Dempsey Law Blog

          Electronic Health Records (EHR) and Computerized Physician Order Entry (CPOE) have revolutionized how medical providers create, maintain, store, and retrieve records and assist physicians and other medical professionals with diagnoses, treatments, and prescriptions.  The advantages are clear, including enhanced ability to make decisions, sharing information in real time, and creating efficiencies.  The conversion of paper records to EHR and CPOE systems also  is crucial to the success of the federal government’s plans to spend billions of dollars of stimulus funds.

             However, as we all know, in practice there are two significant impediments to successfully implementing and using these new tools.  One is the “human” factor.  People.  They make mistakes.  They may not be computer literate.  Or, they may simply not want to learn the new system.  The other obstacle is the software that runs your EHR and CPOE systems.  The decisions you make regarding the choice of software, upgrades, and the software contract provisions are significant legal keys to lowering your organization’ s exposure to negligence and malpractice claims.  This memo will assist you to deal more effectively with your software  planning and your software contracts.  

             Pre-planning

           1. Assemble Your Team.  Software contracting should be a “team” exercise.  For any substantial acquisition, you are smart to involve an outside IT consultant who can act as an objective third party.  An attorney with software licensing and business experience is essential.  A cross-team of your organization’s business, medical professional, and technical people is necessary to obtain  perspectives and receive appropriate buy-in at all levels.

           2. Do the Preliminary Work.  Will the software that you are looking at “run” in your environment? Is it scalable?  Have you done any testing with a demo version?  How many alternatives will you look at?  Have you talked with other similar organizations currently using the software and gained the benefit of their experience?  Determine all alternatives and good, better, and best choices.

           3. Agree on the Process and Strategies.  Once your team is assembled, you will need to develop and agree on the process, strategies and time lines you will use.  This work may be commenced by a subset of your team, or a “lead dog” group that will formulate and sketch out the initial draft plans.  How and when will you look at bids or packages?  Are there legacy systems or concerns that must be addressed?  Who will write your specifications or statement of work (SOW)?  Who will handle the negotiations with vendors?  Who will control the drafting of the legal documents?

           4. Consider Some “What Ifs?”  Prior to the start of the project, your team may want to consider potential problems.  What if the software does not meet the expectations?  What if the roll-out cannot meet the originally established time lines?  What if the site priorities for “go live” need to be re-ordered?  What if there are cost overruns?

           Key Terms and Conditions

           5. Everything is Negotiable.  Price may be negotiable, but so is almost everything else.  Terms and conditions are negotiable, despite what some vendors represent.  As a buyer, if you have leverage, now is the time to make use of that leverage.  Resist the urge to simply sign the vendor’s pre-printed forms.  There is too much money and too much potential liability at stake.

           6. Definitions.  Make sure the key terms are specifically defined and you understand them and how they may inter-relate.

           7. Progress Payments.  Make use of a payment plan, with clearly identified milestones or objectives.  Any doubt about meeting milestones or objectives should be within your authority to resolve or that of a neutral third party – and not ceded contractually to the vendor.

           8. Transferable License.  If you anticipate your organization growing, either organically or by acquisition, now is the time to negotiate the costs of future license “seats,” upgrades or maintenance.

           9. Statement of Work (SOW) and Specifications.  The SOW defines the project and the outcomes.  The specifications mean the functional and operational characteristics of the software.  It is extremely important to spend the time and effort on these documents and finalize them before the contract is signed.

           10. Grant of License.  Pay particular attention to this provision.  Does the license include access to the source code if necessary?  Is there a provision that allows the software to be used on laptops or on the home computers of your medical professionals?

           11. Warranties.  Beyond good title to the software, try to get warranties that the software will materially conform to the specifications and meet any representations regarding performance provided by the vendor.  The duration of any warranty should be stated.

           12. Remedies.  Legal remedies for breach of warranty should be carefully considered.  The most common remedy is simply to “repair or replace” the software, but this might not be adequate in your circumstances.  Response times also may be of critical importance.

           13. Indemnities.  Indemnities are not risk allocation provisions.  Indemnities relate to liability due to a third party claim against one of the contracting parties.  A good example is a claim by a third party that the vendor’s software infringes the third party’s intellectual property.

           14. Risk Allocation.  This is a key provision, as it is concerned with allocating liability between the contracting parties for any breach of the contract and potential damages.  Waivers, incidental, consequential, liquidated and actual damages are all within the scope of this provision.  Risk management plays an essential role.  How will you cover any potential risks or legal exposure?  What is covered by the vendor if it is negligent and what do you need to cover by your own insurance or by other means?

           Post-Contract

           16. No Oral Agreements.  Simple rule – if it is not in writing, it did not happen or it was not agreed to.  Be sure to commit all agreements and amendments to writing.

           15. Assemble the Documents.  All contract information (both paper and electronic formats), drafts, notes, emails, files, and signed originals, to, from and with the vendor should be collected to a single source so that a history can be maintained. 

           16. Monitor Status.  Monitor status, glitches, bugs, fixes, maintenance, etc., on a continuing basis.  Keep in mind future up-stream or down-stream upgrades or changes.  Stay in contact with your vendor to maintain close communication and support.

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