When Your EHR Vendor Goes Out of Business

March 5, 2013

Here's how to prepare for the possibility that your vendor closes up shop.

They say "when one door closes, another one opens."

But when it comes to an EHR vendor shutting its doors, the popular expression doesn't bring immediate relief to a panic-stricken practice. Unfortunately, it's a reality that all practice managers must consider.

Over the past two and a half years since CMS launched its "meaningful use" EHR incentive program, several small and large EHR vendors announced acquisitions, plans to consolidate, or plans to shut down completely.

"There are anywhere from 800 to 1,100 certified products out there, and everyone is expecting in the next five years, you're going to see, for a variety of reasons, forces that are going to drive consolidation of healthcare and health IT," says Scott Monteith, a psychiatrist turned healthcare consultant who specializes in risk management. "You're going to see a lot of vendors not being successful, [and] a drying up of venture capital. You're going to see the vast majority of products falling by the wayside, and a vast number of acquisitions."

Jeff Wasserman, vice president of strategy and executive leadership services at consulting firm Culbert Healthcare Solutions, agrees.

"What's happening right now in the market is there's tremendous impetus for practices, hospitals, and healthcare systems to implement practice management systems and EHRs because of the federal dollars available," he says. "Some vendors are getting overwhelmed … [and] are finding a hard time keeping up with the demand."

Here's how to read between the lines and figure out what it means when your vendor is closing its doors, winding down its EHR or other technology operations, or being acquired - and how to prepare for the worst.

Shutdown scenarios

When a vendor closes its doors, it can mean one of a few things.

In the best-case scenario, one vendor is acquired by another, but everything - from templates to support to upgrade pace - stays the same. Thus, the process is practically transparent to the user.

Other times, when a vendor is acquired, everything changes - and that can be a good thing or a bad thing for a practice, depending on how much staff and physician users liked the old EHR and the nature of the changes. If the shift means a greater level of support from IT liaisons, that's great. But if it means higher prices for upgrades, that's not so great.

In the case of an acquisition, "there are two things that can happen," says Amy Jennings, a strategy consultant at Culbert. "The larger vendor can maintain customer support, or the larger vendor can't provide those services and decides to sunset those parts."

But perhaps the worst thing that can happen is if a vendor shuts down completely with little warning, leaving practices in the dark about what to do next.

"The worst that happens is a company that is acquired and shuts down," says physician Jonathan Bertman, CEO of Amazing Charts, an EHR vendor recently acquired by Pri-Med. "That stops the support."

Monteith says retrieving data from old systems is sometimes a major issue as well.

"God forbid if you find yourself in a medical malpractice case, the expectation is you will present your documentation," says Monteith. "And if you can't present your documentation, you don't have a case. Documentation is a central element of any case. Without notes, you are nearly indefensible."

There are also operational consequences. If your vendor shuts down, your practice will be left scrambling for paper, sans physical medical records. Or worse, if a government agency decides to audit your practice, you could end up paying a steep price.

"What if CMS comes back to you and says, 'we need to see some of your records for billings?'" says Monteith. "What position does that leave you in? Possibly one where you have to reach into your pocket and pay the feds back with interest."

Experts say practices need to do a little investigative footwork to get a good idea of how losing an EHR vendor will all play out - so they know what actions to take.

Preparing for potential shutdown

While Amazing Charts' acquisition only means a change in ownership and higher degree of support from a larger vendor for existing customers, that's not always the case. Therefore, practices are smart to look for clues - and to think about a data contingency plan before a vendor announces it's shutting down.

"If you're looking for advice once the vendor [has] closed its door, you're already behind the eight ball," says Wasserman. "We advise our clients to get out there early and try to figure out what the future of your vendor and the product is."

Wasserman says that in the case of an acquisition, where a practice has advance warning, the first step a practice should take is digesting the news so it understands the implications of the change.

"It can be a good thing," says Wasserman. "Look at the track record of the acquiring vendor [and] understand their plan. The key test, long-term, is to what extent are they moving to an integrated solution?"

If a practice doesn't know in advance that its vendor is shutting down, Wasserman says it can better gauge the likelihood by looking for warning signs, such as a drop-off in service (time it takes to return a practice's request to solve a problem), or a lack in new releases and upgrades.

"If your vendor doesn't have a plan for these changes, or is very slow in reacting, you know you have a problem," says Wasserman.

In either case, a practice should prepare a contingency plan.

As IT is the backbone of the practice, practice administrators need to figure out how they will operate. "Are you going to replicate what your vendor used to do?" says Monteith. "Are you going to run it on your own server so you can buy some time?"

Another tier of protection is technical.

"You need to have someone who is technical and has expertise in backup and can get data to [backup] servers you have possession of," he says.

Starting over

Let's say the worst happens: Your vendor leaves you high and dry, or folds its product suite into another vendor's technology and you don't like the result.

In such cases, it might be more cost effective to start anew.

After you've selected a potential candidate (see http://bit.ly/EHR_Shopping for tips on EHR selection) you can hammer out the important details.

The first issue to consider is transfer of data, which your new vendor should be able to do easily.

"Normally each vendor has a game plan for converting data to a new product," says Jennings.

Next, a practice should do its best to lessen the likelihood of being in this situation again. New vendors should be checked for business solvency, by researching areas such as technology innovations and research and development investments, says Wasserman.

As a final layer of protection, practices should make sure they have solid contracts in place with their new vendors, says Monteith. These should include information on where data is stored, and how quickly it can be recovered.

"If you're an administrator, you're going to contractually make sure you have a good agreement with a vendor," says Monteith. "If the [vendor] doesn't follow through on its contract, what are you going to do?"

Philadelphia-based healthcare consultant and nonpracticing physician Scot Silverstein says a practice should have a data-migration provision of some type in its vendor contract.

"If they don't, or if it's not honored, they will likely need to pay a pretty penny to a new EHR vendor or third party for data migration to a new EHR, assuming the old vendor can and will provide the data schema, or map, terminology sets, etc., needed for the migration," he says.

There are also different considerations depending on whether a practice chooses a cloud-based or server-based product.

"The problem when it comes to using the cloud for health data is that as soon as they move the data offshore, you lose control of your data," warns Monteith. "If you're going to go with more of a server model, you need to look at the contracts, [and] make sure it's a solid company. And you also need to be making backups locally so you have possession of the data. You need to have a very solid answer to this question: What happens if our vendor goes out of business tomorrow?"

Considering all these factors ensures you'll end up with an even better EHR, and be able to say that one door's closing truly means new opportunities opening up for your practice.

Marisa Torrieri is an associate editor for Physicians Practice. She can be reached at marisa.torrieri@ubm.com.

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