Choose your vendor/provider battles wisely

Aug. 22, 2014

Healthcare organizations are seeking to meet Meaningful Use requirements, comply with the change from ICD-9 to ICD-10 and succeed under the auspices of the Accountable Care Act. They’re doing all this while trying to meet the triple aim of enhanced patient experiences, improved population health and reduced costs. The end result: The pressure is on like never before, and things sometimes fall apart as tensions boil over between vendors and healthcare organizations.

Becky Quammen, CEO, Quammen Health Care Consultants

While large-scale healthcare software implementations have always been challenging, I have noticed a definite uptick in the amount of negative media reports lately. Unfortunate scenarios include:

  • A critical-access hospital sued a vendor over a failed EHR installation, alleging breach of contract, negligent misrepresentation and fraud, and conveying “disparaging attitudes” toward the hospital.
  • A hospital laid off almost 50 employees and temporarily reduced the salaries of all staff members due to the effects of the Affordable Care Act – as well as the costly rollout of “an inadequate software program.” Hospital executives claimed the system cost tens of millions of dollars yearly after it went live.
  • Just four months after going live on a major EHR system, the CIO of a hospital was out of a job. The hospital’s president put a freeze on hiring and travel and delayed the EHR rollout throughout the rest of the health system. These actions were attributed to a number of factors, including a decline in patient volume, an increase in the percentage of patients who couldn’t pay for services and the EHR implementation.
  • A healthcare system discontinued using a patient accounting system and other services provided by a major vendor, alleging the solution was not working correctly. The vendor refuted the allegations, and the two organizations ultimately settled on a $100 million-plus settlement – yet the provider continued to use clinical solutions from this same vendor.

Obviously, this discontent has to be curbed. Here’s what I think is behind some of this negative energy, interspersed with some of my thoughts on how to make it stop:

The gloves are off. According to many recent reports, vendors are willing to openly criticize their client’s organizational structure, project commitment, administrative leadership and CIO’s skills. While these information system projects are frequently flawed on many levels, business etiquette seems absent.

For me personally, this is a line that should never be crossed. Vendors do not completely understand the wall that healthcare organizations are up against. They do not handle the day-to-day operational and patient-care challenges that providers are forced to deal with, so they should refrain from public criticism.

Healthcare organizations are beating a path to court. Does anyone ever win with litigation? Probably not, yet some healthcare organizations are ready to jump right into escalation and arbitration as soon as they hit a few bumps in the road. While organizations may get frustrated waiting for their current vendor agreements to pan out, leaders should remember that replacement products are challenging to select, analyze, contract for and implement. Providers should carefully weigh their alternatives before seeking resolution in court.

Vendors aren’t playing fair. Some vendors are running out on basic obligations. Unfortunately, the impact on an organization is irrecoverable. Vendors need to step up to the plate, stop hiding behind the words of their agreements and meet the intent of
these contracts.

Technology systems are not ready for prime time. Healthcare organizations are faced with a flood of software deliveries, upgrades and code fixes that appear to have limited testing. As a result, valuable project time is now spent installing and testing these software fixes in-house – and not on design and workflow. While vendors are not entirely at fault given the short timelines imposed by government regulations for product certifications, they do have a responsibility to deliver quality solutions – or not deliver solutions at all.

Organizational leaders are sometimes in the dark. The proverbial devil is always in the details. It is critically important to get into the details quickly, so surprises do not reveal themselves in projects when remediation attempts are too late. Vendors should aim to develop more digestible contracts, while healthcare organizations need to read and interpret contracts carefully before entering into any agreement.

There is a lack of understanding surrounding the total dollars required. The investment in EHRs is staggering, regardless of vendor or healthcare enterprise size. While many of the initial costs are controlled by the purchase agreement and are fixed, implementation costs are another story and are generally presented as “estimates.” Providers need to exercise caution in their understanding of contracted implementation services. Unmanaged project implementation costs can represent the single greatest impact on an organization’s financial performance.

Don’t let an EHR implementation endanger the organization’s bottom line.

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