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Breaking up is hard to do-for Vendors!

August 17, 2010
by Pete Rivera
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In the past 18 months I have seen Clients that have been on a combination of platforms, migrating to a single vendor solution. The question always comes up: Best of Breed or Standardization. Most organizations are answering by going to a full standardized platform and moving away from vendor relationships that they have had for decades. It’s a bold step and a costly one. CIO’s have to sell their senior leadership on the idea of going through a painful process, take a revenue hit and promise to come out of it better than before.

In most cases it works out very well. Actually when you breakdown your processes to get ready for a system replacement, you end up finding all sorts of “low hanging fruit.” You find out about manual workarounds, flat data extracts, holes in your interface solution and ways to improve your billing. Most of the time you are taking on an EHR to go along with the project, and find more elegant solutions for integration.

What I wonder about is how the current vendor let themselves get to a position that their client would prefer to go through a painful process full of risk, rather than renew or upgrade their existing system. Not that I don’t understand the concept of divorce, on the contrary. Sometimes you get to a point that you can’t communicate. But with all the market changes I would like to hear from those that decided to divorce their vendors for a “newer” model.

Was it primarily support issues, depth of the modules, confidence in the product or capabilities of the product in general?



What a great question...Why would anyone want to change? Think about it...if you make a bad system purchase, what could you lose? How about your job!

As someone who has been in the HIT world for thirty years and having lived the two lives of both a systems supplier and CIO, I have some thoughts on that weighty question.

As you so correctly point out, changing out mission critical systems is no fun and fraught with risk. Almost all the clients I worked with would rather pull out their eye teeth before changing systems. So why do it? Usually several of these reasons come into play.

1) Significant regulatory changes and the old vendor has a LONG history on poor response. It's amazing how much poor support a hospital will put up with. Your note about work arounds is a perfect example. I once did a project in a hospital where they had increased their department staff by 20% to handle work arounds because of poor vendor support. But replacing the system was not even on the table. Throwing more FTEs at it was far less risky than a change-out.

2) New power people in the facility, or a shift in power. This could mean a new CEO/ CFO/CIO or as in recent times a shift in power from administration to medical (or vice versa).

3)The typical turnover rate is from 8-10% systems per year. That means the average hospital keeps a system for about 12 years. That's what you call a replacement market. So existing vendors are always looking for ways to generate new or increasing revenue (particularly if they are a public company). So they charge for new upgrades, new modules, and anything they can come up with. You get tired of being nickled and dimed.

4)Very few, if any, changeovers are strictly based on cost (getting a less expensive system).

5)Big frustration with the current vendor. With a 8% turn over rate a vendor has to almost shoot himself in the foot (head?) to lose a client, but somehow they manage to do it. The devil you know is always worst than the devil you don't.

Those are the real reasons, the ones you hear and read in the press releases are: better functionality, lower cost, better vision...blah, blah, blah!

Frank Poggio
The Kelzon Group

Some blog posts or comments are too dangerous to post. That said, I'm still going to comment on the comparison of vendors to spouses!

Recently, a dental hygenist shared with some of her friends that she was divorsing her husband. Through inattention to the mariage, they had drifted into becoming roomates, rather than mariage partners. There was no animosity, family, child-raising or financial drivers.

The adage that it is important to continue to exclusively (monogamously) date one's spouse to have a successful mariage is an interesting one to contemplate as one looks at their professional relationship with their vendor. The roomate standard is too low.