Over time, we get many questions about technology procurement and negotiations. We have published some questions and answers which may be of interest to you in support of your negotiations.  

Do you have a question? Go to our contact us page and submit your question. You will get a prompt reply.

Q. My vendor says this price is only good until the end of the quarter. Is this real?

A. Vendors do have promotional offers. Some are truly time limited and enforced by the corporation. Most are not. If you have done your price benchmarking and it is an attractive price and you have done all of your other due diligence, then take advantage. Do not rush your contract negotiations beyond what is practical and manageable in order to take advantage of a quarter end deal. You will miss something.

Q. My vendor wants the total license fee on signing. I think this is risky. How should I handle this?

A. All vendors will desire cash sooner as opposed to later. Cash is king and tighter auditing rules make this even more true. The reality is this requirement has to do with the vendor meeting their business objective, and it puts you at a distinct disadvantage should something go wrong. If you choose to give them this benefit, get something valuable in return. Further discounts, preferential services, maintenance, deferrals etc.

Q. I have asked my vendor about a Service Level Agreement and they want considerably more money if one is in place. Does this sound right?

A. It really depends on what you are asking for. If you are trying to get service levels that are above the industry norm or above what the vendor can do today, then they have a right to ask for more fees and you have a  decision to make. Service levels do not necessarily need to be about meeting a higher standard. They often are about enforcement of an existing standard. Try establishing baselines based on their current standards for services. Then establish a margin of deficiency against these standards which you consider unacceptable. Put enforcement and related penalties in place around these parameters. If the vendor is still unwilling, or still wants more money, you may need to question if you have the right long-term partner. 

Q. I have access to a law firm who does my contract reviews for everything in my company. Why would I need a negotiations consultant?

A. Ok, this one hits close to home so I need to add a little sales pitch to my response. Lawyers, depending on their focus, may or may not know all of the business issues from a software and technical perspective.   Will a lawyer know what software vendor Y charges for license fees, or what services they provide as part of their maintenance package? Possibly, but at what hourly cost. Working with a negotiation consultant like Win-Win Agreements allows you to get an experienced negotiator to deal with all of the procurement, selection, negotiation and support issues. This will free up your time significantly and minimizes the need for expensive legal advice throughout. You can, and should, have the lawyer review the proposed agreement at specified milestones and/or provide a final review. As you get more comfortable with a negotiation consultant, the legal involvement can continue to be minimized.

 Q. I want an acceptance provision for the software in my agreement, but my vendor wont agree because he is calling it off-the-shelf software. What do I do?

A. Most vendors who are selling off-the-shelf software will tell you this and position it that way. Just because the software "works" out of the box, does not mean that it will work in your environment. Force the issue on acceptance. There are other ways to do this through pilots, proof of concepts, etc, but the strongest position is an acceptance clause.

Q. Maintenance rates are being represented as non-negotiable. Is this true?

A. The general rule in technology negotiations is everything is negotiable. This rule always holds. Build your negotiating model based on what works for you. It must be practical for the vendor to accept, but don't be afraid to push.

Q. I am negotiating a license agreement with a vendor. I know that I will be upgrading the servers that the software will sit on within 24 months. However, when I checked, there is a large upgrade fee for the license if I do this. Is this right?

A. First of all, it was smart of you to ask now rather than find out when you upgrade. That is how many clients find out they have an upgrade fee. After the fact. Many vendors have license fees tied to processor size or number of processors. If this is the case, ask your vendor to tie the licenses to the site you are operating on, or to a business metric that is a good proxy for your use. The more flexible technology vendors will do this and you can avoid an adverse financial consequence that delivers no business value to you. If they are unwilling, consider negotiating based on the new capacity and get a price break built in based on an anticipated upgrade later. Your leverage will always be better before you sign.

Q. I have entered into an agreement and their support is horrible. I have no service levels in my agreement. What can I do?

A. Given that your agreement is already in place, your options are considerably more limited. However, you do still have options. First we need to review your specific agreement to assess your options completely. Many of these options will depend on your will power and whether you can and should play tough with your vendor. Depending on your business size and future prospects for growth, you can re-open negotiations. If there is future business to be had, your vendor will talk. If you can change vendors this is a great leverage. Many competitors have competitive replacement offerings and all vendors know this. So the threat of moving will often lead to changes. However, you can't bluff because the vendor may let you go if they can't fix their problems easily. Finally, if you cannot or will not move to another technology, you may need to bring the prospect of bad references, bad publicity or even legal action to the vendor.  

Q. My renewal is due and I am convinced I am paying too much for maintenance. There is an evergreen provision in my maintenance agreement so the vendor has sent me a notice for the new period. Complete with a 7% increase. What are my options?

A. It's too late to say never enter into an evergreen maintenance agreement. But consider it said. Always make sure your maintenance will lapse without pro-active action on your part. Don't worry, they will contact you. Resist the urge to fire off a termination notice right now to try and stop the increase. You may find yourself without support, and if you try to re-initiate the maintenance, you might find out what list price maintenance really looks like. You have a few options. For example, you could send a pointed note providing your intent to cancel as of the next maintenance period. Explain that you will act on this intent unless they change their existing terms and agree to re-negotiate the maintenance fees retroactive to the current period. If they re-negotiate, great. If not, you have a full year to evaluate your options and either replace or provide notice that you will continue. Please note: you should take the time to review all of your agreements now to plan for end of term renegotiations so you don't get caught like this again.

 

Have a question? Send us an email or fill out the question form on our contact us page and we will respond.

Disclaimer: These questions are being answered based on limited facts as they have been asked. A complete review of the specific agreements is required in order to give a comprehensive professional opinion.

Q. My EMR vendor insists on using their standard license and services agreement. Does this put me at a disadvantage?

A. In short, yes. Vendors will always insist on using their standard agreement and will be very resistant to anything you may offer. Unless you are a large enough client to force this issue, use their agreement. That does not mean you need to accept all their terms. Everything in an agreement is subject to negotiations. So, if you need to start with their form, so be it. There will be a basic legal framework in their agreement that is a good starting point, but you should never be afraid to ask for any changes if they are important to you. Make sure you are informed about what you need to achieve going into these negotiations, and then make it happen.

Q. I am negotiating my EMR agreement and my vendor wants to lock me in to multiple years of support. This concerns me for obvious reasons. Should I do this?

A. As long as you have protected yourself in all other contractual aspects (service levels, breach, acceptance, support, etc.) then locking into multiple years can be beneficial. First, you should extract more financial concessions for this; second, you may be able to get payment leveling over the term to soften your cash flow; third, you should ask for price protection at the end of the term. If you know that the vendor you have selected is strong and you are comfortable with your choice, agreeing to multiple years can certainly make good financial sense.

Q. My vendor says they are HIPAA compliant but I don't know how to verify this. What can I do to protect myself?

A. HIPAA is one part technology and two parts policy and enforcement. There is no real "certification body" for HIPAA compliance at the software vendor level. CCHIT helps close the gap by reviewing a vendor's privacy and security functionality. To that end, CCHIT certification is a good first step. However, part of being compliant is how you handle and use the data by policy as well.  HIPAA compliance audits will be done at the business entity level in your practice. In order to protect yourself, you should ask the vendor to put their representations into the agreement related to HIPAA along with a mutually agreeable definition. They also need to protect you from claims related to non-compliance, provided that such non-compliance was based on their application deficiencies. Finally, they need to remedy such deficiencies or this should be grounds for a breach of contract determination.

Q. My vendor says a local solution is the way to go, that ASP's are not dependable.  Is a local solution better than an ASP?

A. Sorry to say this, but, it depends. There are several factors in making this critical decision. Do you already support technology in your practice? Do you have sufficient resources and expertise to do so? Do you want the headaches of updates, backups and hardware maintenance? Do you have access to a high speed ISP (Internet) service? Can you get redundent ISP service? Does the ASP vendor have good hosting capability, capacity and processes? Don't assume it is a simple answer. And yes, it is a critical decision, because changing vendors is hard. 

Q. My sales representative has said that several of his sales points are "standard business practice" and does not need to be in the agreement. He even points to their website as proof. Am I okay?

A. No, you are not okay. Remember what sales people are there for...to sell. Anything that is discussed in the proposal or ongoing evaluations must make it into the written agreement or you risk not getting it. It is great that their web site supports the assertions, but the web site is not deemed to be making representations to a specific agreement. If it is important to you, get it in the agreement. No exceptions. 

Q. My EMR vendor is quite small. I love their product but I am concerned about their long-term viability. How can I protect myself?

A. The EMR industry, although it has been around for quite some time, is still an immature industry. There are literally hundreds of EMR vendors out there and most are quite small. To that end, there is risk with many of these vendors. You can put escrow provisions into your agreement and do other contractually related protections, but in reality you need to assure yourself from a business standpoint that this risk is minimized. How many installs do they have? How fast are they growing? Check out if they have participated in certification programs in the past. This shows commitment. Get as much financial information on them as you can. Talk to as many other clients as you can. Use formal channels (ask them for references) and informal channels (find out where they have installations on your own). A contract can only protect you so far. Do your own due diligence.

Q. I am negotiating with an EHR vendor who provides an ASP service. What do I need to know about protecting my clients data.

A. You need to document in the agreement everything related to care and protection of client information. You need to document how the data is stored, where it is stored, where it may and may not be moved to, how it may be used (if at all), how often the data is backed up and where and how often the data restoration process is tested. If possible, you should get copies of their disaster recovery procedures and their privacy and security procedures. Some ASP vendors will have this clearly documented in their agreements, but many don't. You need to review the agreements to make sure they cover all of this in enough detail and provide for remedy in the agreement if there is a problem.

Have a question? Send us an email or fill out the question form on our contact us page and we will respond.

Disclaimer: These questions are being answered based on limited facts as they have been asked. A complete review of the specific agreements is required in order to give a comprehensive professional opinion.