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When your practice goes shopping for an Electronic Health Record (EHR) or practice management (PM) software, you are likely to encounter two types of buying options: the professional license or a Software as a Service (SaaS) license.

Professional license

With this option, you are buying the right to use a specific version of the EHR or PM software. You don't own the software itself; you own a license to use it according to the terms of the license agreement.
  • Perpetual vs subscription: Professional licenses may come in two forms. With both, you install the software on your own hardware or at a co-location facility. Your practice is responsible for managing installation, updates, data center resources, and system compatibility.
  • Perpetual licenses allow you to use the software indefinitely. Updates and support may be limited unless you purchase separate maintenance agreements.
  • Subscription licenses provide access to the software for a specified period, such as a year, and often include updates and support during that time.
  • Customization: Depending on the software and license terms, you might have more flexibility to customize the software to fit specific needs.
  • Cost structure: Professional licenses involve an upfront cost, which is higher for perpetual licenses compared to subscription licenses. There might also be additional costs for support, updates, and maintenance.

Software as a service (SaaS) agreement

With a SaaS agreement, your practice subscribes to access and uses the software over the internet. You don't own the software; you're paying for the right to use it as a service.
  • Subscription model: SaaS agreements are subscription-based. You pay a recurring fee at regular intervals (usually monthly or annually) for as long as you want to use the software.
  • Cloud-based: SaaS software is hosted on servers that belong to a managed cloud services provider. Providers and staff at your medical practice access it through a web browser. This eliminates the need for you to install and maintain the software on your own systems.
  • Updates and maintenance: SaaS providers typically handle updates, maintenance, security, and compatibility issues. Your medical practice benefits from the latest features without the hassle of managing updates.
  • Scalability: SaaS software is designed to scale easily, accommodating the need for your practice to grow or shrink without having to make significant changes to IT infrastructure.
  • Cost structure: SaaS involves ongoing, consistent subscription costs, which some practices find easier to predict and manage. However, the cumulative cost over several years could potentially exceed the cost of a perpetual license.

Which is better?

Predictable subscription costs help promote financial stability and a SaaS agreement may make it easier to scale your health IT infrastructure.

What are the differences between Software as a Service (SaaS) and a professional license?

Software as a Service (SaaS) and a professional license represent two different models for acquiring and using software. Here are the key differences between them:


Professional License


Delivery and Deployment With a professional license, users typically download and install the software on their local devices (e.g., computers or servers). The software is run and managed locally by the user or their IT department. In a SaaS model, software is hosted and maintained by a third-party provider in the cloud. Users access the software over the internet through a web browser, and there is no need to install or maintain the software on local devices.
Access Users purchase a license to use the software, which is often a one-time cost or requires periodic updates or renewals. Once the license expires or is no longer valid, users may need to purchase a new one. SaaS applications are accessed via a subscription or pay-per-use basis, usually on a monthly or annual basis. Users have access to the software as long as they maintain their subscription.
Ownership and Control Users own the software license, which may provide them with greater control over the software's configuration, updates, and customization. They can choose when and how to update the software. Users typically do not own the software but instead pay for the right to use it. They have limited control over the underlying infrastructure and software updates, which are managed by the SaaS provider.
Maintenance and Updates Users are responsible for maintaining and updating the software themselves. This can require more effort and IT resources. Maintenance, updates, and patches are managed by the SaaS provider. Users benefit from automatic updates and do not need to worry about software maintenance.
Scalability Scalability with professional licenses may require the purchase of additional licenses or managing software installations on more devices. SaaS applications are often more easily scalable since users can typically increase or decrease the number of subscriptions as needed.
Cost Structure Professional licenses often involve upfront costs, but the long-term costs may be lower for organizations that use the software for an extended period without significant updates or upgrades. SaaS often involves recurring subscription costs, making it easier for organizations to budget for software expenses. However, it can be more expensive over time.
Accessibility The accessibility of software with a professional license may be limited to devices where it's installed, although some licenses allow for remote access under certain conditions. SaaS applications are accessible from anywhere with an internet connection, making them suitable for remote work and collaboration.

The choice between SaaS and a professional license depends on various factors, including the specific software needs of an organization, budget considerations, control requirements, and scalability needs.

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John Ellis, DO

Vice President of Regulatory & Clinical Affairs at NextGen Healthcare

Dr. Ellis is a board-certified Family Medicine physician who serves as the Vice President of the Regulatory & Clinical Affairs team at NextGen Healthcare. His previous experience includes working as an Adjunct Assistant Professor at the Arizona College of Osteopathic Medicine and serving as the Chairman of the Family Medicine Department at Arrowhead Abrazo Community Hospital. Dr. Ellis founded his own family medicine practice in Arizona and has been using EHR’s since 2003.