What to Know About Negotiating with an EHR Vendor

January 27, 2017

Keeping emotions out of it, having a "Plan B," and being able to walk away are three key skills you need when negotiating.

Dan O'Connor, vice president of client relations at Stoltenberg Consulting, has three key pieces of advice for practices that are heading into negotiations on pricing with their EHR vendor:

• Don't get emotional.

• Don't be afraid to walk away from the table.

• Don't enter negotiations without a Plan B.

Without a Plan B, "you leave yourself vulnerable to backing yourself into a corner without an escape plan," he says. It's equally important to be comfortable walking away from the negotiating table, even if you have chosen a preferred vendor and are already engaged in the process. If at any point in the negotiation you're not comfortable with the process, step back and re-evaluate, he advises.

What informs the negotiation is kicking off the EHR selection process by assessing the practice's current state. This exercise forces the practice to determine the positive aspects of its current EHR, any relevant gaps, and the requirements moving forward, O'Connor says.

While determining the practice's EHR requirements and negotiating strategy can be done internally, O'Connor recommends hiring an outside consultant who has experience with EHR vendors - and that's particularly the case if the practice hasn't gone through a complicated system selection process. Investing in a consultant can translate into significant time and cost savings related to the EHR purchase, he adds.

When preparing for discussions with the vendor, it's important to evaluate and negotiate the entire lifecycle of the contract. This should include licensing, implementation, and post-implementation support, O'Connor says. "Each section is equally important and can have hidden costs, so having an experienced, well-informed team is critical."

The people you have sitting around the negotiating table should include the outside consultant with contract negotiation and legal expertise, an IT representative, two or three team members who can speak to "needs versus wants," and the practice's decision-maker, according to O'Connor.

Having a lead negotiator is vital to the practice's success. Dealing directly with the vendor, this decision-maker should be the face of the practice's negotiating team and capable of outlining the contracting process from the beginning and moving the entire process forward with integrity, he says.

Practices should negotiate with vendors for a fixed-fee implementation, which shares risk between the vendor and the practice - this approach builds in an incentive for the vendor to meet their deadlines, says O'Connor. Absent a fixed-fee approach, an implementation that includes checkpoints with financial penalties is a good alternative.

"You want to make sure the vendor is sharing the implementation risk. This is a place where project costs can skyrocket if both parties aren't held accountable," he says.

In terms of a timetable, there's "no set rule of thumb." Ultimately, a timetable serves to keep the process moving forward; still, it shouldn't be rigid, advises O'Connor.