Hospital EHR Contracts and EHR Lock In

The following email just makes me cringe in pain (specific vendor names removed):

Our small hospital has chosen EMR Vendor A, and is trying to push it onto our clinics against our complaints. My CEO sat down with me to try to mollify my complaints, saying that the previous CEO had signed the 1.2 million contract, and they couldn’t back out until we were reimbursed (the same $1.2 million figure, of course) for meaningful use. This mandate reportedly comes from the hospital board. Thus we are expected to suffer with this system for 2+ years, with some hint of maybe being able to drop EMR Vendor A in the clinics after that time. When I told him that the reduction in productivity and morale while using this system may cost more than 1.2 mil, he said we should find some “work-arounds” to deal with that. Legally, this may all be OK, but it seems fraudulent in intent, and a bad idea. Just another story from the real world.

What an incredibly challenging situation to deal with. We’ve certainly seen the movement towards consolidation of medical practices by hospital. I wonder how many doctors will end up leaving the hospital to run their own practice again just based on the EHR choice that their hospital system chose.

What’s more important is whoever negotiated this $1.2 million project seems to have done a pretty terrible job. I imagine there still are ways to get out a contract like this, but it would take a unique CEO to make that choice.

Of course, this is only one doctor’s side of the story. There could be other angles where this EHR vendor works fine. To me, that’s one of the real challenges facing a hospital system which has every clinic under the sun. I remember one hospital system that had 10-15 different pediatric specialties (let alone all their regular specialties). So, not only were they trying to fit a round peg into a square hole, but they were trying to fit the round peg into a diamond, triangle, star, etc hole as well. That becomes quite an enormous challenge.

I imagine we’re going to hear more “real world” stories like the one above going forward. I guess it’s just one more reason why the healthcare platform I just wrote about on EMR and HIPAA will be that much more important going forward.

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.

4 Comments

  • Anybody have any idea how a situation like this might affect radiology practices that have facilities within hospitals?

  • Gregory,
    I think the biggest impact is that many radiology departments get locked into the EHR vendors radiology software even if it’s terrible. Same goes for the lab and other departments. Sometime the radiology department can make the case for a best of breed approach to software purchase. However, some of the large EHR vendors are notorious for selling their “integrated software” even when their software might not be very good for that department of the hospital. Epic is the leader when it comes to touting the “you must buy all your hospital software from us” approach to hospital software.

  • The growing importance of software within hospital operations, particularly with the introduction of EHR systems and the various related federal incentives has moved health IT into one of the core competencies for healthcare executives. EHR agreements have a financial impact on hospitals that now exceeds or rivals practice acquisitions and mergers. As such, they must receive the same level of executive attention as provided to other transaction of this size when negotiating terms. In addition, it is imperative that hospitals engage competent legal counsel experienced in health IT negotiations and with a context for negotiating key provisions such as acceptance testing, regulatory changes, transition, data ownership and risk (in-house counsel will negotiate only one of these transactions every few years, where outside counsel may negotiate several purchase or more a month). An appropriate level of attention to the complexity of these transactions, and an insistence on reasonable terms (as well as the ability to walk away during negotiation) can alleviate these challenges.

  • Michael Batt,
    One of your first points is pretty profound: “EHR agreements have a financial impact on hospitals that now exceeds or rivals practice acquisitions and mergers.”. I agree with this assertion, but I’m not sure that most C-level execs at hospitals have realized this shift of importance of the EHR agreement.

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