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Rethinking the Vendor Relationship

May 26, 2011
by Mark Hagland
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When it Comes to Clinical Implementations in the Current Operating Environment, CIOs are Reconsidering What They Need from Their Vendors

EXECUTIVE SUMMARY: As the landscape around contracting with EHR vendors evolves rapidly forward because of meaningful use, CIOs need to think very carefully and very strategically about their relationships with vendors-both those they are now beginning to enter into contracts with, and those they've already partnered with.

Edmund Collins, vice president and CIO at the two-hospital, 350-bed Martin Memorial Health Systems in Stuart, Fla., is like a lot of CIOs these days, who are faced with the need to go through a full selection process on EHR vendors in a relatively short period of time in order to try to move forward quickly on meaningful use under the federal Health Information Technology for Economic and Clinical Health (HITECH) Act. Collins recently helped lead his colleagues through an accelerated vendor selection process, which included his organization's existing vendor and three other vendors-all of them among the best-known names in the business.

Edmund Collins
Edmund Collins

“We were focused mostly on the fact that we wanted an integrated solution, first and foremost, because of our large and growing physician presence,” says Collins, referring to the fact that Martin Memorial already employs more than 100 physicians, and is looking to add additional salaried physicians to the organization's roster. In addition, he says, he and his colleagues were hyper-aware of the need to get all the internal and external implementational talent they needed as soon as possible, given the current HITECH-driven rush for help implementing EHRs.

THE MAIN MISTAKE I SEE IS IN THE MAINTENANCE SIDE OF A VENDOR SOFTWARE OR HARDWARE CONTRACT, AND IS SOMETHING OFTEN OVERLOOKED ON THE CONTRACT SIDE. -STEVE GARSKE, Ph.D.

WE STACKED THE VENDORS UP ONE EVERY WEEK, AND WE GAVE EACH VENDOR THREE FULL DAYS EACH TO MAKE A PITCH. AND AT THE END OF EACH DEMO, IF THEY DIDN'T STACK UP, WE WENT AHEAD AND CUT THEM OUT OF CONTENTION RIGHT AWAY. I DON'T THINK YOU CAN OFFER THE VENDORS SECOND CHANCES THESE DAYS. -EDMUND COLLINS

Steve Garske, Ph.D.
Steve Garske, Ph.D.

Interestingly, Collins says, that time pressure ended up working to his and his colleagues' advantage. “We stacked the vendors up one every week, and we gave each vendor three full days each to make a pitch,” he says. “And at the end of each demo, if they didn't stack up, we went ahead and cut them out of contention right away. I don't think you can offer the vendors second chances these days,” he says. In addition, he says, allowing all the stakeholders more time to ponder things would not have helped, “because you can run into analysis-paralysis.”

In fact, Collins says, the four finalist vendors' demos varied considerably in quality; and in the end, his organization chose to go with a vendor that was not their incumbent vendor (they ended up choosing the Verona, Wis.-based Epic Systems), based on calculations around strong referrals and track record with customers, and the belief that the vendor they ultimately chose had the best chance of delivering exactly what it had promised. Certainly, a great deal was on the line, including the fact that the organization's IT department has swelled from 45 people to 105, in order to support the implementation.

I THINK IT'S IN THE CIO'S INTEREST TO LISTEN TO THE DEPARTMENTAL VENDORS IN TERMS OF WHAT WILL CONSTITUTE-THEY NEED TO BE SENSITIVE TO BALANCING CLINICAL NEEDS VERSUS THE NEEDS FOR INTEGRATED HOSPITAL SOLUTIONS. THAT WAS A MAJOR PORTION OF DISCUSSION AT ACC. -JOE MARION

Most of all, says Collins, “We've made a huge commitment to achieving meaningful use,” with an internal goal of the physicians going live this October and hospitals live by December. And this EHR vendor relationship is “exactly like a marriage, so I was really cautious to educate everyone that hey, you need to look at this as being a partnership for the next 20 years. So you can't look at the relationship as transactional. And getting the contract signed by a certain date, that's only one step.”

LONG-TERM VENDOR RELATIONSHIP

Nationwide, many CIOs are thinking along the same lines as Collins. Regardless of which EHR vendor they choose, they are keeping in mind during this time of high pressure around HITECH and healthcare reform that the vendor they choose is one with whom they will have to move down the road together for years, perhaps even decades.

Among the key elements that CIOs should consider, everyone interviewed for this article agrees, are:

  • The intensity of need for implementational support from one's vendor, at a time of greater need than availability of experienced implementers;

  • The reality that the meaningful use “journey” is one stretching for several years into the future, so quickly switching vendors if one is dissatisfied would involve considerable risk; and

  • The need to rethink what kinds of needs one's organization will have for support, training, ongoing maintenance, etc., far beyond the initial EHR or other clinical implementation itself.

Jane Metzger
Jane Metzger

 

In fact, the very time/intensity pressures facing CIOs is causing some to make mistakes, says Steve Garske, Ph.D., vice president and CIO of the 286-bed Children's Hospital of Los Angeles. “What I'm seeing now is that everyone is frenzied, and they are jumping into this so quickly; and one of the most complex things to deal with for a CIO is the implementation of clinical systems. It is highly, highly complex, and if you make a mistake, it could put someone's life at risk. So you need to make sure you do the planning and appropriately maneuver your way through the contracting process,” he urges.

Is Meaningful Use Changing EHR Vendor Contracting Patterns?

Just how aggressively can CIOs get in pushing for vendor contracts that are more favorable to their patient care organizations? “It really varies by vendor,” says Jeff Ganiban, a partner in the Health Law Group at the Washington, D.C. law firm Drinker Biddle and Reath. “We're seeing some vendors saying they can make certain commitments around Stage 1; but in terms of Stages 2 and 3, they're being very wary,” he says, referring to the stages of meaningful use requirements under the HITECH Act. “Some are saying that they might want to partner with a third party for certain elements for those stages, and don't want to commit to providing elements to providers at no charge when they might have to obtain those elements from third parties. Others, which are in the minority, are agreeing to make some commitments related to Stages 2 and 3.”

One key element to keep in mind, Ganiban says, is that “When the so-called Stage 2 requirements come out, the regulators have left open the possibility that even the functionality around Stage 1 may change. So for example, even if you've already implemented it and are still in that Stage 1 window, once the Stage 2 certification comes out, there is no longer any Stage 1 certification; the Stage 2 certification level will be the only certification allowed.” The bottom line for CIOs? It will be more important than ever for CIOs to think extremely strategically about the terms of their contracts with their EHR vendors, in the context of advancing meaningful use requirements in the next few years.

Garske, who is so passionate about vendor issues that he recently authored his doctoral dissertation on the topic, goes on to say that “The main mistake I see is in the maintenance side of a vendor software or hardware contract, and is something often overlooked on the contract side. And that's where, typically, a vendor, especially a software vendor, will make a great deal of their return. So we usually go in and ask for a 60-percent discount off the software cost, but also ask for some kind of discounted rate across all the maintenance areas, and to make sure we have the response times and support levels that we need, with risk on the vendor side.”

He goes on to note that “We just went through the implementation of some medication dispensing units, and built in a response time requirement; and our core clinical IT vendor hasn't yet met our requirements for response time-the company they are contracting with to repair our medication dispensing units. So that's something you have to look at very carefully, if you're using a vendor that is subcontracting to another vendor for a piece of the services you need; and then tying that to some kind of financial penalty.”

THE STAKES: HIGHER THAN EVER

“If ever there was a time when the partnership aspects as well as the contractual aspects, of the vendor relationship, have to be effective, it's right now,” observes Jane Metzger, principal researcher in the Waltham, Mass.-based Emerging Practices division of the Falls Church, Va.-based CSC. “Just to give one example,” Metzger notes, “customers have to trust that their vendor is going to keep up with all the meaningful use requirements, and that they're going to not just have the capabilities to pass HITECH certification, but that they're actually going to build and deliver and support implementation of truly meaningful use. And there are very short timeframes involved, and there's a lot at stake. So I would say in all my years in this industry, this is probably the most crucial time for that to be a very effective customer-vendor relationship.”

Joe Marion
Joe Marion

In that context, engaging both internally and externally will be critical to CIOs' success, urges Scott Grier, principal in Preferred Healthcare Consulting, a Sarasota, Fla.-based consulting firm. Grier believes that CIOs need to consistently engage internal stakeholders, most particularly clinicians and clinician leaders, while also moving forward collaboratively with vendors. “I think CIOs are realizing that to achieve success, you have to have a good relationship with your vendor,” he reflects, “because at the end of a five-year project, if you're constantly forklifting out for aspects of implementation or training, that represents failure. And very few people do a post-mortem and figure out what really failed. So they end up moving onto the next vendor, and making the same mistakes. And a lot of that has to do with the very short tenure of many CIOs now.”

CUSTOMERS HAVE TO TRUST THAT THEIR VENDOR IS GOING TO KEEP UP WITH ALL THE MEANINGFUL USE REQUIREMENTS, AND THAT THEY'RE GOING TO NOT JUST HAVE THE CAPABILITIES TO PASS HITECH CERTIFICATION, BUT THAT THEY'RE ACTUALLY GOING TO BUILD AND DELIVER AND SUPPORT IMPLEMENTATION OF TRULY MEANINGFUL USE. -JANE METZGER

Scott Grier
Scott Grier

What's more, when CIOs consider their internal stakeholders, they need to continue to think about the needs and wants of clinicians and other end-users in specialized hospital departments, says Joe Marion, principal in the Waukesha, Wis.-based consulting firm Healthcare Integration Strategies, LLC. “I think it's in the CIO's interest to listen to the departmental vendors in terms of what will constitute-they need to be sensitive to balancing clinical needs versus the needs for integrated hospital solutions. That was a major portion of discussion at ACC,” Marion says, speaking of discussions he engaged in during the annual American College of Cardiology conference, which was held in Chicago in late March.

VERY FEW PEOPLE DO A POST-MORTEM AND FIGURE OUT WHAT REALLY FAILED. SO THEY END UP MOVING ONTO THE NEXT VENDOR, AND MAKING THE SAME MISTAKES. AND A LOT OF THAT HAS TO DO WITH THE VERY SHORT TENURE OF MANY CIOs NOW. -SCOTT GRIER

Indeed, Marion says, the stakes are particularly high for CIOs when it comes to engaging clinicians and other end-users on the use of niche systems (such as cardiology PACS), because of the complexities around interfacing with core EHR systems and moving forward on meaningful use, while also making end-users happy in terms of the selection of niche systems.

Clearly, balancing various considerations against one another and moving forward in this time of rapid policy and industry developments, intensive resource needs, and growing demands from clinicians and other end-users, will pose challenges for all CIOs and healthcare IT leaders. What will success look like? Certainly, all those interviewed for this story agree, it will involve the opposite of failed implementations and unstable computing environments. Will the majority of hospitals and medical groups develop strong, lasting relationships with their vendors, relationships that benefit everyone in the patient care organization? Only time-and strategy and tenacity-will tell. But, everyone agrees, the stakes are simply too high to allow for failure going forward.

Healthcare Informatics 2011 June;28(6):62-68


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