HITlaw 11/16/12

Exit Shmexit

When healthcare provider entities merge, whether physician practices or hospitals, there is usually a misalignment of technology. It is not typical that the merging entities operate the same vendor systems, which means that ultimately one vendor is out and the other gains a new (merged) customer.

Here is a real-world example recently brought to my attention. Physician Practice A merges with (larger) Physician Practice B, which basically means Practice B bought out Practice A. The two practices use different EMR products and Practice B dictates that its current EMR technology will remain the standard. Practice A will have to transfer its operations to the other vendor’s EMR technology. Not surprising and not a big deal, many are thinking as they read this, because practices convert to different systems all the time.

However, the vendor being replaced at Practice A is not playing nicely and refuses to provide the EMR data in a format that satisfies the technical requirements for conversion. Setting aside the fact that Practice A will have serious record retention issues, they will be unable to access historical patient records (unless they continue to pay for support or subscription to keep the old system, a very unnecessary cost) and will have to start from scratch in the new system. Really?

One would think that bad PR would be enough to persuade the ousted vendor to provide the practice data ready for conversion, but we have seen enough strange stories about sore losers recently to unfortunately have to consider this possibility and behavior.

About the title of this posting – Exit Shmexit? Every software contract should have a section devoted to data rights and extraction at termination. Frequently labeled in conversation as “Exit Procedure” or “Exit Strategy,” this type of language is absolutely essential. I take the tone I do because it is clear that unfortunately many practices, and to a lesser extent, some hospitals, do not take the time to carefully review and negotiate the terms and conditions under which they are investing in technology.

Evident in my HITlaw postings is the emphasis on the critical need to review and negotiate your software agreements. “Exit Shmexit” is my personal rebuke to those that consider vendor license agreements as merely “paperwork” and hurriedly review and sign what is put in front of them. Inclusion of a few sentences in Practice A’s EMR license would have prevented the present angst and difficulty for that entity.

Although not as pertinent to hospitals due to the size and expense of the technology investment (and corresponding recognition and cooperation by vendors), I am made increasingly aware of instances where physician practices are courted, quoted, and commanded. The first two everyone knows. Commanded refers to the attitude of some vendors at the contract stage. Sign here. We don’t negotiate.

Editorial comments now aside, here is the help.

To repeat, every software contract should have a section devoted to data rights and extraction at termination.

Critical inclusions that should be in the software license:

• As between vendor and customer, all data entered into the software database is the property of the customer. This is my nod to the notion that medical records are truly the property of the patient, but that is a topic for another day. The point here is that the customer owns all the data, not the vendor, and the vendor must recognize this.
• Transition must be accommodated. Upon termination of the software contract for whatever reason, all data must be immediately made available to the customer. This is to be provided without question in industry standard format and at no additional cost. This is part of the price of doing business and I have no problem advising my healthcare technology company clients that this must be done.
• The vendor must also agree to provide the data, for an additional cost if necessary, in whatever format is required by the replacement vendor, with a reasonableness factor included regarding technical feasibility.

Dust off your existing EMR license agreement or review the proposed agreements in front of you for that new EMR, PACS system, or HIS as the case may be. No exit procedure? For existing relationships, think about this before you sign with the new vendor. Go back to the existing vendor and address the issue. Far better to do so when there is still a working relationship than after you have told the vendor they will be replaced. For prospective business relationships, get agreement from the vendor as described above (as well as many other important considerations).

Going back to my editorial comments, any customer presented with a contract and the statement that “we do not negotiate” should politely show the salesperson the door. There will be another one from another vendor ready and willing to discuss your needs and listen to your contractual concerns.

This is not to say that vendors must negotiate all terms and conditions as requested by the customer prospect. Vendors are completely within their right to protect their business and intellectual property, limit their liability, and keep sacred the things most important to them. However, to place a contract in front of a prospect with the message “take it or leave it” is not good for business. Unless of course the agreement is written so fairly that it considers not only the company’s interests but also the interests of its customers in equal measures. That would be very rare.

Repeated many times in my HITlaw postings is the advice that contract review, at least for major terms and conditions, is a critical part of the vendor selection process. Do not select a vendor and then look at the contract. When you have the search down to a select few vendors, review the contracts in front of you. Look for the smoldering sections that need attention. Recognize the absence of sections of vital importance for your protection during and after the business relationship.

In the example above, the absence of a “data rights at termination” section should be immediately brought to the vendor’s attention. If the vendor provides language suitable for your protection, keep them in the game. If they refuse where others cooperate, take them off the list.

Please see my quick tips for an EMR Contract, as well as my paper Selection and Negotiation of EMR Contracts for Providers. Hopefully my general insight and advice will help avoid problem situations such as the one involving unfortunate Practice A.

Previous HITlaw postings were fairly infrequent and arose only when I found a seriously weighty topic. Look forward to more frequent postings on important issues in shorter format. E-mail me with questions and suggestions for future HITlaw writings, whether provider side or vendor side.

William O’Toole is the founder of O’Toole Law Group of Duxbury, MA. You may contact him at wfo@otoolelawgroup.com and follow him on Twitter @OTooleLawHIT.