Three Steps to a Tech Contract You Can Live With
By Ellen Terry


When you are shopping for a new technology vendor for your practice, signing a contract is the easy part. The real work starts well in advance and continues as long as the contract is in force.

“Too often, companies move from one vendor contract to another without proper planning,” says health care consulting firm Coker Group. “If you decide to accept the standard contract terms without negotiation, you assume all the risk with little recourse.”

Achieving a sound, workable contract involves three main steps, Coker says. 

  1. Conduct precontract investigation. First, to narrow your search and provide a benchmark for your needs, make a list of required and desired functionalities for the product or service. This can help you identify potential problem areas up front. “Then read customer reviews and talk to your colleagues who have experience with the top vendors you are considering,” advises Shannon Vogel, TMA’s director of health information technology, and author of the self-study course, Switching EHR Systems. “Bring in vendor representatives for a demonstration for you and your staff.” You’ll also want to be certain the vendor follows sound security practices and will provide software and updates that keep you in compliance with federal and state laws and standards.
  2. Negotiate contract terms. Most standard contracts favor the vendor, says Coker Group, which offers TMA members free technology contract reviews through TMA’s group discount program. Therefore, be prepared to negotiate many of the terms and conditions so they work to your benefit. “Most vendors will negotiate the terms of your agreement, but if not, you can find one who is amenable,” Coker says. Critical areas you may need to negotiate are: data ownership, migration, and security; confidentiality; contract termination and wind-down provisions; scope of software licenses; system updates and changes; warranties; and payment and fees. “Be sure you understand the contract and ask for clarification of terms you may not comprehend, or for additional terms you would like to include,” Coker says.
  3. Manage your vendor and the relationship. “Once you have a vendor, the due diligence must continue,” Coker advises. Make sure you’re receiving what you contracted for, and work with the vendor to resolve problems. “Switching a technology vendor can be expensive and disruptive, and may not be your best solution,” even when you’re not happy with your product, said Ms. Vogel. For example, she said, half of the physicians responding to a 2015 American Medical Association survey indicated that switching to a new electronic health record (EHR) did not improve their productivity. But if the vendor relationship is beyond repair “making sure that your contract includes a sound termination provision and wind-down transition can save time, money, and discord,” Coker says. 

TMA Can Help

NOTICE: The Texas Medical Association provides this information with the express understanding that 1) no attorney-client relationship exists, 2) neither TMA nor its attorneys are engaged in providing legal advice and 3) that the information is of a general character. This is not a substitute for the advice of an attorney. While every effort is made to ensure that content is complete, accurate and timely, TMA cannot guarantee the accuracy and totality of the information contained in this publication and assumes no legal responsibility for loss or damages resulting from the use of this content. You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought.


Last Updated On

August 30, 2023

Originally Published On

April 03, 2018