Medical Practice Vendor Package Deals: The Pros and Cons

October 5, 2013
Aubrey Westgate

Here's how to determine what technology purchasing route is right for your practice.

Paula Taylor sees plenty of technology troubles on a regular basis - not the least of which arise when medical practices take an unnecessarily complicated approach to technology acquisitions.

In fact, Taylor, principal at Atlanta-based practice management consulting firm Better Performing Practices, is currently working with a practice that is stuck in a confusing web of technology vendors. "They're coming from a place right now where they have a hodgepodge of legacy systems," says Taylor of the four-physician OB/GYN practice she's currently working with. "It's very cost prohibitive for them because they do have so many vendors that are involved, and there are support fees on top of layers of support fees."

But cost is not the only problem the practice is experiencing. Its vast array of vendors and products makes it difficult for the practice - and its vendors - to troubleshoot when problems arise. "A lot of time in that practice has been wasted," says Taylor. "Whenever there is an issue [the practice is] trying to unpeel that onion to find out which vendor it is who's responsible, who's going to own that process."

For that reason, Taylor is helping the practice move to a more streamlined technology approach: A web-based package in which one vendor will provide a suite of technology products and services, including an EHR, practice management system, and revenue cycle management system.

Still, while the packaged approach is best for this practice, Taylor says there's no one-size-fits-all strategy to smart technology purchasing. One practice might thrive with a package, another practice might benefit from a more a la carte approach, in which it picks and chooses products from a variety of different vendors. "I really don't think there is a preferred way, it just depends on where they are, what kind of resources that they already have, what are they bringing to the table, where is it they want to go," says Taylor. "I've seen so many variations of it and I wouldn't say that there's any one way to build a better mousetrap with it."

To help determine which technology purchasing approach is best for your practice, we asked Taylor and a number of other medical practice technology consultants to weigh in. Here's what they said are some of the biggest considerations practices need to make when deciding between a package deal and a la carte approach.

Consider quality and expertise

As technology vendors attempt to lure in more customers - and make the most of each customer they attract - nearly all of them are offering packages, and they come in all shapes and sizes: from packages made up of multiple software products, such as an EHR, patient portal, and practice management system; to packages made up of software and hardware products, such as a practice management system, laptops, scanners, and printers; to packages made up of technology products and outsourced services, such as a practice management system and a revenue cycle management service - it's likely that your practice will have no trouble finding a package that checks off every item on your shopping list.

It's also likely that your practice will find a package that offers cost savings, says Michelle Holmes, principal at ECG Management Consultants, a Seattle-based healthcare consulting firm. "If you go with a single vendor, you may get some volume-type discounting where the more you buy from that one vendor they'll give you a deeper discounted level across the board," she says.

Still, don't let cost savings cloud your judgment when deciding between a package deal and a more piecemeal approach. One reason: As vendors rush to broaden their customer base and expand their technology offerings, some are releasing packaged products prematurely.

"Right now we see a market where vendors are trying to bundle technologies and services that aren't their core competency," says Holmes, pointing to the example of a software vendor offering a package made up of software and hardware. "They really don't have a lot of familiarity with how to deploy and support some of the things that they are putting in these bundles."

For that reason, it's critical for practices considering package deals to assess the vendor's track record and expertise with each of the products included in the package, says Holmes. "I would ask really simple questions like: 'Are we the first one that you've bundled these particular technologies or services together for?'; 'Do you know that these things actually work well together?'; and 'Have you supported these things together?'"

Consider features and functions

In addition to assessing the vendor's expertise, another top consideration should be whether the technology products meet all of your practice's unique needs. This is one area where a more a la carte approach might provide an advantage. That's because your practice will be able to pick and choose between all the different vendors and technology products on the market, rather than being limited to the products included in a package.

For that reason, if a practice is considering a package deal, it's critical to ensure each of the products included meets all of its unique needs, says Medical Group Management Association consultant Rosemarie Nelson. If your practice is looking for a package made up of an EHR and a patient portal, for instance, write down all of the features and functions you'll need both products to include. You might decide that your practice needs a portal that allows patients to schedule appointments online, but if the portal included in a particular package only lets patients request appointments online, then you shouldn't settle for less than you need. "If you really wanted that [feature] and you felt like that was going to drive tremendous operational efficiency in your practice, then you might make that a deal breaker," says Nelson. "If it's something that you're thinking about, 'Gee, that might be nice in the future,' then be patient because the vendor will probably deliver that in the future."

Another option: Ask the vendor to guarantee that the missing feature will be added to the portal within a certain period of time, such as within a year after implementation. But don't rely too much on such guarantees if the missing feature is critical to your practice. "Releases get pushed out in the future, further and further, so if it's an absolute must-have, make sure it's already live in the solution," says Nelson.

Consider ease of use

When assessing potential new technology products, another top consideration should be how easy it is to implement and use them. That's one area where a package might offer several advantages. One of the biggest reasons: If you purchase a technology package from one vendor, it's likely that many of your technology products and services will be provided by one vendor (or one vendor and its partners). As Taylor noted, and as her practice client will soon experience, utilizing one vendor may help streamline processes and improve efficiency. Here's why:

• It eases administrative burdens. Since you'll only need to deal with one vendor, your practice saves time and resources, says Holmes. "If you're a small practice, it's easier if you only have to have a relationship with one vendor instead of managing the contracts, and the points of contact, and the different help desk numbers, and things like that from multiple different companies."

• It helps with troubleshooting. Since one vendor is providing multiple products, you'll only need to deal with one point of contact when technology problems arise, says Nelson. "You don't struggle with finger pointing and waste a lot of time and effort trying to get two vendors on the same conference call."

• It eases the transition. Since one vendor is providing multiple products and services to your practice, it's likely the products will work well together from the get-go. Consider, for instance, a package composed of hardware and software. Since the vendor is providing the hardware directly, it will likely configure the hardware to ensure it works well with the software included in the package, says Abbey Dieteman, cofounder of Kenwood, N.Y.-based Dieteman Technology Consulting.

Using one vendor for software and hardware also streamlines upgrades, since the vendor will ensure both products are upgraded appropriately. "You know all your technology is on the same page, so that's definitely an advantage," says Dieteman. "You don't have to have somebody else come in and look at your computer when you get a software upgrade, [the vendor is] going to be prepared to deal with that with you."

• It helps staff adjust. Since one vendor is providing your practice with multiple products, it's likely that each product will have a similar "look and feel," says Nelson. That will make it easier for staff to learn to use the various products, and for new hires to get acquainted with your technology quickly.

Consider information flow

Another priority when assessing potential new technology should be ensuring that information flows seamlessly between products. This is especially important for practices considering EHRs, patient portals, and/or practice management systems. "It really deals with moving data within the practice and having the data flow between - not just between systems - but from registration, to the [medical assistant], to the nurse, to the doctor, to the billing," says Mark Anderson, CEO of AC Group, Inc., a healthcare technology advisory and research firm based in Montgomery, Texas. "When everything is working seamlessly, things work so much better. When it's interfaced or separate products, the data doesn't flow all the way through and you end up missing certain things."

When information flows smoothly between systems, it will also help physicians satisfy the requirements in the various stages of the government's EHR incentive program. For instance, in the Stage 2 rules of meaningful use, physicians will need to provide more than 50 percent of patients with online access to their health information (such as lab results) within four business days after the information is available to the physician. "As lab tests come in to the physician's inbox and EHR and the physician acknowledges those lab tests and decides to share those with the patient, they're going to want that to move seamlessly into the patient portal," says Nelson. "You don't want to have to copy and paste something or have the physician's nurse have to do that."

If seamless information flow between products is important to your practice, purchasing a package might provide an advantage over a non-packaged approach. Again, since one vendor is likely providing multiple pieces of technology, it's more likely that the technology will work well together, and therefore, exchange information more easily. Still, purchasing a package deal does not guarantee information will flow easily. One way to check: Ask the vendor to refer you to a similar-specialty practice using its technology package so that you can see how information flows between systems.

While a more a la carte approach to purchasing technology does not necessarily mean information will flow poorly, it will likely require an interface, says Nelson, adding that using an interface has its drawbacks. "I think that if you go with multiple vendors, ongoing costs will be higher because of interfaces," she says. "Every time one vendor has an upgrade, there may be a risk of having to apply some upgrade or patch to the interface."

Consider long-term implications

Prior to investing in new technology, practices must consider possible worst-case scenarios that could occur. For instance, how will the practice be affected if the vendor goes out of business, or if the vendor is acquired by another company?

If your practice purchases a package deal, in which multiple products are provided by one vendor, these worst-case scenarios could have broader effects, as the multiple technology products your practice is using could be affected simultaneously. At the same time, Nelson points out that if your practice goes with a more piecemeal approach, your practice will need to focus on the long-term viability of multiple vendors, rather than just one (or one vendor and its partners).

While there's no crystal ball to forecast a vendor's long-term viability, practices can increase the likelihood of a smart vendor selection by doing their homework, says Nelson. She suggests considering the vendor's history and track record, reviewing any available financial reports, and asking key questions regarding its strategy for long-term growth. "If you don't have a good sense from the [vendor] and the structure that it's a good environment then maybe you need to steer clear," she says.

There's one more worst-case scenario practices need to hedge against that is specific to practices considering package deals. What happens if your practice finds that most of the products within the package work fine, but one or two of the products do not? "I think the biggest pitfall you have to make sure of with a package is can you 'unbundle' the system if it becomes necessary," says Jeffery Daigrepont, senior vice president of the Coker Group, a national healthcare consulting firm based in Alpharetta, Ga. While most vendors allow unbundling, some prohibit it, he says. "That could mean that you'd have to replace everything."

Money-saving tip

If your practice is interested in purchasing multiple products from one vendor, use your bargaining power. "Often, even if it's not promoted, a practice can achieve a better price or a discount if they do contract for the suite of services," says Medical Group Management Association consultant Rosemarie Nelson. "Ask for it because it might not be promoted."

Critical questions

Considering investing in a technology package deal? Visit http://bit.ly/Package-Questions for a list of key questions to ask your vendor.

In Summary

Many technology vendors are offering package deals, in which practices can purchase multiple products at a discounted rate. Prior to investing in a package, however, practices should ensure:

• The vendor has strong expertise with each of the products included in the package, as well as a strong track record supporting the products in package form;

• Each of the products included in the package is equipped with the features and functions necessary for your practice;

• Information will flow seamlessly between products; and

• It's possible to "unbundle" the package if some of the products included are unsatisfactory.

Aubrey Westgate is an associate editor at Physicians Practice. She can be reached at aubrey.westgate@ubm.com.

This article originally appeared in the October 2013 issue of Physicians Practice.