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The Beginning of the Vendor Relationship

June 21, 2012
by Gabriel Perna
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The importance of picking out the right clinical IS vendor and hammering out the contract

It would be dramatic to say a health IT vendor contract can make or break a provider organization, and that’s far from the truth. Yet, according to many industry experts, in this day and age, when time is of the essence due to the regulatory pressures emerging from the American Recovery and Reinvestment Act/Health Information Technology for Economic and Clinical Health (ARRA/HITECH) Act, the transition to the ICD-10 coding set, and the Affordable Care Act (ACA), it’s not a stretch to say that strategizing a vendor contract for a clinical information system (IS) is of the utmost importance.

Providers can rarely afford to make a mistake when choosing a vendor, especially for an EHR system. With meaningful use, a vendor’s products must stay aligned with the requirements, says Fran Turisco, director of the Pittsburgh-based consulting firm Aspen Advisors. As the Massachusetts-based Turisco notes, the worst thing that can happen is to put a lot of time and money into an implementation that won’t get an organization to where it wants to be.

It’s not just about meaningful use, in her view. “I would look beyond that,” Tursico says. “I’m working with a number of hospitals that are starting to get into accountable care, whether it’s a CMS [Centers for Medicare & Medicaid Services] pilot or any program. They see it coming. They are building relationships with payers, community hospitals, long-term care facilities, and all of this…relies on technology. It’s how you communicate. It’s how you share data. That’s how you get referrals to the tertiary care hospitals.”

Fran Turisco

If the vendor relationship is not to be taken lightly, the lengthy process of choosing a vendor must be a procedure of logic, says Joe Marion, founder and principal of the Waukesha, Wis.-based Healthcare Integration Strategies. Marion says this is not what vendors want to hear, but for the provider, it makes sense. “It’s important for facilities to zero in on strategic vendors that make sense,” he says. “If I’m a McKesson hospital, it doesn’t make sense to look at a Cerner solution. If I’m Siemens for imaging equipment, it doesn’t make sense to be looking at GE for a PACS [picture archiving and communication system].”

Marion acknowledges that there are some exceptions, but says it’s generally better to know which vendors make sense strategically before going about a search. Rick Ferguson, president and CEO, Oklahoma Surgical Hospital, a 76-bed facility in Tulsa, says his organization had trouble with this facet, before settling on a working solution. Because the hospital has numerous surgical specialties, it requires management from the surgical side plus patient accounting needs.

Oklahoma Surgical had trouble finding the right recipe, and went with MedGenix (Springfield, Mo.), which eventually merged with Prognosis (Houston, Texas). The first system from MedGenix was an integrated relational database, and it didn’t fit the hospital’s needs for a surgical management solution, according to Ferguson. It continued to use MedGenix for the patient accounting, while for the surgical management system, the organization chose Surgical Information Systems (Alpharetta, Ga.), and developed an integrated best-of-breed approach.

Chuck Podesta, senior vice president and CIO at Fletcher Allen Health Care, a 550-bed tertiary care academic medical center in Burlington, Vt., says his organization wanted to get down to two vendors as quickly as possible during the selection process for its EHR vendor. Once it narrowed down the choice between Cerner (Kansas City) and Epic (Verona, Wis.), the entire organization was involved in making the final decision, he says. From an EHR perspective, he said clinicians, in particular, had a big say in selection. Through this process, which also involved a thorough cost-analysis, Fletcher Allen chose Epic.

Joe Marion

Once a company has been selected, the next step is working out a contract. Contract flexibility depends on both the vendor and the organization, Aspen’s Tursico says. Prestigious organizations, such as a Johns Hopkins or a Mayo Clinic, have leverage, she says.  Speaking from the perspective of the provider organization, Podesta notes that some contracts, like those offered by EHR vendors such as Epic and Meditech (Westwood, Mass.), are going to be ironclad, while others, such as McKesson and Cerner, tend to leave a little bit of wiggle room for providers.

The decision to stay with MedGenix wasn’t an issue, according to Ferguson. “With any information system, it’s almost like a marriage; you have to make sure there’s a fit there, and we felt culturally comfortable with them,” he says. Once MedGenix and Prognosis merged, he says choosing an EHR became a lot easier for Oklahoma Surgical because of the culture and the fact it wouldn’t have to maintain two separate databases.

Podesta says providers must not allow the need for contract flexibility to place a burden on the most important part of the process: the go-live. “Get it up and running so you can start to get the benefits of it and move into optimization phase, where you really get the benefits,” he urges. “You don’t want to fall on your face…The last thing you want to do is put together a four-year implementation plan because you are changing the system over and over again, and trying to get 100 percent out of the design of the system. That’s a dangerous road to go down since you don’t know how good this system is until it’s in use.”

There is also the potential to be too aggressive, in the desire to go live as fast as possible, especially under the pressure of meaningful use deadlines, says Podesta. He says if an organization is just starting its EHR selection now, it’s not worth it to hit any meaningful use deadline before 2015. The money it would get from incentives isn’t worth risking the organization’s profitability, he says.

Finding the middle ground that Podesta speaks of is something Turisco advises as well. “Before you sign on the dotted line, make sure the ball is in your court,” she says. “Make sure all the important points are in the contract before you think about signing it. But the other thing is, is you can’t drag it out. Once you get involved, the important thing is to make sure it is someone’s business that all the bases are covered.”

Chuck Podesta

The relationship should not end at the contract signing, of course. Observers like Healthcare Integration Strategies’ Marion say that developing a strategic connection within the organization is essential to quickly resolving issues as they occur. The worst thing that can happen, he says, is having a vendor that closes the deal, collects, and moves on. “Make sure that it’s a two-way partnership,” he says, and one designed to last for years, especially given the long horizons involved in achieving meaningful use and preparing for the future beyond meaningful use.

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