Custom Practice Management System Development: A Complete Guide

Published on July 12, 2021

The administrative burden on healthcare providers is huge. According to estimates, clinicians spend about 34% of their time on patient data collection and documentation. Unfortunately, keeping records, billing, bed management, and other administrative tasks are an unavoidable part of the healthcare workflow. Still, you can significantly streamline most of these processes by creating a custom practice management solution (PMS). 

But what is PMS? How exactly can it improve your workflow? And what does practice management system development involve? Read on—we’ve answered these and other questions in this article.

Why clinics need a practice management solution

Medical practice management software will improve your bottom line while giving you more time for your patients.

Practice management software is a collection of computerized services. It’s used by healthcare providers to optimize their administrative and financial processes, such as scheduling, patient tracking and accompanying, billing, inventory management, and beyond. Here are several examples of how PMS implementation can benefit your practice:

  • With a PMS, your front desk staff don’t need to manually enter the patient’s insurance card details to check their eligibility. Instead, they can scan the card, and the system will capture the necessary information automatically. 

  • A PMS with medical billing features can also streamline the work of your billing department while decreasing the denial rate.

  • Automatic appointment reminders enabled by a PMS are a decent alternative to phone calls. They can reduce no-shows and save you hours. For instance, according to the Behavioral Economics Team of the Australian Government, automated text alerts can save 240 staff hours per fortnight.  

  • A practice management solution can simplify patients’ lives, too. They won’t have to struggle to discern the handwriting of their doctors because when a practice uses a PMS, all prescriptions can be sent directly to the pharmacy. 

In general, a robust practice management solution can accelerate repetitive processes, reduce labor costs and the error rate, increase patient satisfaction, and prevent staff burnout. As a result, you’ll have more time for your patients, which, in turn, will improve your bottom line. 

Practice management system in healthcare: Market trends

Telemedicine, automation, and data security are the main practice management system development trends.

The need to increase the efficiency of current processes as well as to save time and resources persists. So, the market for practice management software doesn’t stand still; it’s projected to grow at a CAGR of 8.3% during the next three years. On top of that, it’s changing constantly. For example, 2020 and 2021 have brought about trends like:

Though these trends aren’t new, the pandemic has considerably accelerated their growth. Let’s give them a closer look. 


During the pandemic, virtual care has seen explosive growth. According to McKinsey, in 2020, the number of patients using telehealth increased from 11% to 46%. 

Virtual visits have proven to have tons of benefits, including the reduced risk of contagion, the ability to handle more appointments and deliver care to patients that, for whatever reason, can’t travel to their healthcare provider. At the same time, more than half of US patients of all ages who used telemedicine were satisfied with the services they received. 

Such satisfaction levels suggest that the rise of telemedicine isn’t a temporary phenomenon. This trend is turning into the new norm, which is going to linger post-pandemic, too. That’s why if you’re planning to create a medical practice management system, make sure it has the telemedicine feature or easily integrates with your existing virtual care solution. 

The need for automation

As our experience of developing medical practice management software suggests, clinicians decide on implementing PM solutions because they want to automate repetitive processes and have more time for what really matters — taking care of patients. In 2020, this need for automation became urgent.

Automated appointment reminders are one example of how automation can alleviate the strain COVID-19 has put on your facility. It’s typical for hospitals to make phone calls to notify patients about their upcoming appointments. Given that 87% of us simply ignore calls from unknown numbers, this practice is both time-consuming and inefficient. 

An automated text alert system will enable you to reach out to hundreds of patients at once. And that’s to say nothing about the fact that 67% of customers prefer texting with businesses rather than talking to them on the phone. This will save you hours while significantly boosting your productivity.

Data security

Practice management systems have always been storing a lot of sensitive data, which made them vulnerable to cyberattacks. But in 2020-2021, the healthcare industry is going through really tough times:

  • As the pandemic has accelerated the adoption of AI, the volumes of healthcare data have skyrocketed with the projected CAGR of 36% by 2025. 

  • With the rise of virtual care, teleworking, and cloud-based solutions, much of this data circulates outside healthcare facilities. 

  • Cybercriminals are becoming even more aggressive, and the number of attacks on healthcare facilities doubled in 2020.

That being said, whether you are looking to build a practice management system on your own or there’s a third-party solution on your mind, make sure you’ll be able to protect your data.

The trends we’ve discussed are actually displayed in the features every modern practice management software should have.

Main practice management software features

Main practice management software features include scheduling, record keeping, automated billing, and beyond.

The practice management market is brimming with offerings, and you won’t find two identical solutions. Still, most of the top PM systems have the features listed below. 


Waiting in line at the doctor’s office is not what a smooth patient experience looks like. That’s why a scheduling feature with a convenient drag-and-drop interface is a must-have component of every PMS. It should consist of: 

  • Patient scheduling that enables patients to schedule and organize their appointments online, by the phone, via e-mail, or in-person

  • Physician scheduling that allows physicians to scan their schedule and balance appointments while avoiding double bookings

  • Automated reminders that notify both patients and doctors about upcoming appointments

  • Room, laboratory, and inventory booking that also reduces waiting times and mitigate the risk of unavailability

A practice management solution with a proper scheduling function will help you manage patient flow easily while significantly improving the patient experience. 

Patient records

Patient information is a crucial component of practice management. Incorrect or incomplete data might prevent you from providing timely care or worse—put your patients’ lives at risk. So, your PM system should allow you to: 

  • Enter data quickly and error-free

  • Access this data easily

  • Store all patient documents, such as scanned documents from other facilities, lab results, radiology images, etc. 

  • Make updates when the data changes

Your patients should also be able to access their data anytime, no matter whether they want to view their laboratory test results or to switch a provider. 

Automated billing 

Smooth payment procedures are another characteristic of efficient practice management. Most PMS solutions allow patients to pay for services online. The process is fast and easy: the system fills out all the necessary fields automatically, so a patient doesn’t have to enter all the information manually. 

Besides, practice management systems often support the entire medical billing process, from insurance verification to denial management, with features like: 

  • A database with all insurance providers your facility supports. It will enable you to check your patients’ insurance eligibility and coverage before you provide care, as well as to keep track of new billing rules

  • Claims scrubbing, allowing you to reduce the risk of denial

  • Claims submitting, tracking, and re-submission

  • Denial management software, which compares denied claims with a database of insurers’ rules

Medical billing isn’t necessarily an integral component of a practice management solution. It can be a separate tool you can integrate with your system. Either way, you can learn more about medical billing software in one of our previous articles.  

Communication platform

Patients should be able to text or have a call with their physicians for minor queries like prescription adjustments or refills instead of traveling to the provider’s office. Physicians, in turn, can use the communication feature to make electronic prescriptions and send them directly to the pharmacy. 

Thus, the communication feature will save time for both providers and patients, strengthen doctor-patient relationships, and allow for smooth information exchange without confusion.

Inventory management

Durable medical equipment (DME), disposable inventory, and pharmaceutical samples—without these things, you wouldn’t be able to deliver care properly. That’s why it’s important to have a PMS with a robust inventory management tool. It should: 

  • Assign a barcode to each item for easy tracking

  • Keep a check on every item

  • Monitor usage patterns

  • Send out expiration alerts

  • Make automated inventory recorders

  • Help you avoid overordering 

With such a solution in place, you’ll be able to optimize your operational expenses while ensuring continuous inventory availability.  

Integration capabilities

Your PM solution shouldn’t necessarily have all the functionalities you need in your daily operations, but make sure that it integrates easily with other tools. 

For example, you might want to integrate your system with your EHR/EMR software for accurate scheduling and charting. Clearinghouse is another tool that often exists as a separate module. You might also consider integrating a separate business intelligence system to get insights into your performance and possible ways of growth. Read also: How to Develop an EMR Software

Оff-the-shelf vs. custom practice management system: Pros and cons

Both off-the-shelf and custom practice management solutions have their pros and cons.

When you decide to implement practice management software to optimize processes in your clinic, the first question that might come to your mind is whether to purchase an off-the-shelf solution or build custom software. Well, let’s take a closer look at each option. 

Off-the-shelf software


  • A variety of available solutions. You really have what to choose from. For example, gives 190+ options. 

  • Cheap at the beginning. Available for mass selling, off-the-shelf solutions might be cheaper than their custom counterparts. But this is true only at the beginning of your practice management digitalization journey. Be prepared that cumulative subscription expenses might exceed custom development and maintenance costs.

  • Ready-to-use. Most off-the-shelf software is available on a pay-as-you-go basis. This means you can start using it as soon as the subscription fee is paid. 

  • No maintenance headache. Your provider will take care of everything, from infrastructure to regular updates.


  • Customization. There’s a good chance the off-the-shelf option won’t cover all your business needs. You’ll have to integrate it with additional tools, which is not always easy and requires tech expertise.

  • Too many features. On the flip side, you might find yourself paying for functionality you’ll never use. 

  • Not scalable. Third-party solutions are often too hard or impossible to scale as your practice grows.

  • No guarantee. Your provider might stop supporting their solution anytime, and you’ll need to look for an alternative. 

Custom medical practice software


  • Features. You’ll have a solution tailored exactly to your current needs.

  • Scalability. The best custom practice management solutions are designed to be scalable from the start. 

  • Support. You can improve your solution whenever you need to instead of hoping that your third party will do so. 

  • Security. Ready-made systems are typically less secure due to the number of businesses using them. 


  • Cost. Many healthcare providers hesitate to build a practice management system from scratch due to the development cost. Still, since you don’t have to pay a subscription fee, make too many integrations, and search for alternatives as your needs change, the development expenses will pay off in the long run. 

  • Time. The software development process will take time. But you can begin with minimum viable product (MVP) development, which takes about 1-1.5 months.

As you can see, custom practice management systems outperform their off-the-shelf counterparts in many aspects. But what does the PMS development process actually look like? Let’s find out. 

What does it take to develop medical practice management software?

The process of practice management system development includes several phases.

To create a custom practice management system, you’ll need a team of tech and business experts with healthcare IT experience, including a business analyst, back-end and front-end developers, a UX/UI designer, and a QA expert. The duration and the cost of practice management software development will depend on the project complexity and your resources. 

The process will include the following steps: 

  • Identifying your needs 

  • Building a product vision

  • Implementing your product vision

  • Testing and integrating 

Let’s consider each step in more detail. 

Identifying your needs

At this stage, you should analyze your current processes and identify challenges. Are you facing challenges with maintaining patient records? Do you have medical inventory issues? Or maybe, you have a hard time handling patients remotely? 

Since various staff members will be using the solution, it’s also imperative to survey everyone involved in the practice management process. On top of that, we also recommend scanning the IT healthcare market for suitable off-the-shelf solutions. 

Building a product vision

Once you identify your pain points and business objectives, the next step is to come up with a solution to address your needs. After that, your developers will outline all the details of your future application and write them down in a software requirements specifications (SRS) document. Besides, your UX/UI designer will build a prototype of your future solution, so you’ll get an idea of how it will look and feel. 

Implementing your idea

At this stage, the concept is turned into programming code. More likely than not, your solution’s architecture will consist of multiple modules, which your team will implement one after another. If your solution has a machine learning engine for, say, predictive analytics, your tech experts will also be training algorithmic models. 

Testing and integrating

Testing is a crucial part of the practice management software development process. At this stage, it’s important to make sure that: 

  • Your solution performs as expected

  • It’s scalable, compatible with your existing IT infrastructure (including legacy systems), and can be easily integrated with any other third-party solution you might need as you adapt your processes to your business and market needs

  • It’s GDPR and HIPAA compliant

  • Your staff (which is mostly non-technical) can quickly understand how to use your practice management solution

We recommend testing and integrating your solution on a module-by-module basis. 

Implementation challenges 

Building a custom practice management system usually requires a lot of time and effort. You should also be ready to overcome some common issues this process involves. Below are the most persistent challenges your development team will be dealing with: 

  • Usability. While it’s critical to make sure your solution addresses your current administrative needs to the fullest, it should also be easy-to-use so that you can reduce the learning curve for your employees. Reaching the balance between usability and functionality can be an arduous task. 

  • Security and compliance. Practice management is all about collecting, storing, and exchanging sensitive data. This means you should make sure that your solution is secure, despite the number of people accessing it, and compliant with all applicable regulations, such as HIPAA, GDPR, and HL7

  • Integration. Practice management software is an ecosystem of solutions rather than a standalone tool. That’s why it’s critical that your PMS integrates easily with other tools, including the ones you’re already using in your processes. Integration can be challenging if you’re working with legacy software. 

Addressing these issues requires specific expertise. So, the next question is, where to find the necessary talent? 

Finding a reliable tech partner

A practice management system is a necessity for medical practices in 2021. At the same time, building one from scratch is a complex process. That’s why you need a professional development team with strong expertise in healthcare software development by your side.

Demigos is a healthcare software development vendor that has been building custom-tailored healthtech solutions for more than five years. Due to our in-depth understanding of the healthcare industry combined with tech skills, we know how to develop a practice management system that will take the challenge of administrative routine off your shoulders.

So, whether you’re looking to outsource practice management system development or are willing to learn more on the topic in relation to your particular case, feel free to contact us!

Ivan Dunskiy
Ivan has been working in the tech industry for more than 10 years as a Quality Assurance Engineer, Mobile Software Developer, and Product Manager. Co-founder of 2 startups.