The good news is that the transition to EMR, which can be both costly and and time-consuming for small practices, has become a top priority for at least some of the leading practice management solutions providers. Steve Housberg, the president of Peak Healthcare Solutions, a Warwick, NY-based company which specializes in medical billing, consulting and related services for offices with between one and seven practitioners, says that EMR is both "cutting edge" and "where the industry is going."

Housberg, who is also on the American Medical Billing Association's National Advisory Board, adds that a look at recent history indicates that this isn't a contradiction in terms. "Entering the data, providing remote access, timely denial and rejection information and responses, good follow up, electronic claims submissions -- these are things that weren't offered by everybody not too long ago. Nowadays, these things are a minimum requirement: if you don't offer them, you're going to be laughed out of the business. Just a few years ago, being HIPAA-compliant was cutting edge; now it's old."

In about five years, Housberg estimates, EMR will have much lower barriers to entry than it does today. It will be much less expensive to implement and cause much less disruption when practices switch to an all-electronic setup, and as a result, the federal requirement that practices keep electronic medical records will kick in.

And EMR is inextricably linked to billing. "Most EMR programs offer a billing component. Why would a practice buy an EMR program and not use the billing component? So my company has to get EMR up to speed now. It's what the more savvy physicians are looking into right now, and I run the risk of losing clients if I don't offer it now, and figure out how to offer it at a low cost."

Housberg has plenty of incentives to keep costs as low as possible. Rival billing companies, both large and small, have been slashing costs by outsourcing many or all of their services either offshore or overseas, which Housberg says he won't do. He's cutting costs by going virtual -- he jettisoned his bricks-and-mortar office for a virtual business setup. This saves him lots of overhead, and, he says, enables him to get better employees, ones who are willing to trade flexible work-at-home hours for slightly lower salaries. Competition is forcing greater efficiency.

Also, a model that didn't exist at the turn of the millennium -- the fully Web-based practice management system with an integrated billing and collection component -- is making inroads, and challenging setups like the one Housberg employees.

While he owns his own server and software, companies like Salt Lake City-based AdvancedMD are offering an all-SaaS (software as a service) solution. "Since we started six years ago," says Gary Balluta, the product manager for Advanced MD, "we've been a pure Web-based application, which all of our clients run using a Web browser as a front end. Embedded in that is the online billing component, which is part of our value proposition."

Balluta estimates that the "Web-based market" -- meaning the completely virtual practice management software solution -- is still small, making up less than 20 percent of the market. But he adds that "our revenue growth has been very healthy, in the mid-double-digits or better over the past four years," and says that many practices and individual practitioners have overcome reservations they'd had about data security.

AdvancedMD, like Peak Healthcare, caters mostly to small practices. Balluta estimates the company has about 2,000 clients representing about 10,000 doctors, most of whom are independent. "Most are coming off of a client-server system, a legacy system." Those running older systems are ready to make a switch, and some have experienced system crashes that cost them data, and says Balluta, when "you go through one of those you realize that having it [your system and data] in house isn't the best way to go."

Balluta also says that many are attracted by how AdvancedMD's consistent, tightly-integrated software is able to generate a high rate of return on insurance claims. "In a typical (practice-based system) scenario, the number of bills that get rejected on the first pass is very high, typically. Some might have 30 percent of them kicked back, and then the have to go reconcile and figure out and chase down insurers and everything else." The company's Web site, and Balluta, both say that AdvancedMD is experiencing a rejection rate of less than five percent on the first pass.

"You can only imagine the savings in time, the speeding up of revenue and collections, the reduction in manual labor, pure aggravation and headaches," says Balluta. And when practice managers imagine it, it's an easy sell: "It's measurable and material," says Balluta.

Another advantage to the AdvancedMD solution is that the up-front investment is relatively low, because practices pay on a monthly basis for services, and don't have to invest all at once in a new system, which would likely also require a great deal of training. Advanced MD prides itself on its 24-7 support and training, which it provides via phone and also via Web-based video tutorials. Soon, real-time on-line chat will be part of the service offering.

Balluta is confident that the Web-based model will win over physicians who do their own billing. "We're going to look back and say, 'Why did I ever do this in-house?'"

That's good news for smaller practice management and billing solutions providers like Peak Healthcare, as well. By offering a complete, virtual practice management and billing solution, the idea of a "turnkey" system will seem quaint. The Internet doesn't need a key, because it's always on.