Vendor Selection and Negotiating EHR Vendor Contracts

From time to time, practices and hospitals face the task of acquiring and implementing a new EHR system. Some may find that their current EHR system does not align with their scalability, requirements, or vendor support needed by the organization. When system replacement is inevitable, it is essential for organizations to recognize that a new system is not a cure-all for the issues of the past. Replacing an EHR is often more difficult than the implementation of the original one, so it is critical for your organization to invest in the planning needed to define business and user requirements, implementation, and integration strategies. The most difficult aspect of a successful practice is determining the best vendor. It involves careful consideration of the needs and requirements of your organization, thorough assessment of the vendor, and informed decision-making. There is no “one-size-fits-all” approach to EHR adoption.

Following is a list of the steps to take in selecting an EMR vendor:

  • Identify your practice needs
  • Determine cost
  • Identify operations issues that may compromise the implementation process
  • Understand pitfalls and develop reasonable expectations
  • Research the EMR vendor(s) and use resources to make an informed decision
  • Identify necessary integrations
  • Understand technical standards and technical competency of the vendor
  • Arrange vendor demonstrations
  • Conduct site visits and reference checks
  • Understand both your short- and long-term investments
  • Verify vendor accomplishments
  • Obtain EHR vendor proposals

Once a vendor is selected, the next step is to understand the terms of the EHR contract before signing. Most EHR vendors offer standardized “boilerplate” contracts that favor the vendor, but you can negotiate the terms of these agreements. If your vendor of choice is unwilling to amend the terms of the agreement, you can choose whether or not to work with a vendor that offers only a non-negotiable contract. If you decide to accept the standard contract terms without negotiation, you have assumed risks with little recourse, and trying to resolve a contract dispute at the time of a breach is less efficient than negotiating an agreement with appropriate protections before signing on the dotted line. If you work with an EHR vendor that will negotiate contract terms, your ability to make changes will vary depending on your circumstances, the standard contract terms, how much you know about alternative contract terms, and your skill at negotiating, among other factors. Conferring with a healthcare consultant as well as an experienced healthcare attorney for legal advice is a best practice.

Successfully negotiating a vendor contract is the final act in a careful selection and planning process. First, request all contractual documents from the vendor, and develop a list of all issues that need discussion. Define the problem and the desired outcome, prioritize the list, and identify your non-negotiable criteria. Sort your priorities by deal-breakers, neutral items, and “wish list” matters. Some providers make the mistake of advising a vendor that they are selected, and all that remains is to enter into a contract. By doing so, organizations may unintentionally undermine their bargaining position. The goal of the negotiation should be to achieve a balanced agreement.

Following are some essential points to discuss when negotiating your contract:

  • System Implementation
  • Software customizations, especially integration requirements
  • Performance criteria, remedies, and dispute resolution processes in terms you can understand.
  • Tie payments to key milestones of performance, such as completing system testing, training, and going live
  • Assignments under a merger, acquisition, buy-out, name change, corporate reorganization, a successor organization, a parent or subsidiary, and another entity within the organization
  • Software and hardware maintenance fees
  • Data ownership, transfer, and conversion
  • Future upgrades, new releases, version changes, mandated modifications
  • Cost of the system
  • Product warranties and liability limits
  • Future providers and users
  • Future recurring fees
  • Government mandates
  • Evergreen clauses (automatic renewals)
  • Third-party interfacing
  • Training and support
  • Termination and transition
  • Cybersecurity
  • Data backup
  • Price protections

The final step before signing is to review all documents in their final format against the issues list and ensure that there are no errors or mistakes. Once the contract is signed, it is critical to continue to manage the vendor and the relationship. The relationship that your organization establishes with your selected vendor is vital to the success of both the implementation and the long-term viability of your EHR system.

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