Sunday, February 20, 2011

How to Meaningfully Shop for an EHR – Part III

(Seal the Deal)

We have arrived at the point of no return. You are now looking at an EHR vendor contract and no matter how well you negotiate this contract, once signed, it will be very difficult for you to change your mind and “get out” without incurring large financial penalties. Once you begin using the product, there will be more than just financial considerations barring you from switching to a different product, and the longer you use the EHR, the harder it will be to replace it. Even if you did a stellar due diligence as outlined in Part I and Part II of this series, there is still a significant chance that you selected an EHR that will not work very well for your practice, a company that will go out of business or be acquired, or a product that will be left behind as new vendors enter the market with new and innovative technologies. Does this mean that you should forget the whole thing and not buy an EHR? Not necessarily.  In a free-market economy, these risks are always present, whether you are shopping for an EHR, a car, cable TV, phone service or anything else. Your job as a consumer is to minimize your risks, but understand that you cannot completely eliminate risk in general.

First you need to understand exactly what you are buying. Much has been said about the difference between buying an EHR, through a license model, as opposed to buying the services of an EHR, through a Software-as-a-Service (SaaS) model. Is there a difference? Is one safer or cheaper than the other? To answer these questions, one must first understand the obvious: EHR is a software program which can only exist when installed on a piece of hardware. Whether the EHR exists on a computer under your reception desk, or in a datacenter over the rainbow, or in some nebulous Amazon Cloud, EHR is still a piece of software, made of many lines of code instructing the computer to perform certain actions at certain times. Wherever the EHR software resides, it will need a physical computer, electricity, ventilation, internet connectivity, lots of cables and other peripheral physical devices. And, yes, “virtual servers” also need computers to execute on. All those trendy clouds are nothing more than giant warehouses full of metal and plastic machines connected to the local electric company and the Internet through lots of colorful plastic cables, and the Internet itself is made of gazillions of similar machines, connected together through routers and switches and ocean floor cables and satellites.

So what are you buying when you buy an EHR? Simply put, you are buying the right to use the software. If you are buying your EHR through a SaaS, or Application Service Provider (ASP), model, you are also buying the rights to use the machines on which the EHR software resides. If you are buying your EHR via a license model, it is up to you to provide the plastic and metal and cables that house your EHR software, and all the additional services it needs to operate. You do not own the EHR software any more than you own Casablanca after you purchase the DVD – you can watch Ingrid as much as you want, but you cannot replace her with Beyoncé and you cannot prevent her from getting on that airplane. Not much different than “pay-per-view” or Netflix, other than the fact that if you “own” the DVD, you can cut it up in a million pieces, if you so choose. Now that you understand what you are about to spend money on, let’s see what can be done to obtain the most advantageous terms from the seller.

Standard Terms & Conditions
The following concepts are not unique to EHR contracts. They are the same concepts that you will find in a contract with the guy that is remodeling your kitchen, or an extended warranty on your new surround sound system, but their application is specific to the contracted service.
  • Contract Period – You would think that if you went to great pains to identify a good product, you would want to lock the vendor into a long term commitment, but if you sign a contract for 50 years (yes, they do exist), it also means that you are locked in for the same period of time. Considering the opening statements to this article, this may not be the best course of action. To get the best of both worlds, you should strive for the shortest possible contract (12 months), with an option to automatically renew the contract every year at your sole discretion. The vendor will want to obtain the longest possible contract period. Most start with a 5 year period, which is an eternity in the software world, and an acceptable outcome of negotiations would be 2 to 3 years initial period with automatic renewal for the same. If you can get a 1 year renewable contract, consider yourself lucky.
  • Price – A contract is also an itemized bill of sale outlining the products and services you receive, their individual pricing and a grand total. The contract should itemize all services and sub-parts required to provide you a complete service. Just like you would not buy a car that lists Tires as a third-party option that you need to buy on your own, you should not accept a contract that lists Claim Clearinghouse as an unquoted third-party option that you need to separately negotiate and obtain. The contract should also be very specific as to what an item includes. For example, $5000 for training is meaningless unless it specifies the number of hours, the means of delivery and the qualifications of the trainer(s). Similarly, you should avoid open-ended pricing on a time-and-materials basis, which is usually offered for custom interface and data migration work. Insist on a fixed price, and at the very least a “not to exceed” number. Every contract will include a clause allowing the vendor to increase price on an annual basis by at least the Consumer Price Index (CPI) percentage growth. Anything undefined in that clause, or above 5% is highway robbery. Based on the contract pricing, you should be able to easily calculate three indicators: 1st year cost, 2nd year cost (should be much lower than 1st) and 5 years Total Cost of Ownership (TCO). If you cannot calculate these three numbers, return the contract and ask for clarifications. 
  • Assuming all pricing information is available, what should you expect to be able to negotiate? Unfortunately, not much. First, your ability to obtain discounts is inversely proportional to your practice size. It is very unlikely that you will be able to obtain discounts on recurring costs such as monthly subscription or yearly maintenance because these are already offered at low margin and because any discounts here are very hard on the vendor’s earning projections. You should concentrate on one-time initial charges, such as training, implementation, data migration and in rare cases even the license price itself. If you cannot obtain actual discounts, try to get “free” stuff thrown in, like an extra day or two of training (there is no such thing as too much training), an interface, some project management or maybe a piece of hardware. Another good option is to spread out your initial investment into a 12 months period, interest free, payment plan. Be creative and use any advantages you may have (being an influencer in an IPA or hospital board or medical society, is a good bargaining chip).
  • Schedule – A good contract should include vendor commitment to an implementation schedule, including go-live dates for the EHR and any interfaces you are purchasing. Considering that vendors are extremely busy and spread very thin in this HITECH era, you should insist on an enforceable commitment to implement your EHR within an agreed upon period of time, subject to significant financial penalties or breach of contract. The vendor will most likely insist on adding language committing you to meet your obligations necessary for a timely go-live, and this is fair.
  • Workers – You would be hard pressed to find an EHR contract specifying any minimum requirements for vendor staff delivering services to you, and yet many implementations fail because vendor staff is unqualified to deliver these services. Right now there is a terrible shortage of qualified HIT resources and the temptation to cut corners is very real. You should insist on adding a clause guaranteeing that your trainers and implementers have a minimum of 3 years EHR implementation experience, at least 1 year with the current company, and carve out your right to review resumes, interview and dismiss any vendor staff assigned to your practice with no adjustments to the contracted schedule.
  • Materials – The equivalent of materials in the EHR world is the content of your training and implementation. A contract should include a detailed project plan for your implementation and an itemized curriculum (including hours and delivery method) for your training. These documents should be incorporated in the contract as exhibits, not just provided to you independently for review. In addition, a list of minimum hardware requirements should also be an exhibit in your contract. You don’t want to find out after the contract is signed that you need to rip and replace every computer in your practice and pay for a dedicated T1 line to your office.
  • Warranties/Service Level Agreements (SLA) – If you go back and recall that EHRs are software programs, you should understand that no software vendor can, or will, warranty that the software is free of defects or that it will operate continuously 100% of the time, not even Microsoft or Apple or even IBM. Here you should be looking for SLAs. There should be 3 or 4 severity levels of problems defined (complete shutdown, severely impaired with no workaround, workaround available, minor malfunction) with a predefined response time, a predefined resolution time and clear financial penalties for not meeting the SLAs. It is very important that you stick to your guns here, since the SLAs are defining the level of support you will receive down the road and a vendor that recoils from commitment here probably has a very good reason to do so.
  • Regulatory Compliance – The only current regulations pertinent to EHRs, are HIPAA and Meaningful Use. Most contracts have the HIPAA commitment built in and various commitments for Meaningful Use, ranging from lip service to full money back guarantees. Read carefully and remember that Meaningful Use is only the beginning. There will be Meaningful Use Stages 2 and 3 and it is possible that somewhere down the line the FDA may want to oversee EHRs. Ideally, you would want a commitment to adhere to Federal and State regulations and a separate commitment to adhere to all Meaningful Use specifications (quote the statute) as updated by the Secretary of Health and Human services from time to time.
EHR Specific Terms & Conditions
  • Data – Almost every EHR contract contains a glorious statement, meant to make you feel good, that all data in the EHR belongs to you. This statement is meaningless. To obtain tangible protection you need to have two additional clauses in the contract. One is a “not to exceed” price for all data extraction, including clinical, from the EHR in a standard format (CCD, HL7, CSV and PDF), with specific standards attached to specific data (CCD for clinical data, HL7 for demographics and insurance, CSV for all other structured data and PDF for all documents). Other than a fixed price, you should also insist on a “not to exceed” timeframe for completing the export and a commitment to work with your next EHR vendor. The second clause, which is generally ignored and most often with disastrous consequences, is a requirement that in case of a dispute with the vendor, you should be allowed full access to viewing the EHR until the dispute is resolved. Vendors have been known to cut access to the software for non-payment and any other breach of contract. You need to avoid this possibility. If you are contracting with a rather new or small vendor, you will be well advised to contractually commit the vendor to provide you with weekly full data dumps, in the above formats, that you can keep in your office. Do not accept copies of backups, unless you have a tested way to restore a full working database, and overwhelmingly you will not. Be advised that almost all EHR vendors will be monetizing your patient “de-identified” data in accordance with HIPAA restrictions. You may want to try and limit disclosure, request that physician data is also “de-identified” or request notification of secondary use of your data. Most likely, you will make no headway here.
  • Hold Harmless - The infamous “Hold Harmless” clause that is supposed to shield vendors from any responsibility of harm to patients, is rarely present in ambulatory contracts. The lunatic fringe’s loud screams notwithstanding, most contracts only contain statements of vendor’s limited liability (usually 1 year worth of maintenance) for all damages to the business, including financial losses and malpractice judgments, arising from use of the product. Just like you cannot sue Microsoft if the lack of usability in Excel caused you financial loss and you cannot sue Intuit if a bug in TurboTax prevented you from filing on time (happened to me), you will not be able to seek financial compensation from an EHR vendor commensurate with your damages. The best you can do here is try to get the vendor to agree to increased liability (perhaps double the original), but you can be certain that any liability will remain limited.
Most important, whatever you do, please seek legal advice for this step. The above points are very general in nature and not comprehensive enough for you to adequately navigate the contract on your own. Remember that vendors have large legal departments and by forgoing legal advice you are placing yourself at significant disadvantage. Small practices often do not heed this advice, but large medical groups always use attorneys for contract negotiations. Call a colleague who works for a large group and get a referral to an attorney that is experienced in EHR contracts. It may end up costing you a couple thousand dollars, but considering that you are about to enter a contract worth upwards of $50,000 for each licensed provider over the next 5 years, and considering the ramifications to your business if you sign the wrong contract, the attorney fees are money well spent.
Good luck and happy hunting!

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