practices can use OneDrive to file and backup business documents and faxes. Table 2 summarises the estimated costs of cloud services.

 

Table 2. Cloud Services Costs

 

MediRecords		Year 1	Year 2+
SetUp Fees	Medicare, Training, Letter Templates, MHR, Messaging	$2,750	$0
	Data Migration	$1,500	$0
Licencing	5 doctors & 4 support, 4 Integrated, 2 Clinical, 3 Practice	$7,560	$7,560
Office 365	5 doctors & 4 support. Office 365 with Storage @ $12pm	$1,296	$1,296
	Sub Total	$13,106	$8,856

 

Including setup fees, data migration and licensing of both MediRecords and MS Office 365 the total year one estimated cost is $13,106. Ongoing annual costs are estimated as $8,856

 

Conclusion – The results Speak For Themselves

 

Comparing like for like costs between an in-house practice server vs cloud services, excluding all other peripherals like printers and users computers, significant savings can be made.

 

In year one alone the costs saving is estimated as $49,618  Ongoing annual cost savings are estimated as $30,618 and over a five year period the total estimated savings are a staggering $172,290

 

To put this saving in perspective, and assuming 20 consults per day with an average billing rate of $70 per consult, this would translate to an extra 5 days holiday for each of the 5 doctors doctors each year.

 

There is no doubt that significant savings can be made by moving the entire practice to the cloud, the numbers speak for themselves. However that’s not the only reason it’s a smart move. Cloud services providers offer backups and redundancy. Knowing that your information is being backed up, secure and available provides peace of mind to the practice owner – how do you put a price on that!