A Complete Guide to Custom Healthcare Software Development

A medication monitoring platform. 

An app for orthopedic rehabilitation. 

An API that enables interoperability between disparate systems. 

What do these three things have in common? They are all the result of custom healthcare software development

Technology is transforming the healthcare industry, and tailor-made software solutions play a significant role in that transformation. 

Many software-driven changes address one or more of the following four goals: 

  • Save time 
  • Prevent mistakes 
  • Improve patient health 
  • Increase cybersecurity 

In addition to these overall goals, healthcare providers often have specific needs and care goals. When they can’t find ready-made software to meet those needs, they turn to a custom healthcare software development company for tailor-made applications that can fill the niche.  

This software development guide looks at why custom healthcare software development services are important and where it’s having the most significant impact. We also cover how healthcare providers can turn their ideas into high-quality software that meets their unique needs.

The Impact of Custom Healthcare Software Development

The healthcare industry faces one of its greatest challenges: the COVID-19 pandemic.  

Healthcare providers were already struggling to catch up with federal quality care mandates. They adopted patient portals. They sought solutions to help improve patient engagement. They grappled with interoperability. 

And then the pandemic hit. Software upgrades and new technologies were put on hold as patients flooded in

The demand for telehealth solutions skyrocketed. So did data breaches and ransomware attacks, as criminals took advantage of the global crisis. 

When healthcare organizations lacked the IT skills or bandwidth to develop needed software solutions quickly, providers turned to a custom healthcare software development company.

Meeting Critical Needs

Custom healthcare software development helps providers meet critical needs for which commercial solutions don’t exist or are cost-prohibitive.  

These crucial needs include: 

  • Enabling a shrinking pool of healthcare workers to do more with less  
  • Complying with government mandates designed to increase healthcare quality 
  • Meeting new interoperability standards for quickly and securely sharing patient data 
  • Increasing patient education and engagement  
  • Tracking quality care metrics to maximize federal financial reimbursement 

With few off-the-shelf solutions meeting these needs, many healthcare organizations require custom applications built by healthcare software development companies. 

The interoperability issue alone requires custom APIs to connect a healthcare organization’s medical records system to other organizations’ systems.

Filling Niche Healthcare Needs

Custom healthcare software development also helps providers improve niche healthcare delivery needs for which prepacked software isn’t available. 

A prime example of this is the concussion management app developed by an orthopedic rehabilitation specialist. The application has everything the provider needs to physically analyze a patient and provide high-quality care. The bespoke application tackles the limitations of existing rehab programs and offers advanced solutions for performance enhancements, neuromechanical health, senior health, and orthopedic care. 

With such a narrow market, a major software company would not be inclined to develop such a specialty application. Custom software applications address unique healthcare needs or tackle common needs in new, more efficient ways. 

Learn More: How Custom Software Development Is Transforming the Healthcare Sector

Key Impact Areas

Because it’s developed to meet a client’s specifications, custom software can address almost any healthcare need.   

That said, a greater demand for custom healthcare software development services exists in four key areas: interoperability, workflow optimization, data security and integrity, and automation. 

In a Deloitte study, physicians identified these four areas as their biggest digital technology needs.


Healthcare providers are looking for more secure and efficient ways of sharing patient data. 

For example, many believe that patient-generated data (from wearable fitness and consumer health devices) will get integrated into care delivery within the next decade. 

Doctors see interoperability as a necessary stepping stone to other healthcare innovations. Health organizations and startups targeting interoperability will need to build vendor-agnostic apps with simple front-ends and seamless back-end integrations with current electronic health records (EHR) and clinical systems.

Optimized Workflow

More than half of the physicians Deloitte surveyed need technology to improve their day-to-day processes.  

They see artificial intelligence, robotic process automation, and other advanced technologies as ways to save time and resources and increase job satisfaction among healthcare workers. 

With the strain of the pandemic causing a mass exodus of healthcare workers, technology to optimize workflows and increase staff satisfaction is growing more crucial.  

However, these solutions must be well designed and easy to use. Healthcare workers will quickly abandon any technology that detracts from patient interaction.

Augmented Intelligence

Healthcare providers see great potential in augmented intelligence solutions to improve the speed, accuracy, and quality of healthcare delivery.  

Physicians anticipate technology that will read and interpret routine medical images, as well as AI solutions that will help them better diagnose disease and prevent acute illness. 

These providers also believe that solutions involving AI, augmented and virtual reality, improved wearable sensors, and remote care will boost patient engagement.  

Through augmented intelligence solutions, doctors believe they’ll be better able to encourage patients to lead healthier lifestyles.

Data Security and Integrity

Healthcare organizations live in fear of data breaches and cybersecurity threats. And for good reason. 

Cyberattacks have drastically increased during the pandemic. In 2021 alone, 45 million individuals were affected by healthcare attacks.  

One hospital had to cancel surgeries and abandon its electronic records systems. Many other health organizations suffered compromised software or networks.  

The Department of Health and Human Services (HHS) even issued a call for providers and related organizations to improve their cybersecurity posture. 

With the increased importance of data security and integrity, healthcare organizations will be looking for software solutions that meet or exceed their current cybersecurity requirements.  

Solution providers and startups will need to transparently communicate the security measures they’ve put into their software. They may also need to have it verified by independent third parties.


The pandemic caused an immediate need for remote healthcare and telehealth solutions.  

According to J.D. Power’s 2021 U.S. Telehealth Satisfaction Survey, telehealth usage jumped from 9 percent in 2020 to 36 percent in 2021.  

A different survey (McKinsey & Company report) found that virtual healthcare usage was 38 times higher now than pre-pandemic rates and that it is maintaining that level over time.  

It should come as no surprise that healthcare consumers like telehealth. After all, what is telehealth other than a convenient, fast, and safer way to get healthcare? Patients can talk to a physician from home, at work, or even while out of town.   

Healthcare providers also benefit from the convenience and safety of telehealth. In addition, they see it as another tool for improving patient engagement, which helps them meet their value-based care goals.  

Although there are many telehealth solution providers, telemedicine continues to grow. As a result, opportunities abound for improvement and innovation in this area. 

Learn More: Benefits of Telehealth Software Solutions for Patients and Doctors

Healthcare Compliance

The healthcare industry is a heavily regulated field for a good reason. Not only are people’s lives at stake, but also some of their most sensitive data. 

Therefore, healthcare compliance is critical for any care organization or startup needing healthcare software development services for their business.  

Whether developed by an internal healthcare information technology team or outsourced to a custom healthcare software development company, the developers must have a foundational understanding of the healthcare data regulations, and particularly HIPAA.

What is HIPAA?

HIPAA stands for the Health Insurance Portability and Accountability Act. This law mandates how organizations in the healthcare industry can store, share, manage and record the protected health information (PHI) of patients.  

Organizations must comply with HIPAA if they provide services for treatment, payment, or related healthcare operations. If an organization provides a third-party service that uses PHI, they are considered a Business Associate. Under HIPAA, health organizations and their business associates must be compliant with the law.

What Does HIPAA Cover?

In general, HIPAA’s primary requirements consist of the following aspects:  

  • HIPAA Rules: Health software must adhere to all aspects of HIPAA rules, including the Privacy Rule, Security Rule, HITECH, and the Omnibus Rule. 
  • Security Safeguards: Software developers must abide by the administrative, physical, and technical safeguards described in the Security Rule. 
  • Transport Encryption: All electronic patient health information (ePHI) must be encrypted before being transported or shared electronically.
  • Backup: All ePHI must be securely backed up in case it must be recovered or restored. 
  • Authorization: Only authorized personnel should be granted access to ePHI, so restrictions must be in place. 
  • Storage Encryption: ePHI must also be encrypted while in storage, not just during transport. 
  • Integrity: ePHI must not be subject to unauthorized changes, improper destruction, or other prohibited interference. 
  • Disposal: Once the ePHI is no longer needed, it should be destroyed safely and permanently.
  • Business Associate Agreement: Software companies that store or transport ePHI must sign business associate agreements with the entities for which they will be working. These agreements must be stored on secure servers. 

This list is a high-level overview of HIPAA compliance. For a more in-depth discussion and checklist, review the documentation available from the U.S. Department of Health and Human Services.  

Learn More: HIPAA Compliance: Everything You Need To Know

How Can a Healthcare Company Get Custom Software Developed?

Getting custom software developed for the healthcare market often begins with an idea. 

Sometimes, a paper-based process becomes too time-consuming, error-prone, or expensive for a practice to maintain. The practice may envision a way to streamline the process with a custom web-based solution but not have the resources to build it. 

Or it could start as a sketch of an innovative solution for treating a specific health condition, without knowing what to do next. 

A healthcare organization may even get the first version of the software developed and then realize they don’t have the bandwidth or skill to make needed improvements. 

Regardless of the path, at some point they recognize the need for custom healthcare software development services.

In-House or Outsource?

When an organization reaches this point, they have two choices. 

They can hire the talent they need and have all the development done in-house. Or they can outsource the work to a custom healthcare software development company.

Assembling an In-House Team

The in-house option allows the organization to hire full-time employees, allowing the project stakeholders to bring on individuals with the skillsets and experience needed. It’s a custom-built team for creating a custom-built solution. 

An in-house team may take several months to get up to speed, but once they do, they’ll be able to maintain and upgrade the product over its entire lifetime. As they get used to working with one another, they’ll form efficient work strategies and methodologies. And they’ll gain an intimate knowledge of the software they build, making it easier for them to improve it and add new features. All of this makes in-house teams well-suited to large, complex applications. 

However, not many small or budget-conscious organizations can afford the overhead of hiring a team of full-time a healthcare software development services team—especially if the application is limited in scope. 

Outsourcing to a custom healthcare software development company may be the better option for these organizations.


Third-party software development companies offer many advantages. Possibly the most significant benefit is long-term cost savings, but other gains include greater security, faster time to deployment, assured compliance, and a ready-made team. 

If speed is a factor, healthcare software development companies take less time to get up to speed than a newly hired in-house team. This is because outsourced teams are used to working together and have an established methodology. These factors allow third-party teams to complete projects faster than in-house teams. 

They may have built similar healthcare applications and can carry over the lessons learned to the new project. If so, they’re probably knowledgeable about the latest healthcare technology trends, as well. 

A team with HIPAA experience will also know what compliance measures the software will need to meet. And because data criminals look for hacks they can use on many targets, they are less interested in one-off, custom applications. This fact, coupled with strong software security, makes it rare that bespoke software gets breached. 

And unlike commercially licensed platforms, there are no annual fees to use custom software. Once the development work is complete, the client organization owns the software.  

Learn More: Top Benefits of Agile Medical Software Development

Finding the Best Healthcare Software Development Company

Finding the best healthcare software development services for your needs is vital for building a quality healthcare solution. Because of this, it’s critical to find a custom software development company that understands the unique requirements of the healthcare industry.  

Perhaps the most crucial prerequisite for selecting a healthcare software development partner is their understanding of healthcare data regulations. Of course, a potential partner doesn’t need to be an expert on everything healthcare-related. Still, they do need a firm understanding of PHI to ensure the solution they build is HIPAA compliant. 

Coupled with a knowledge of HIPAA, good healthcare software development companies should have procedures for information security in place to mitigate data risks and protect patients’ health information. PHI is arguably the most sensitive information transported and stored electronically, so it needs strong security measures.  

Good healthcare software developers also understand interoperability. They can create applications that interface easily with electronic health records systems. And they have a firm grasp of HL7 standards. 

Learn More: Criteria for Choosing a Healthcare Software Development Partner


For healthcare organizations and startups looking for a tailor-made software solution, the cost of building a healthcare app may seem daunting. However, when they weigh the advantages, these organizations often find it’s more cost-effective in the long run. 

Custom software allows providers to improve specific care goals and eliminate the time-consuming, error-prone manual methods they’ve been using. In addition, they own and can even resell the application once development is completed. Many organizations find this more appealing than paying recurring seat licenses to make do with ill-fitting commercial software.

About Taazaa

Taazaa means “fresh.” Think new. Not canned. Tailored to you. We work with like-minded people and organizations looking for a fresh experience around creating and unleashing great software. 

Since 2007, Taazaa has helped hundreds of mission-minded organizations stay relevant in a world of relentless change. Leveraging custom software solutions and emerging technology, we follow design-based development practices that promote rapid delivery and a tailored fit to your business. 

We’re agile. We’re high-empathy and low-friction. And we make great software. 

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Taazaa Inc

Taazaa Inc.

1780 Stoney Hill Dr., Suite A Hudson, OH 44236
(888) 800-0016

For inquiries, please contact info@taazaa.com.