Maximizing Value in Health Care Technology Negotiations

While every business, regardless of industry, is impacted by technology innovations, perhaps no other industry has been transformed more by technological advances in recent years than the health care industry. From new hardware to new applications, hospitals and health care systems are vast technology enterprises, with software as the "brains" connecting all of these devices. The move toward mass digitization of medical records may be the most heavily impacted area.

Congress has recognized the important role that advanced software-based electronic medical records can have in terms of patient care as well as cost efficiencies and has created incentives for the adoption of electronic medical records software. As more and more health care providers adopt electronic medical records systems in light of the HITECH Act and the new "meaningful use" regulations promulgated thereunder, negotiating these very complex and heavily negotiated agreements with software vendors is a critical first step in the process. The fees associated with these arrangements, in terms of license fees, integration fees and ongoing support fees can be very substantial. The transactions also tend to be long term, which makes "getting it right" very important. While the initial form of agreement will almost always be drafted by the vendor, these are not "form" agreements, but rather serve as starting points for a negotiation.

Buchanan Ingersoll & Rooney's Technology Transactions Group (TTG) works closely with the firm's Health Care Section in representing both vendors and customers in the health care industry. They have handled matters that range from negotiating single facility licenses to enterprise-wide licenses for multi-hospital systems, advising clients on the acquisition of picture archiving and communications systems, to negotiating inbound and outbound technology and intellectual property agreements, clinical trial agreements, and private sector/university collaboration agreements. Because our TTG lawyers have deep experience in these matters from both sides of the table, we are uniquely positioned to understand what is "market" and what is not in order to maximize the benefits of the deal for our clients.
 
One of the key factors in determining whether or not such a negotiation will be successful for a health care system is recognizing what leverage that system has in the context of the negotiations with the vendor. For example, if a hospital has several vendors who have responded to an RFP and has not publicly announced to any of the vendors in the running that they have been selected, the hospital will have greater leverage than a situation in which it has announced the winning vendor. Further, many vendors will give preferential pricing depending on the timing of a transaction due to financial accounting interests. Our TTG team can help clients assess and maximize the leverage they have in a particular transaction to obtain the most beneficial results.
 
As you consider either adopting an electronic medical records system for the first time or upgrading your current system, our TTG lawyers can assist you throughout the process. Getting us involved at the earliest stage possible will maximize the real value we can bring to the transaction. For further information, please contact David A. Gurwin, chair of the Technology Transactions Group at 412-562-1592 or david.gurwin@bipc.com.