Beware the hidden costs of a poorly constructed EHR contract

We know that electronic health records can cost a lot of money, sometimes millions of dollars.  

So it would be pretty disconcerting for a provider to learn that it has to pay additional amounts on top of that initial layout.   

Yet evidently, this is not uncommon, and it's often because providers make mistakes when entering into a contract with an EHR vendor. There are all sorts of unexpected fees or other costs that can trip up even a savvy provider, as attorney Steven Fox, with Post & Schell in Washington D.C., pointed out in a recent webinar on the subject sponsored by the American Bar Association's Health Law Section. 

Moreover, many of these money sinkholes aren't even due to nonnegotiable, unfair one-sided contract provisions. They're really more construction issues.   

Some of the problems that can ratchet up the cost of an EHR are fairly well known, such as failing to tie vendor payments to operational milestones when implementing an EHR system. There are hospitals that have had to resort to litigation to rectify poor vendor implementation and support.

But a few of the pitfalls Fox mentioned are not that obvious.

Here are some of the contract issues that can give providers a "nasty" financial surprise, as Fox put it:

  • Unclear definition of "customer."  It's important to define "customer" to include applicable related organizations, so providers don't have to later add them to the contract at an additional cost, Fox said.
  • Sales tax implications. If there are for-profit and nonprofit entities involved, the type of entity listed in the contract as the EHR purchaser could affect whether sales tax would be imposed, according to Fox.
  • Licenses that limit corroboration with other providers in, for example, an accountable care organization or health information exchange. "You don't want a situation where you have to go back to the vendor and the vendor charges you extra [for this approval]," he warned.  
  • Too much allowable down time in the level of service. "If the vendor says it's 99 percent available, [that sounds great but in reality] that means almost two weeks of down time," Fox said.
  • Tipping your negotiating hand. Fox noted that providers should not tell an EHR vendor that it's the only one the provider is considering. "The only leverage in negotiations you have is the ability to walk from the table. If you say up front you don't have a second choice of vendor [waiting in the wings], the vendor is less likely to negotiate. It kills your leverage," he explained.    
  • Agreeing to language that wipes out your insurance coverage. Fox said he has noticed a "troubling trend" where EHR vendors want customers to indemnify them for third-party claims, even due to the vendor's own negligence. Fox warned that such a clause is "ridiculous" since it ignores the reality that the industry is moving to electronic clinical decision support. "If you agree to this language [you won't have insurance coverage since] almost every insurance policy has an exception for assumed contractual liability," he said.  

And these financial pitfalls don't even include costs stemming from potential legal problems, such as an EHR design feature that results in patient harm. Wow; talk about an ounce of prevention being better than a pound of cure. 

Providers, please take heed. - Marla (@MarlaHirsch @FierceHealthIT)