October 16, 2026

For most small healthcare practices, a cloud-based electronic health record (EHR) system is generally the more practical choice because it reduces the need to purchase, maintain, and replace local server infrastructure. However, an on-premises EHR may be appropriate when a practice has specialized clinical requirements, existing infrastructure, or specific needs for controlling how its systems are hosted.

The right decision depends on 7 factors: total cost, IT management, cybersecurity and HIPAA responsibilities, internet reliability, performance and integrations, backup and disaster recovery, and long-term flexibility.

For an independent practice with 10 to 25 employees, the objective is not simply to choose between cloud and on-premises technology. It is to select an EHR environment that supports patient care, protects sensitive information, remains reliable, and fits the practice's budget and available technical resources.

What Is the Difference Between Cloud-Based and On-Premises EHR Systems?

The primary difference is where the EHR application and its supporting infrastructure are hosted and managed.

Cloud-Based EHR

A cloud-based EHR is hosted in infrastructure operated by the EHR vendor or its hosting provider.

Employees typically access the system through a web browser or supported application using an internet connection.

The vendor generally manages the hosted application and its underlying infrastructure, although the exact responsibilities depend on the agreement.

The practice remains responsible for its local computers, network, internet connectivity, user access, and other technology outside the vendor's scope.

On-Premises EHR

An on-premises EHR operates on servers or infrastructure maintained at the practice or another facility under its control.

The practice generally has greater responsibility for managing the infrastructure, including server hardware, operating systems, storage, maintenance, backup, and recovery.

Some responsibilities may be handled by an IT Service Provider or another vendor.

On-premises does not necessarily mean the practice manages everything itself. It means the practice must arrange for the infrastructure to be managed.

Cloud-Based vs. On-Premises EHR at a Glance

Consideration	Cloud-Based EHR	On-Premises EHR
Hosting	Vendor or hosting provider	Practice-controlled infrastructure
Initial infrastructure cost	Generally lower	Generally higher
Ongoing expenses	Subscription and related service fees	Licensing, infrastructure, maintenance, and support
Server maintenance	Typically vendor-managed	Practice or IT provider-managed
Internet dependency	Usually essential for access	May support local access during internet outages
Local network dependency	Yes	Yes
Security responsibilities	Shared across vendor and practice	More infrastructure responsibility falls on the practice
Backup and recovery	Vendor-managed components plus practice responsibilities	Practice is responsible for arranging EHR data backups and system recovery
Infrastructure upgrades	Generally vendor-managed	Practice must plan and fund
Scaling	Often simpler, depending on vendor	May require additional infrastructure
Data migration and exit	Depends on contract and export capabilities	Depends on software, infrastructure, and vendor terms

These are typical differences, not guarantees. Individual EHR products can vary substantially.

What 7 Factors Should a Healthcare Practice Compare?

1. What Is the Total Cost of Each EHR Option?

Cost is often one of the biggest differences between cloud-based and on-premises systems.

A cloud-based EHR generally uses a subscription model, which may be charged per provider, user, location, or another licensing unit.

An on-premises EHR may involve software licensing and a larger initial investment in servers and supporting infrastructure.

However, comparing the monthly subscription against the server purchase price does not provide a complete picture.

Cloud-based EHR costs may include:

• Monthly or annual subscriptions
• Implementation and configuration
• Data migration
• Interface and integration fees
• Training
• Additional modules
• Transaction-based charges
• Internet connectivity
• Local computers and network equipment
• Ongoing support

On-premises EHR costs may include:

• Software licenses
• Server hardware
• Server operating systems
• Database licensing
• Storage
• Backup infrastructure
• Power protection
• Server installation
• Maintenance and monitoring
• Cybersecurity
• Software upgrades
• Hardware replacement
• Disaster recovery
• Ongoing IT support

An on-premises EHR may also have recurring software maintenance or subscription charges. It should not automatically be treated as a one-time software purchase.

Example: Comparing Costs Over Five Years

Consider a hypothetical 15-employee Houston medical practice evaluating two EHR options.

For illustration, assume the following:

Cost Category	Cloud-Based EHR	On-Premises EHR
Initial implementation and setup	$10,000	$15,000
Initial server infrastructure	$0	$18,000
Annual software and licensing	$18,000	$9,000
Annual infrastructure maintenance and support	Included in subscription assumption	$6,000
Five-year total	$100,000	$108,000

The simplified calculations are:

Cloud: $10,000 + ($18,000 × 5) = $100,000

On-premises: $15,000 + $18,000 + (($9,000 + $6,000) × 5) = $108,000

These figures are hypothetical and are not vendor quotes or industry pricing benchmarks. They demonstrate why a practice should compare a complete multi-year budget rather than focusing on one expense.

For an actual decision, request written estimates from the EHR vendors and have the IT Service Provider identify infrastructure and support costs.

2. Who Will Manage and Maintain the Technology?

Cloud-based EHR systems generally reduce the amount of infrastructure the practice must manage.

The vendor typically handles hosting infrastructure, application availability, and certain maintenance activities.

That can be valuable for a small practice without a dedicated internal IT department.

However, cloud hosting does not eliminate the need for IT support.

The practice still needs properly configured computers, secure user accounts, reliable internet access, wireless connectivity, supported peripherals, and local cybersecurity protections.

With an on-premises EHR, the practice also needs someone responsible for:

• Server monitoring
• Hardware maintenance
• Operating system updates
• Storage capacity
• Backup management
• Infrastructure security
• Hardware replacement
• Disaster recovery planning
• Troubleshooting server-related issues

For a 10- to 25-employee practice, these responsibilities can create a significant operational burden if they are not clearly assigned.

The key question is whether the practice wants to manage the EHR infrastructure or primarily manage access to a vendor-hosted service.

3. Which Option Is More Secure and Better for HIPAA Compliance?

Neither cloud-based nor on-premises EHR systems are automatically more secure or HIPAA compliant.

Security depends on how the system is configured, maintained, monitored, accessed, and protected.

For cloud-based EHR systems, the vendor generally manages security controls associated with its hosted environment.

The practice must still address its own responsibilities, including user access, endpoint protection, network security, workforce procedures, and appropriate risk management.

For on-premises EHR systems, the practice typically assumes more responsibility for securing the servers and supporting infrastructure.

That may include operating system patching, physical security, network segmentation, backup protection, vulnerability management, and monitoring.

What About the Business Associate Agreement?

When an EHR vendor or cloud hosting provider creates, receives, maintains, or transmits protected health information on behalf of a covered entity, a Business Associate Agreement (BAA) may be required.

A BAA establishes contractual responsibilities, but it does not eliminate the practice's own HIPAA obligations.

Regardless of hosting model, the practice should understand:

• Who can access patient information
• How accounts are secured
• Whether multifactor authentication is supported
• How information is encrypted
• How security events are monitored
• Who applies security updates
• How incidents are reported
• Which responsibilities belong to each party

For additional guidance on securing the practice's broader technology environment, see How Should Healthcare Practices Secure Microsoft 365? An 8-Step Security Framework.

Microsoft 365 security is separate from EHR hosting, but both require clearly assigned responsibilities and appropriate controls.

4. How Much Does Internet Reliability Matter?

Internet connectivity is a major consideration, particularly for cloud-based EHR systems.

If the practice loses internet access, employees may be unable to reach the EHR even when the vendor's servers are functioning normally.

This can disrupt:

• Patient check-in
• Clinical documentation
• Access to patient records
• Electronic prescribing
• Scheduling
• Billing
• Other connected workflows

An on-premises EHR may allow certain local functions to continue during an internet outage, depending on the system's design.

However, internet-dependent services such as electronic prescribing, external interfaces, cloud communications, and remote access may still be disrupted.

On-premises systems are also vulnerable to local network failures, power outages, and server problems.

Should a Practice Have a Backup Internet Connection?

For practices heavily dependent on cloud applications, a secondary internet connection may be worth considering.

That might involve a separate wired provider or an appropriately configured cellular connection.

However, having two internet services does not automatically create reliable failover.

The network must be configured and tested to switch between connections as intended.

The practice should also understand whether both connections share infrastructure that could fail simultaneously.

A backup connection can reduce one source of downtime, but it does not eliminate the need for an EHR downtime plan.

5. Which Option Better Supports Performance, Integrations, and Medical Devices?

Performance depends on more than where the EHR is hosted.

Important factors include:

• Application design
• Server performance
• Internet latency
• Local network performance
• Workstation specifications
• Browser compatibility
• Database performance
• Integration architecture
• Connected devices

Cloud-based EHR systems may be easier to access from multiple locations, but some integrations or peripherals can require additional configuration.

On-premises systems may support certain specialized local workflows, but that advantage depends on the actual EHR product and its technical requirements.

Before deciding, identify every critical integration.

Examples include laboratory interfaces, imaging systems, practice management applications, billing platforms, scanners, printers, and connected medical devices.

Ask each EHR vendor to confirm which integrations are supported, which require additional products or fees, and who is responsible for maintaining them.

Connected medical devices deserve particular attention because they may have different operating systems, vendor support requirements, and update procedures than standard business computers.

For additional guidance, see How Should Healthcare Practices Secure Connected Medical Devices? A 6-Step Risk Reduction Framework.

The better EHR is the one that reliably supports the practice's actual clinical workflows, not simply the one with the preferred hosting model.

6. How Will Backups and Disaster Recovery Work?

Backup and disaster recovery responsibilities differ significantly between cloud-based and on-premises EHR systems.

With a cloud-based EHR, the vendor generally manages backups and recovery of its hosted environment. However, the practice should verify exactly what is included.

Ask the vendor:

• How frequently is EHR data backed up?
• How long are backup copies retained?
• Are backups protected from ransomware and unauthorized access?
• How often are recovery procedures tested?
• What happens if information is accidentally deleted or corrupted?
• Can individual records be restored?
• What is the expected recovery time after a major outage?
• How will the practice access its information during an extended disruption?

An on-premises EHR places more infrastructure recovery responsibility on the practice and its technology providers.

That can include maintaining backup equipment, protecting backup copies, monitoring backup jobs, and testing restoration procedures.

Understanding RTO and RPO

Two important recovery measurements are:

Recovery Time Objective (RTO): The target amount of time a system can remain unavailable before it must be restored.

Recovery Point Objective (RPO): The maximum amount of data loss, measured in time, that the recovery strategy is designed to tolerate.

For example, a hypothetical practice might establish:

• RTO: 4 hours. The recovery strategy is designed to restore the system within four hours.
• RPO: 1 hour. The recovery strategy is designed to limit data loss to approximately one hour.

These are illustrative objectives, not recommended targets for every healthcare practice or guarantees of actual recovery performance.

The appropriate objectives depend on clinical operations, risk tolerance, technical capabilities, and available recovery options.

A cloud EHR vendor may define its own recovery commitments, while an on-premises environment requires the practice to establish and support appropriate objectives.

For additional guidance, see How Should Healthcare Practices Back Up Their Data? A 6-Part Backup Strategy.

Regardless of hosting model, the practice needs documented procedures for continuing essential operations while the EHR is unavailable.

7. Which Option Provides Better Long-Term Flexibility?

A healthcare practice's needs can change significantly over the life of an EHR agreement.

The practice may add providers, open another location, introduce new services, or acquire another practice.

Cloud-based systems can offer advantages when expanding because additional users or locations may not require the practice to purchase and install new server infrastructure.

However, scaling may increase subscription costs or introduce additional licensing requirements.

On-premises systems can also support growth, but expansion may require additional server capacity, storage, network infrastructure, or technical support.

What About Vendor Lock-In?

Vendor lock-in occurs when changing providers becomes difficult or expensive because of contractual, technical, or data-related dependencies.

It can affect both cloud-based and on-premises systems.

Before committing to either option, ask:

• Who owns the practice's data?
• In what formats can the data be exported?
• What does a complete data export cost?
• How long does the export process take?
• What happens to historical records after termination?
• Are there early termination penalties?
• Can the practice move to another hosting environment?
• What assistance does the vendor provide during a transition?

A cloud-based EHR may be easier to deploy, but that does not automatically make it easier to leave.

Similarly, owning an on-premises server does not guarantee that the practice can easily transfer its data to another EHR.

Long-term flexibility depends on the vendor's contractual terms, data portability, integrations, and technical architecture, not just the hosting location.

Which EHR Hosting Model Makes the Most Sense for Your Practice?

The following comparison can help a Practice Administrator narrow the decision.

Practice Situation	Cloud-Based EHR	On-Premises EHR
Small practice without dedicated internal IT staff	Generally favorable	Requires additional infrastructure management
Practice wants lower initial infrastructure costs	Generally favorable	Higher initial investment likely
Practice operates multiple locations	Often easier to deploy	May require additional network and infrastructure planning
Practice has unreliable internet	Requires connectivity planning and downtime procedures	May preserve some local functionality
Practice has specialized local integrations	Verify compatibility	May be appropriate depending on requirements
Practice wants vendor-managed infrastructure	Generally favorable	Less aligned with this objective
Practice needs direct control over hosting infrastructure	Less direct control	Generally favorable
Practice expects significant growth	Often easier to scale	May require infrastructure upgrades

For most independent practices with 10 to 25 employees, a cloud-based EHR will often be the more practical starting point.

That recommendation assumes the cloud EHR supports the practice's clinical workflows, meets its security and contractual requirements, and operates reliably with the available internet and local technology.

An on-premises system deserves serious consideration when the practice has specific technical or operational requirements that a cloud-based option cannot adequately support.

Example: How Might a 20-Employee Houston Practice Make This Decision?

Consider a hypothetical 20-employee medical practice in Houston evaluating a new EHR.

The practice currently operates from one location and has no dedicated internal IT department.

Its existing environment includes standard business computers, Microsoft 365, network-connected printers, and several clinical devices.

The Practice Administrator is considering two EHR vendors.

Vendor A offers a cloud-based EHR.

The vendor manages the hosted infrastructure, and employees access the application through supported computers and an internet connection.

The practice would need to verify integration compatibility, improve its internet redundancy, and establish appropriate downtime procedures.

Vendor B offers an on-premises EHR.

The practice would need to purchase server infrastructure, arrange ongoing maintenance and security management, implement backup and recovery capabilities, and plan for future hardware replacement.

Both systems support the practice's core clinical requirements.

In this scenario, the cloud-based option may be more attractive because it reduces local infrastructure responsibilities and offers a more predictable subscription-based operating model.

However, the practice should still compare complete multi-year costs, vendor security responsibilities, integration requirements, and recovery capabilities before making a decision.

This example is hypothetical and does not represent an actual ResTech client engagement or vendor recommendation.

What Should a Healthcare Practice Verify Before Choosing Either Option?

Before signing an EHR agreement, the Practice Administrator should coordinate a technical review with the EHR vendor and IT Service Provider.

The review should confirm:

1. Total cost: What will the system cost over three to five years, including implementation, licensing, infrastructure, and support?
2. Technical requirements: Can existing computers, networks, and internet connections support the system?
3. Integrations: Will required clinical devices, laboratories, imaging systems, and other applications work properly?
4. Security: Which cybersecurity controls and HIPAA-related responsibilities belong to the vendor and the practice?
5. Backup and recovery: How will the system and its information be restored after an outage or other disruption?
6. Support: Who handles application problems, infrastructure problems, and issues involving multiple vendors?
7. Data portability: Can the practice retrieve its information in a usable format if it changes systems?

Document the answers rather than relying entirely on verbal assurances.

This review can help prevent unexpected expenses and technical problems after the contract is signed.

Frequently Asked Questions

Is a Cloud-Based EHR Automatically HIPAA Compliant?

No, cloud hosting does not automatically establish HIPAA compliance.

The vendor and practice must address their applicable responsibilities, including security safeguards, access controls, risk management, and business associate arrangements when required.

Can a Healthcare Practice Access a Cloud-Based EHR Without Internet?

Generally, a cloud-based EHR requires an internet connection, although some products may offer limited offline functionality.

The practice should verify the vendor's capabilities and maintain appropriate downtime procedures.

Is an On-Premises EHR More Secure Because the Data Stays in the Office?

No, keeping data on local servers does not automatically make it more secure.

On-premises infrastructure still requires appropriate physical security, access controls, patching, monitoring, backup, and incident response capabilities.

Security depends on the controls protecting the information, not simply where the servers are located.

Does a Cloud-Based EHR Eliminate the Need for an IT Service Provider?

No, the practice still needs reliable computers, networking, internet connectivity, user access management, cybersecurity, and support for technology outside the EHR vendor's responsibilities.

The EHR vendor typically supports its application and hosted environment, while the IT Service Provider supports the practice's broader technology infrastructure.

Can an Existing On-Premises EHR Be Moved to the Cloud?

Yes, some on-premises EHR products can be migrated to vendor-hosted or other supported cloud environments.

However, not every product supports that transition, and migration may require licensing changes, infrastructure modifications, data conversion, or application upgrades.

The practice should confirm available options directly with the EHR vendor before planning a migration.

Should a Small Healthcare Practice Always Choose a Cloud-Based EHR?

No, although cloud-based EHR systems are often a practical choice for small practices, the decision should reflect actual clinical requirements, integration compatibility, security responsibilities, internet reliability, and total cost.

An on-premises system may still be appropriate when it better supports essential workflows or technical requirements.

Final Thoughts

For most small healthcare practices, a cloud-based EHR offers a practical balance of accessibility, infrastructure management, and predictable operating expenses.

But cloud hosting is not automatically more secure, more reliable, or less expensive in every situation.

The better choice is the system that supports the practice's clinical workflows, fits its budget, protects patient information, and can be maintained and recovered reliably.

Before selecting an EHR, evaluate the entire technology environment rather than making the decision based solely on where the application is hosted.

About ResTech Solutions

ResTech Solutions helps independent healthcare practices throughout the Houston area manage technology, cybersecurity, Microsoft 365, networks, backups, vendor relationships, and long-term technology planning.

Founded in 2011, ResTech takes a security-first, compliance-focused approach to helping small businesses make informed technology decisions.

When a healthcare practice evaluates a new EHR, ResTech can help assess the supporting technology environment, review infrastructure requirements, identify integration dependencies, clarify vendor responsibilities, and evaluate the cybersecurity and continuity considerations associated with the proposed system.

Our role is to help the practice understand the technology requirements and risks surrounding its EHR decision, while the EHR vendor remains responsible for its application and clinical leadership determines which system best supports patient care.

If your practice is evaluating cloud-based and on-premises EHR options, book a 10-minute discovery call to discuss your technology environment and identify requirements worth reviewing before making a commitment.