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H H S Department of Health and Human Services
U.S. Department of Health and Human Services
Health Information Technology

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How do we write and negotiate the vendor contract?

After an institution has selected a vendor, it needs to develop a contract that specifies expectations and requirements in order to foster a collaborative environment.  Contract negotiation is a key step in the health IT implementation process and should be treated as a distinct phase.  As part of the negotiation process, the health care organization should define what it needs, wants and expects of the vendor.  Some organizations may find it advantageous to pursue negotiations with two vendors to maximize leverage and to provide a back-up option. Pursuing this approach, however, will require additional time and resources.

Participants should remember that the contract not only determines price, but also the types of services the vendor will provide and how the partnership will facilitate implementation and technology adoption.  Health care providers should also keep in mind that health information technology systems require regular updates and that a system implemented one year may have new functionality or modules that providers might find of interest the next year.  The contract should provide some guidance on whether the vendor will provide technological updates to the provider and what sort of support the vendor will provide if the staff needs re-training or an introduction to updated features of the system.  At its base, a contractual agreement protects both the provider's and vendor's interests and can be an important step in building a successful relationship.  Key components that should be included in a vendor contract include: licensing terms; payment terms; system testing; training; service-level agreements and system availability; maintenance terms; availability of updates to the system as new features or functionalities become available; legal and regulatory information; and termination clauses.  Also, in an ever changing regulatory environment, the contract should also specify the vendor's responsibility for additional programming or other changes that may be necessary to meet compliance requirements.

Developed by the Health Resources and Services Administration as a resource for health centers and other safety net and ambulatory care providers who are seeking to implement health IT.
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