By Mike Uretz
June 25, 2013
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Editor's Note: This is the fifth installment in the series on electronic dental records with expert Mike Uretz, editor-in-chief of DentalSoftwareAdvisor.com. See the previous article here.
In our previous installments we have focused on using a team approach to evaluate, select, and implement a dental electronic health records system. But how about best practices for actually acquiring the system? One question I get all the time when I speak about the subject is how best to negotiate a system purchase.
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- Team EHR: A team approach to electronic dental records
- Team EHR: In EHR, the "H" may very well stand for hygienist
- Team EHR: Electronic health records and the dentist
- Team EHR: EHR and the office manager – the chart stops here
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Let’s face it: everybody wants a good deal. But too often, providers and administrators become complacent and are not willing to work for that better price. Vendors are adept at making you believe that you’re getting a great system at the right price. How can you be certain? As one of my clients put it, “Contracting for EHR felt like shopping for a used car.” You can, however, develop a win-win negotiation with your vendor, as the following email from a provider demonstrates:
“When we negotiated our deal, we learned that the vendor was very interested in breaking into our size practice market in our specific geographic area. We were able to get substantial discounts.”
I had a large multi-site client who asked me to negotiate their EHR contract. When I saw the price quote, I asked them if I could have a crack at getting them a better deal. The CFO said they had negotiated the best price possible, but that I was welcome to try. After intense negotiation, I saved them a substantial amount on top of the original deal. This is because I knew the market and understood the “game” vendors play with pricing. It was hard for the vendor to argue that they had given us the best pricing possible when I was aware of the competition. In this case, knowledge was power.
Be cognizant of the potential for "nickel and diming.” Vendors frequently employ smoke and mirrors when presenting costs.
Being on both sides of the pricing equation as a software vendor and software purchaser, I can tell you that it is much more beneficial in the long run to focus on the win-win nature of successful price negotiations. Yes, you can try to bully a vendor into accepting your terms, but my experience has shown that you’ll be more successful if you analyze why a vendor should give you additional discounts and how you can help the vendor as their partner. If you try to understand your vendor’s situation and needs, you may find reasons for them to give you better pricing.
Perhaps the vendor is trying to meet a quota, or you’re a potential source of valuable referrals, or your vendor is eager to establish a presence in your geographic area or within your particular specialty. Perhaps you’re willing to be a beta test site for a new software component. Get to know your vendor and ask them how you can help their efforts and goals. That type of relationship could help you get a better deal, and better service.
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More articles on EHRs in the dental office:
- From RDH magazine: The advent of electronic dental records
- The future of electronic dental records [Infographic]
- Using technology to maintain a personal touch with dental patients
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Regarding vendor quotations, try not to get confused by their complexity. A while back I was a member of a national advisory committee to come up with a standardized EHR quotation format to make it easier for providers to compare vendors’ costs. Our committee was charged with this task because vendor quotations are so confusing.
Vendor quotations include costs for many items, including licenses, data conversions, implementation, training, device interfaces, third-party databases, and maintenance and support. You might get a good deal on your licenses, but to make up for it, the hourly training rate might be overpriced and your support percentage might be higher than the norm. Also, you need to consider all of the items that you might need in the future, such as interfaces, because once you sign that contract, you lose a lot of leverage. Be cognizant of the potential for "nickel and diming.” Vendors frequently employ smoke and mirrors when presenting costs. Ask your vendor to break down your costs in detail. And remember, all of these items should be negotiable. Above all, learn about marketplace pricing. If you negotiate price from a position of knowledge, you’ll likely get better terms.
It’s important to understand that there are many ways to also mitigate your costs by obtaining a better contract or agreement. I worked with one group practice, for example, that saved over $200,000 when I changed a few words in the contract’s licensing clause. There are also caps on pricing increases you can negotiate. And don't forget the importance of looking at your payment terms, as these can impact cash flow. If you are successful at negotiating additional discounts, it is also important to make sure these discounts are extended over a certain period of time and not just applicable to the present deal.
At the end of the day, as mentioned above, knowledge is power, especially in the area of pricing models and negotiations. From my experience, the more you know about what's usual and customary – as well as discounting models from vendor competitors – you can make a logical argument for getting the best price.
