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Planning, Management and Leadership for Health IT

Planning, Management and Leadership for Health IT. Purchasing and Contracting. Lecture c – Negotiating and Contracting.

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Planning, Management and Leadership for Health IT

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  1. Planning, Management and Leadership for Health IT Purchasing and Contracting Lecture c – Negotiating and Contracting This material (Comp 18 Unit 9) was developed by the University of Alabama at Birmingham, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number 90WT0007. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. To view a copy of this license, visit http://creativecommons.org

  2. Purchasing and ContractingLearning Objectives • Understand the process for gathering a team to negotiate a contract • Understand the need for documenting contract goals and objectives • Understand the purpose of a contract and how to participate in a negotiation

  3. Negotiation Team • Evaluation team members • IT Director • User or owner • Finance

  4. Negotiation Team 2 • Usually not the CEO or practice managing partner • One-on-one meetings are NOT allowed

  5. Negotiation 101 • The vendor is not your friend • Differing goals • Document everything

  6. Negotiation 101 2 • All vendors are in last place… as far as they know

  7. Negotiation 101 3

  8. Negotiation Strategy • Contracts can be changed before signing • Carefully review “hold harmless” clauses • Be prepared to walk away Source: (Goodman et al., 2011)

  9. Negotiation Strategy 2 • Dual Threaded Negotiation Strategy • Negotiate with two vendors simultaneously • Single Threaded Negotiation Strategy • Keep a second vendor “in the wings”

  10. Dual-Threaded Negotiation Strategy • Two vendors at the same time • Already working with second vendor if negotiations with first break down • Can be time-consuming and stressful

  11. Single-Threaded Negotiation Strategy • One vendor at a time • Time to focus on details of contract • Have to start over if negotiations break down

  12. Negotiation Strategy 3 • Be realistic in expectations • Shoot for the moon anyway

  13. Contract Defined • “the agreement between two or more parties for the doing or not doing of something” • “agreement enforceable by law” Source: Dictionary.com

  14. Contract Defined 2 • Agreement between two or more parties • Functional owners need to be involved

  15. Contracts 101 • “Boiler plate” contracts • Standard vendor contracts • Favors vendor • Must be negotiated by customer • Some organizations develop their own contract to avoid vendor boiler plates

  16. Contracts 101 2

  17. Contracts 101 3 • Take time to read EVERY contract • Obtain legal counsel if possible • Contracts are not all about legalese • Contracts include business issues • Hardware needed • Support options • How to get out of contract

  18. Contracts 101 4 • Have a finance professional involved in the negotiation • Keep financial officer informed • Finance should approve contract before signing • Will track budget during implementation

  19. Contract 101 5 • A contract is what everyone falls back on when things go wrong • Watch termination clauses • Be able to get out of contract

  20. Contracts 101 6 • If it’s not in writing it does not count • Document everything

  21. Consultants • Time and expertise for in-house negotiations? • Risk of contract warrants external firm? • Relationship with vendor?

  22. Consultants 2 • Relationship with vendor? • Large acquisitions can create volatile situation • “Good cop” and “bad cop” • Consultants play “bad cop”

  23. Purchasing and Contracting Summary • Organizational goals should be aligned with the IT goals

  24. Purchasing and Contracting Summary 2 • Evaluation of technology should follow a defined process

  25. Purchasing and Contracting Summary 3 • There are numerous tools to be leveraged during the selection process

  26. Purchasing and Contracting Summary 4 • Contracts are the foundation for a long and hopefully successful relationship…so take your time and do it right the first time

  27. Purchasing and Contracting Summary 5 • Prior to entering a negotiation an organization should develop a negotiation team and document goals and objectives

  28. Purchasing and ContractingReferences – Lecture c References Dictionary.com [Internet]. Oakland (CA). Available from: dictionary.reference.com Dictionary.com [Internet]. Oakland (CA). Available from: dictionary.reference.com Friedman, Brent, “Top 10 strategic mistakes that hospitals make in HIT contracting and how to avoid them” (2007)  Available at: www.himss.org Goodman KW, Berner ES, Dente MA, Kaplan B, Koppel R, Rucker D, Sands DZ, Winkelstein P; AMIA Board of Directors. Challenges in ethics, safety, best practices, and oversight regarding HIT vendors, their customers, and patients: a report of an AMIA special task force. J Am Med Inform Assoc. 2011 Jan-Feb;18(1):77-81. Available from: www.ncbi.nlm.nih.gov Ury W. Getting Past No. New York: Bantam Books, 1993.

  29. Planning, Management and Leadership for Health IT, Purchasing and Contracting Lecture c This material was developed by the University of Alabama at Birmingham, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number 90WT0007.

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