How much does EHR software development cost? 7 key cost factors explained

Building EHR software isn’t cheap.

But figuring out how much it’ll actually cost? That’s where most healthcare teams get stuck.

The thing is, there’s no single price tag.

Your costs depend on the size of your organization, how complex your workflows are, what features you need, and whether you’re going custom or off-the-shelf.

Miss any of these details, and you risk blowing your budget or ending up with a system that doesn’t work the way your team does.

This guide breaks it all down.

We’ll walk you through the 7 biggest cost factors in EHR development, from infrastructure and compliance to training and long-term maintenance.

You’ll get real numbers, real examples, and a clearer picture of what to expect.

Let’s dive in!

How much does EHR software development cost?

Custom EHR software development costs vary dramatically based on scope and complexity.

Small practices often start with basic systems handling only patient records, scheduling, and billing.

These simpler implementations typically range from $40,000 to $90,000 per provider for initial setup, with ongoing annual costs of $8,000 to $16,000 per provider.

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Mid-sized practices with multiple providers and more complex workflows usually invest $150,000 to $400,000 total for implementation.

Large hospitals, on the other hand, face substantially higher costs, with enterprise-level implementations often exceeding $1 million to $10 million or more, depending on scope and customization requirements.

Here’s a more detailed comparison:

EHR cost comparison by organization size

Your deployment model significantly affects costs too.

Cloud-based solutions reduce upfront infrastructure costs but have ongoing subscription fees.

On-premise deployments require significant hardware investments but offer more control over data and potentially lower long-term costs.

The bottom line? EHR development costs scale with your organization’s size and complexity.

Larger teams, complex workflows, and advanced integrations all increase both upfront and ongoing investment.

Choosing the right deployment model and focusing on the most valuable features can help you get the most out of your budget – we’ll cover that (and more!) next.

Key factors influencing EHR software development costs

Here, we’ll cover the main cost factors that impact EHR software development costs.

Organization size and complexity

As we mentioned previously, your organization’s size hugely impacts your EHR costs.

A solo practice just needs the basics – appointment scheduling, visit notes, and simple billing.

But a 500-bed hospital? They need complex workflows across emergency services, inpatient units, surgical departments, specialty clinics, and so on.

This complexity means more development hours, extensive testing, and custom features for each department.

The price difference is stark. A small family practice might spend $20,000-$50,000 on an EHR system, while a mid-sized clinic network could shell out $100,000-$300,000.

Large hospital systems? They’re often looking at millions for implementation, plus hundreds of thousands annually for maintenance.

They face exponentially higher costs because everything gets more complicated:

• User management for thousands of accounts
• Complex permission and access structures
• Workflows tailored to different specialties
• Higher demand for data interoperability
• Stricter compliance and audit requirements
• Integration with multiple legacy systems

Staff training is a major expense too.

A small practice might train everyone in a day, but a large hospital could need months of training across different departments.

User numbers matter a lot here. Small clinics might have 10-20 people at most using the system at once, while a large hospital could have 100s accessing records at the same time.

This affects everything from database design to server capacity and network bandwidth.

Performance standards get stricter with size too. If a system slows down for a minute in a small practice, it’s annoying. If it happens in a busy ER, it could affect patient care.

In short, the bigger and more complex your organization, the more your EHR will cost.

Every added layer – users, workflows, integrations – raises the bar for what the system needs to handle.

Personnel costs

Building EHR software requires specialized expertise.

Developers need both technical skills and healthcare domain knowledge, which means higher rates.

However, geographic location substantially impacts costs here.

Developers in HealthTech hubs like Boston and San Francisco will be much more expensive, especially if you’re hiring in-house.

In general, developers in North America and Western Europe are by far the most expensive. Here’s an overview of hourly rates for different roles in different regions:

Average hourly development rates by role and region

With a team of just six to eight people working full-time over several months, these hourly rates add up quickly.

An intense, 12-month EHR development project with a North American team could easily run into seven figures in personnel costs alone.

That’s why many healthcare organizations look beyond their local markets.

Outsourcing parts of the project to experienced teams in lower-cost regions can make your budget go a lot further, without compromising on quality.

Of course, outsourcing only works when your partner understands the industry.

Healthcare is heavily regulated, high-stakes, and fast-moving.

If you do go this route, work with company that has proven experience in healthcare software and can provide both strong engineering and domain-specific insight.

Beyond pure hourly rates, it’s also worth considering:

• Team size and composition – A smaller team with experienced people may cost more per hour but get work done faster and with fewer mistakes.
• Hiring model – In-house hiring adds recruitment, onboarding, and long-term employment costs, while outsourced or contract teams offer more flexibility.
• Project scope – A small MVP requires fewer people than a full enterprise-grade rollout, so plan team size based on what you’re building.

Personnel costs will likely be your biggest line item in the entire project.

The key is building a team that fits your goals, timeline, and budget without cutting corners and sacrificing quality.

Level of customization and feature complexity

The more tailored your EHR is, the more it’ll cost to build.

Off-the-shelf systems are cheaper, but they come with a tradeoff – they force you to adjust your workflows to fit the software.

Custom development flips that.

It’s a bigger investment upfront, but it pays off with better efficiency, less training, and software that actually match how your teams work.

Custom features can include things like:

• Clinical decision support tools built for your specialty.
• Custom reports and dashboards.
• Unique workflows for specific departments.
• Stronger privacy controls for sensitive specialties (e.g. behavioral health).
• Specialty-specific tools like image annotation for dermatology or ECG interpretation for cardiology.

Each custom feature you add means higher development costs and extra development time.

Advanced, cutting-edge features that use the latest technologies come with a higher price tag.

Here’s a couple of examples:

• AI-powered analytics ($50,000–$100,000) to predict readmission risk or flag medication issues
• Telemedicine functionality ($30,000–$60,000) with video visits, scheduling, and virtual waiting rooms
• Voice recognition ($25,000–$45,000) tuned for medical terminology to speed up documentation

The thing is, they can deliver big returns. You might break even on advanced features in 12–18 months through better outcomes and faster workflows.

So how do you decide what to build?

Start by mapping your core workflows and identifying pain points.

Then prioritize features that solve real problems and have the biggest ROI. Here’s a simple formula you should use to calculate ROI:

There are a few smart ways to keep your budget in check.

Start by looking closely at how your team works day to day – where they lose time, what slows them down, and which tasks create the most friction.

Also, you should launch with the core features first, and add customization later based on real needs.

And keep checking in with your team during development to make sure you’re building what they actually need.

Customization only pays off if it matches how people work, not how you think they work.

Hardware and infrastructure

Your infrastructure setup has a major impact on both upfront and long-term costs.

Whether you go with on-premise or cloud hosting, each path comes with its own tradeoffs.

On-premise deployments come with large capital expenses. You’ll need to buy and maintain your own hardware, which adds complexity and cost right from the start.

Typical infrastructure needs include:

• Servers and backup systems – $15,000–$30,000 per unit
• Storage arrays – $20,000–$50,000 depending on capacity
• Networking equipment – $5,000–$15,000
• Power and cooling – Backup power supplies and climate control systems
• Security and physical space – Secure server rooms and access control

Add in setup, installation, and ongoing maintenance and the total can easily reach $50,000 to $200,000 for mid-sized clinics and above.

Cloud deployments shift those upfront costs into predictable monthly fees.

A small practice might pay around $300/month, while a 10-provider clinic might start at $3,000/month, rising to $5,000–$7,000 as usage grows

Cloud solutions give you flexibility and scalability, but the long-term costs add up. That’s why it’s worth calculating your 3-5 year total cost of ownership (TCO) before deciding.

Regardless of your setup, storage is a big cost driver.

EHR systems generate huge volumes of data – clinical notes, labs, imaging, patient history – and it all needs to be stored securely and remain accessible.

Keep in mind that a single MRI file can take up 1GB or more and complete patient records can grow by several GBs over time.

To manage growing data without breaking your budget, consider a tiered storage strategy:

• Keep recent records on high-performance (but pricier) systems.
• Move older or less-used data to lower-cost storage.
• Set clear data retention and archiving policies to avoid unnecessary storage bloat.

Planning for growth now saves you from expensive emergency upgrades later.

And whether you choose cloud or on-premise, understanding how your infrastructure scales will help you keep costs under control as your system grows.

Regulatory compliance and security

If you’re building EHR software, compliance isn’t optional.

It’s a core requirement that affects every part of the process, from design to deployment to long-term maintenance.

In the U.S., HIPAA sets the baseline.

Here’s a more detailed look at how it affects software development:

Key HIPAA rules that impact software development: overview

If your system touches international users or patients, things get more complex.

You’ll also need to consider:

• GDPR (Europe) – Includes strict consent rules, data portability, and the right to be forgotten.
• FHIR & HL7 – Standards for data exchange between healthcare systems.
• Country-specific laws – Like Canada’s PIPEDA or Australia’s My Health Records Act.

Meeting these regulations takes time, people, and money.

A large chunk of your project’s will go to compliance, including writing detailed documentation and policies (and implementing them) as well as security audits with external experts.

And it doesn’t stop after launch.

Compliance is a moving target, not a one-off task. It’s always cheaper and safer to build it in from day one.

Damir Plejic, Strategic Partnerships Manager at DECODE

Regulations evolve, and your system has to keep up. That means reviewing new requirements, rolling out updates, and testing changes.

But, compliance is always cheaper when it’s built in from day one. Use a compliance-by-design approach to save yourself from trouble down the line.

Here’s what you need to address:

• Data encryption (at rest and in transit)
• Tamper-resistant audit trails for forensic investigation
• Multi-factor authentication that works with clinical workflows
• Access logging with user ID, timestamps, and actions taken

Ignoring compliance isn’t just risky – it’s expensive.

HIPAA violations alone can cost up to $1.5 million per violation category per year.

But the real financial damage comes from what follows: lawsuits, downtime, expensive fixes, higher insurance premiums, and a damaged reputation.

Well-known enforcement actions speak for themselves.

Anthem paid $16 million and Memorial Healthcare System paid $5.5. million in fines and settlements after violating HIPAA.

Remember, compliance isn’t just a checkbox.

It’s an ongoing investment and a major factor in the long-term success and safety of your EHR system.

Integration with third-party systems

Modern healthcare runs on a network of connected tools.

Your EHR is the core system that needs to plug into everything else, from lab software to imaging tools, to keep care running smoothly.

Some essential EHR integrations include:

• Laboratory information systems (LIS) – Order lab tests directly and get results delivered automatically into the patient’s chart.
• Picture archiving systems (PACS) – Store and display medical imaging so providers can access scans and reports in real time.
• Practice management systems – Connect clinical data with billing to keep administrative tasks in sync.
• Pharmacy networks – Pull in medication history, run interaction checks, and send prescriptions electronically.
• Patient portals – Let patients view their records, book appointments, and message their care team.
• Health information exchanges – Share data securely with other healthcare organizations to improve coordination.
• Telehealth platforms – Enable video visits, virtual check-ins, and digital consults within your EHR.
• Remote monitoring devices – Track vital signs and symptoms from home and feed that data into the patient’s record.

Each integration adds complexity and cost to your EHR development project.

And integration costs vary widely.

Here’s a rough overview of what you can expect:

• Basic lab result imports: $5,000-$15,000
• Medical imaging system integration: $15,000-$50,000
• Pharmacy network connections: $10,000-$25,000
• Billing system integration: $20,000-$75,000
• Patient portal connectivity: $15,000-$40,000

The more systems your EHR connects with, the more planning, development time, and budget you’ll need.

But when done right, these integrations improve data flow, reduce manual work, and support better patient care.

And that’s why they’re a good investment.

Ongoing and maintenance costs

Building an EHR is just the beginning.

Keeping it secure, up-to-date, and compliant is where the real long-term investment comes in.

Too many healthcare organizations focus on launch costs and underestimate what it takes to maintain a system over 5–10 years.

Ongoing expenses usually surpass the initial investment.

Over an average software product’s lifetime, maintenance costs add up to over 50% of the total cost of ownership (TCO).

source: LinkedIn

And the thing is, regular updates are essential. They fix bugs, patch security vulnerabilities, and improve performance.

Without them, you risk system instability and serious data breaches.

According to IBM, the average healthcare data breach costs $10.1 million. So, proactive security updates are an absolute must.

Sett aside around 20% of your initial budget cost each year to cover:

• Routine maintenance
• Security patching and monitoring
• Regulatory-driven upgrades
• Infrastructure refreshes as hardware ages

Another key area of ongoing cost is training and user adoption. Your system is only as good as your team’s ability to use it.

Effective training should be role-specific, continuous, and proactive.

When your staff knows how to get the most out of the system, you reduce errors, boost efficiency, and get better outcomes.

And just like security updates and regulatory upgrades, training isn’t a one-time effort – it’s part of maintaining a system that actually works.

The bottom line? Ongoing costs aren’t just about software.

They’re about keeping your system secure, compliant, and genuinely useful, year after year.

EHR software development cost: FAQs

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Whether you’re starting from scratch or planning your next big upgrade, we can help you get there and solve your technical, regulatory, and budget challenges.

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Want to see if we’re the right fit? Get in touch and let’s talk about your goals.