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3 common mistakes made when signing dental Electronic Health Records contracts


The dental software revolution is upon us and with it comes “next generation” dental electronic health records (EHR) and cloud-based solutions. Whether you have an older system and are planning on signing a contract for new software with your existing vendor, or if you’re purchasing new software with a new vendor, chances are that you are not prepared to negotiate your dental EHR contract.

I believe that you shouldn’t necessarily depend on your dental practice attorney to have the skills and experience necessary to structure and negotiate dental EHR contracts. After having negotiated contracts for many years now, I have found that many practice attorneys, although skilled in the matters of dental practices, don't necessarily understand the nuances of IT and software contracts, especially EHR contracts. There are many business and technical issues in these contracts that need to be recognized and addressed, and the onus can fall on you to prepare yourself for vendors who typically structure one-sided, poorly structured contracts. Don’t fall prey to a bad contract that you’re stuck with for years to come.

Obviously a dental EHR contract can be very complex and lengthy with many sections and clauses. To help you level the playing field a bit, and get you thinking, here are three mistakes made when signing contracts.

Editor's Note: A video interview with Uretz detailing more about this topic can be seen at the end of this article.

Mistake #1 Accepting poor payment terms when purchasing licenses and services

If you were a vendor, you would want most of your money upfront. This is typically what vendors ask for, but the problem is that upfront payment severely reduces vendor accountability. I had a group contact me after they signed a poor contract that required almost 80% of the payment before the system was up and working. They had problems with their vendor, but because they had paid so much up front, they lacked the leverage to convince the vendor to remedy matters.

I had another group tell me at a conference that their vendor didn’t implement their system on a timely basis. When I asked how much of the total they held back, they seemed surprised. It wasn’t until after I explained the concept of milestone-based payments that they understood what they should have done.

Never pay a vendor most of its money upfront. Instead, ask for milestone-based payments. As the vendor completes certain pre-determined project milestones, it receives a portion of its fee. A milestone-based payment system is the best incentive for the vendor to complete the project successfully and in a timely fashion.

When it comes to implementation and training fees, you should pay these as incurred. In other words, typically a vendor going through implementation and training with you should provide a weekly or monthly accounting of its hours. It is up to you to audit this information, making sure it is correct before any payment. On the flipside, if you do choose to pay for implementation upfront, you should have language in your contract that provides for credits back to you should implementation and training not take as long as originally estimated by the vendor.

Finally, if you are having your vendor develop interfaces to devices such as imaging systems or imaging software, you should not pay any more than half upfront and half upon completion of the interface. Interfaces can be tricky. Issues can come up along the way and you want to make sure that you have a little bit of leverage to get that interface completed and working properly.

Mistake #2 Not demanding support guarantees for your licensed EHR software

For some reason, Murphy’s Law seems to come to the forefront once a system is installed, the final payment is tendered, and the practice is now dependent on the technology. I wish I had a nickel for each story I’ve heard of vendors that closed the deal and then “just didn’t show up” when the customer had problems or issues.

Ever heard of a “turnkey system?” The generally inaccurate assumption regarding turnkey systems is that they’re installed, the “key is turned,” it works, and all will be fine. Wrong. There is no such thing as a system that doesn’t need a solid plan for maintenance, support, upgrades, and enhancement. This is where many contracts fall short because they don’t take into account the “after” implementation problems in enough detail.

During the sales process, salespeople are quick to assure you of great support, but can your vendor “walk the walk” as well as “talk the talk” once the system is in place? If you do run into problems, how long will the vendor have to address these problems immediately or in two to three days? What are the penalties if the vendor doesn’t meet stated commitments? Salespeople will commit to taking care of you, but unless there are real consequences for the vendor, you might not get the service you deserve.

To address support concerns, the Service Level Agreement or SLA, is the standard mechanism to document vendor commitments. These agreements outline various areas of accountability in which the vendor is willing to make a commitment to service and support. After all, you’re paying a percentage of the license fee on an ongoing basis for your support, so you have the right to demand good service.

There are numerous items to think about when putting together a service agreement. Some of the main areas you will want to address include:

Hours of support

Don’t accept such terms as “support during standard business hours.” What if your vendor is based on the East Coast? Standard business hours for your vendor might be 8 a.m. to 5 p.m. Eastern, but if you’re located on the West Coast, this means you can’t get support after 2 p.m. your time. Instead, have your contract specify “local time.” You’ll also want to specify how support works during off-hours and whether the vendor will charge you an off-hours fee with proper notification.

Problem escalation and triage

Whether it be your cell service provider or your bank, you’ve probably become frustrated by the lack of knowledge or problem resolution by the immediate support person and have had to ask to “speak to the manager.” The same holds true for your EHR vendor. It pays to ensure that the levels of escalation are specified ahead of time. This can include having the vendor’s support person actually come on site if the issue can’t be resolved by other means.

Response time guarantees

These need to be clarified in your contract as well. If response time is an issue that affects patient care, you need to know if you’ll be expected to wait two days or if you will receive help immediately. Be aware that different functions of the EHR system might warrant different response times. For example, charting problems or bugs might need immediate attention, while a problem with a patient education component might not be as urgent. Your contract should spell out response guarantees along with associated penalties. Don’t accept a vendor telling you that they have a history of great service. Get it in writing. Be the “squeaky wheel.”

Introduction of new updates or versions

What about changes, updates, or improvements to your licensed software as time goes on? I’ve seen contract clauses where vendors have the right to reduce or even drop support for a system at some point in time if you haven’t upgraded to the newest version. You should always expect that a vendor will support the current version and the previous version of your system. You might not want to install the newest version right away, as the time to test and install a new version is not trivial and can possibly impact your internal resources and the operation of your practice. Also, in terms of always upgrading to the newest version, make sure the additional features add value to your practice needs and warrant an upgrade. Sometimes, the old saying “if it ain’t broke” has validity.


Accountability is key

Don't let your dental software vendor get away with promises of great support make sure it happens. The key is accountability. Your vendor will have numerous customers who are all competing for the ear of the support staff should problems occur. The question is how do you assure that you will be the squeaky wheel in this scenario? With a support agreement in writing, rules of how your vendor takes care of you are laid out in black and white. Your vendor might have good intentions, but different situations can come up where a vendor support staff has to prioritize based on their resources. You want to make sure that you are one of those priorities

Mistake #3 Not looking closely at your cloud-based or hosted EHR contract

Many of you are looking at cloud-based dental software and it has become increasingly important to put protections into your contracts that can mitigate what can happen down the line. Remember with cloud-based systems, you lose a level of control over the operations so you need to be diligent in holding the cloud-based vendor accountable.

I recently received a call from a dental practice owner who asked for help in transitioning his data from his current web-based vendor to a new vendor. When I asked him if I could look at the vendor’s data transition warranty, it was apparently non-existent.

Dental practices owners make software decisions every day based on how the screens look and function and how much they like their salesperson. Few, however, use the actual terms and conditions of the contract in their evaluations and comparisons.

Having been involved in the selection and purchase of numerous web-based software solutions for practices over the past decade, the best advice I can give is a reminder that the contract you sign is critical in the success or failure of your web-based vendor selection decision.

There are many advantages in having the software hosted by the vendor. You don't have to call Joe the local IT guy on an evening or weekend if there's an issue and see if he can make it over to your practice. You also don't have to deal with making regular backups, taking care of system maintenance issues, or making sure that the system is optimized for efficiency. Fact is, you would probably rather take care of patients than deal with these IT issues.

There are many items to review and structure in your web-based contract. Here are two of the most important:

Performance guarantees

You have to remember that when the vendor is hosting your system and it has more control over the operations of the software. The vendor is in control of whether the system is up or down and accessible. Unfortunately, when practice owners sign contracts, they often don't think to make the vendor accountable for all this. So you need to make sure they are accountable for the system performance, availability, and uptime.

Ask if the system has been down for any length of time. The industry standard is that the system will be up and working at least 99% of the time, if not greater. If the vendor doesn't meet that metric, then there needs to be a financial penalty for the vendor.

Secondly, how would you feel if you were in front of a patient, tried to use the system for note entry, and had to wait 60 seconds for the screen to display? You need to define what is acceptable system response time. This is all negotiable. However, at the end of the day if the vendor doesn't meet the agreed to response times, then there should be a penalty.

Remember, vendors don't typically like to penalize themselves for their mistakes (what a surprise!). If there aren't already metrics for uptime, availability, and response time, with associated penalties for noncompliance, then the onus is on you to make sure you are protected.

Can you get out of your contract?

In a perfect world, you and your vendor partner will have a wonderful relationship running your web-based software from its hosting center, everything will be smooth, and there will never be cause to get upset. Keep in mind that the monthly software fee and hosting contract can be fairly long-term. Most vendors set a period of three to five years. If you decide to get out early, there is a penalty.

But what if the vendor doesn't do its job? What if the system is chronically down, or slow, or the support is unacceptable? There needs to be a boiling point defined, where basically you have had enough and, in this case, the vendor should let you out of your contract with no strings attached. You will probably need to negotiate with the vendor what is a “chronic problem,” but, at the end of the day, they need to give you the right to cancel the contract if there truly are chronic problems.

Avoiding a visit by the “HIPAA police”

Many practices used to take HIPAA rules and regulations a little too lightly. However, as of Sept. 23, 2013, this changed dramatically with the introduction of the new HIPAA Omnibus regulations. Now practices are at risk of up to $1.5 million for breaches of HIPAA. What is of greatest concern to practices is that they are more responsible than ever to monitor whether there are breaches of their database. Therefore, HIPAA compliance language in your cloud-based contract is an essential. Since you have less control over your data, you must make sure that your cloud-based vendor guarantees that there is compliance with HIPAA regulations. There have been instances of breaches of cloud systems where, even though the vendor posted the data, the practice has liability as well. Make sure the vendor guarantees this.

Finally, make sure that the vendor agrees to provide you your data in a standard format and assist in transition to another system (at a predetermined rate) should you decide to go this route later on. With this understanding and agreement, you can save considerable time, money, and hassle and assure smooth functioning of your practice should you need to part ways at some point

Lessons learned

It is in the vendor’s interest to make sure that it has structured a contract or agreement that benefits the vendor, whereas it is in your interest to ensure that you sign a contract or agreement that protects your interests, gives you the rights you need, and leaves little to interpretation. This might seem self-evident, but it is worth repeating. Too many vendor-customer relationships go sour because of bad contracts that should have defined and had “rules of the road” agreed to up front. Remember, you typically have one opportunity to review and negotiate your contract when purchasing or upgrading software. Make sure you get it right the first time.


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