EMR Vendor Extortion for Renewal Fees

A reader of EMR and HIPAA recently emailed me about the title of this post. The way they saw it, the software renewals fees for an existing EMR user amounted to EMR vendor extortion. This person felt like providers had little options when it came to the renewal fees that EMR vendors would charge them.

The fact of the matter is that it’s not actually extortion (from what I’ve seen), but it certainly can feel that way if you’re a provider that’s getting charge a train load of money to renew or update your license with your EMR vendor. Unfortunately, once you’re in that position you really don’t have many options. Plus, your options are always very specific to the contract you signed with the EMR vendor.

Instead of focusing on those who are stuck with little options, I think it’s more valuable to try and help those that are just signing and negotiating their contracts with an EHR vendor. This is such a crucial part of the EMR implementation process. Here are a couple paragraphs of the three pages on contract negotiation from my EMR selection e-Book:

Once you have made a final decision on an EMR vendor, it is time to start negotiating the contract with the vendor. It is interesting that doctors are use to negotiating contracts for purchases of large medical devices, but for some reason do not often negotiate the details of their EMR contract. The amount of negotiation room you have in a contract will depend on a number of factors. Generally the larger the EMR vendor the less negotiation room you have with the contract. Interestingly, the larger your organization the more negotiating power you will have as well. That is not to say that large EMR vendors and small doctors do not negotiate the contract. They are just less likely to negotiate or there is less room to negotiate.

There is always some room to negotiate with your EMR vendor. The vendor’s first proposal or contract is always their first offer. You should never take it since price and contract details can always be negotiated.

Many doctors find themselves handing their contract over to their lawyer to handle the negotiation. You will want a lawyer to look over it for final review. However, very few attorneys know much about negotiating tech software contracts. Lawyers usually bill by the hour and you do not want to be paying your lawyer by the hour to negotiate commas and periods that will have little meaning or value to your practice.

The contract negotiation with the EHR vendor is the key time when you make sure it’s very clearly stated the types of fees that you’ll have to renew the software. This should all be clearly stated in the contract and if it is not, then get it changed. As it says above, don’t leave it to an inexperienced lawyer who knows little about EMR software and the types of fees they’ll charge to understand these details. Experience is valuable at this stage of the process.

Another part of the contract should be the details of how you could get the data out of your EMR should you decide to ever move to a new EMR. Access to the database schema and clearly defined data ownership are two key parts of the contract that will be needed should you choose to move to a new EMR. There’s real value in an EMR vendor knowing that you can easily move to another EMR. For some reason, those EMR vendors don’t seem to charge the outrageous unexpected renewal fees.

Many EMR companies might baulk at the idea of providing a method for providers to switch EMR companies. That might be telling you something. Yes, I definitely come from the philosophy of “If you make it easy for people to leave, they’re more likely to stay with you.” Chew on that concept for a little while.

Either way, providers need to make sure they’re protected against the unknown future. That protection comes during the EMR selection process and contract negotiation phase.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

9 Comments

  • WIth two decades of experience negotiating HIT agreements, I support John’s position on EHR contract negotiation. To providers, do your work early. Know what you have in place today and know what terms are problems for you now. That leads to knowing what you want (and don’t want) from your new/next vendor. Legal review is essential, but not necessarily overpriced. Experience pays off. The attorney that has done many EHR agreements knows how to drill right down to the issues. You can keep a reign on the scope of the engagement if you do so up front. I am a strong believer that license terms and conditions are an important factor in the selection process, and stating so to the finalist vendors can go a long way to finding out how they will deal with you on critical issues. As for “extortion for renewal fees”, diligence in negotiating always pays off. There should be no surprises down the road for the client that carefully negotiates and reviews proposed agreements with experienced HIT counsel. Really.

  • This just strikes me as bizarre. As a small software company, we know that we owe our continued existence to the good will of our customers. Our prices and policies are designed to cultivate a long term, positive relationship. If at some point a customer’s needs make a change of software the best move for them, we assist them to export their data, even working with the new vendor to make it happen. An ex-customer can still be a source of referrals, so it is never a good business move to obstruct or “extort” your customers.

    Having said that, a small company like ours simply cannot afford to jump through the certification hoops and expense, and our future is cloudy as a result. We hope that at least a portion of our market niche (behavioral/mental health) may not require certified EMR’s and that we can continue to provide great software and service that closely meets the needs of our customers. We shall see.

  • I would love to know the readers thought process on how they were being extorted? Did they realize that they have to pay for continued maintenance and support of the product before they signed?

    We are finding that many practices believe that EMR maintenance fees are a necessary,but the ones who complain the loudest, are the ones that had a poor implementation and aren’t using the product to it’s full potential.

    Who’s fault is that?

  • Jeff,
    This was actually someone trying to finance the EMR. So, this was really pre-EMR purchase and them talking about the possible EMR renewal fees. So, it wasn’t about product use at all.

  • Thanks for the clarification, John. I was trying to play devils advocate but we hear plenty of complaints about the maintenance fees. We rarely get complaints from EMR users that are fully implemented and getting the results they planned for with the system. It’s not to say they had it easy and it wasn’t painful to get to the point where they are at.

    We started developing clinical software a while back and we depend on maintenance fees to continually support our product and provide the best possible service to our customers.

  • Yes, much of the problem is also users who don’t read the contract and/or negotiate a proper contract for these types of fees. Although, there are some messed up EMR vendors that do take advantage of users with their renewal fees. Most users understand a reasonable renewal fee. It’s when the renewal fee gets jacked up much higher than before or when the user was just not detail oriented when they looked at the real cost of the EMR (including renewal fees). I don’t feel bad for this second group.

  • The topic of this post is a good reflection of the “unexpected” issues associated with the adaptation of electronic health records. I suspect that most physicians approach the EHR purchase in the same way that they deal with medical device purchases. There is a “stated price” and negotiating/haggling over the terms is not typically part of the process. Most medical practices do not involve a lawyer in their medical device purchases as they consider it a “purchase”, not a contract. As the push for EHR adaptation increases, it will be interesting to see if more legal questions about EHR purchases, support, and security also arise.
    I also suspect that there is a significant misconception among providers regarding access to the EHR systems. Most providers probably assume that once the EHR system has been purchased that they will always have access to the software, regardless of whether they maintain support, just like any other consumer software product. They are probably not aware that ongoing access to the software (to add to the health record) is part of the annual maintenance fee. This confusion may be the source of the “extortion” comment.

  • I just had a conversation with a client about this yesterday. The said client was ready to cancel their service and migrate to our EMR. Their current vendor (medi notes) is attempting to charge the client $9,000 yes NINE THOUSAND DOLLARS to obtain an encryption key to extract their data for migration. Might as well be Tony Soprano with a shotgun to your head asking for “protection money” at this point. How this is legal is beyond me…

  • Leor,
    Thanks for sharing. Another thing that should have been in the initial EMR contract and will surprise users if/when it’s not.

Click here to post a comment
   

Categories