Special contribution by Jeffery Daigrepont, Senior Vice President, the Coker Group
It seems inevitable that every practice will eventually be on an electronic health record (EHR) system. Making the right vendor decision and avoiding pitfalls is critical to having a successful experience. Below are the hard lessons learned by those who have been there, done that, and paid the price. These are true stories of clients that engaged the Coker Group after their purchases. For confidentiality, names of vendors or practices are not disclosed.
Hard lesson #1: Suprise costs for software upgrades
A small practice in Ohio bought a new system, and everything seemed to be going well. Eight months after the purchase, however, the vendor sent the practice an unexpected invoice for $5,000. Stunned, the practice demanded an explanation. The vendor replied with a letter stating the version purchased by the practice will not comply with ICD-10; therefore, the practice needed to upgrade and purchase the newer version. To make matters worse, the existing operating system on the server was not adequate to support the new version. To meet the requirements, the practice faced more than $10,000 in unexpected fees.
How to avoid this mistake: Have a solid agreement
A practice should never buy any EHR system without a written guarantee from the vendor ensuring its compliance with all federal, state, and local mandates that will affect the functionality of the software. Moreover, the vendor should always provide the practice with an unlimited number of upgrades and access to new releases as a component of the monthly maintenance contract. Many vendors have been known to commercially discontinue their software or undergo an acquisition, then attempt to resell the newer version back to their existing clients. This is unethical, and it is 100% avoidable if practices make upfront arrangements with the vendor to provide future versions and new releases at no charge.
Hard lesson #2: EHRs don't perform as promised
A large urology practice on the East Coast bought a fully integrated practice management and EHR system from a well-known vendor. At the time of the purchase, the practice funded 100% of the investment though a leasing company for a total commitment of more than $500,000. The purchase included all the software, hardware, training resources, and tablet PCs. About 12 months into the installation process, the practice became dissatisfied with the vendor. But the vendor had little incentive to improve because the entire system was paid in full. The physicians refused to use the EHR, and they could not return any of the equipment or software because it had been used.
Moreover, the practice purchased 40 tablet PCs with MicrosoftTM Home edition, only to later discover that the system required Microsoft Professional as the operating system. The vendor refused to take responsibility for this mistake because the practice was unwilling to go forward. The practice tried to sue the vendor, but the court threw the case out. Coker negotiated a settlement of 20% of the $500,000, but clearly the practice suffered a major loss.
How to avoid this mistake: Don't pay upfront before the goods are delivered
First and foremost, never pay in full for any technology before knowing the system will work as promised. It sounds basic, but many vendors show the cost as a monthly payment. However, the financial obligation will rest with the leasing company. This mistake can easily be prevented by requiring the leasing company or vendor to comply with performance-based payment terms. Here is an example of an easy payment schedule that is fair to both the vendor and practice:
- 10% payment at contract signing
- 10% upon shipping the software
- 10% at installing hardware
- 10% at loading software
- 10% after successful staff training
- 20% at successful go-live
- 20% after go-live
- 10% 30 to 45 days after go-live to ensure everything is working properly
In addition to these payment terms, never purchase professional services in advance. Professional services should be paid based on what you actually utilize, not on a projected budget. Also, it is essential to hold the vendor accountable for any software defects and equipment malfunctions.
Hard lesson #3: EHRs missing necessary content
A surgical practice in Alabama bought a system based on verbal promises from the vendor that the system would have functionality designed specifically for surgeons. The practice confirmed that the vendor had one surgeon-client who helped with content development. The practice did what most would do and had the vendor put this promise in writing. However, after installing the system, the surgeons discovered that the content created was weak, underdeveloped, and useless to the practice. The vendor maintained that it held up its responsibility because the system did have some surgical content. Because the parties never defined the content expectations, they argued over the content features; the practice demanded a refund. The vendor refused to refund, and the practice tried to sue the vendor in the state of Alabama, but it was tossed out immediately because the vendor required venue and governing law to be in its state. The practice could not justify the cost of defending the dispute across state lines, and it dropped the suit and took a total loss.
How to avoid this mistake: Detail content expectations and state
There are two issues here: First, never assume the vendor knows what you are expecting on a good faith promise, even if it is put in writing. This practice should have required the vendor to provide a detailed statement of work (SOW) for content development as an addendum to the contract. The SOW would make expectations clear and could even have specific examples of content to be added to the system. Second, always try to get the vendor to move the venue and governing law the state where the software is installed. If the vendor refuses this request, pick a neutral state (with the exception of Delaware) that would be mutually inconvenient to both parties. Most vendors will agree to this request, contingent on a purchase.