Making the IT service agreement work for you

Making the IT service agreement work for you

August 10, 2016
From the August 2016 issue of HealthCare Business News magazine

By Michael J. Cannavo, "The PACSman"

One of the definitions of the word automatic is “done or occurring spontaneously, without conscious thought or intention.” When it comes to service agreements (SAs), the decision to purchase an SA is almost always automatic. In radiology, cardiology and other areas with specialized imaging equipment, purchasing an SA assures the equipment will be properly maintained and serviced promptly when needed. With clinical systems software, including PACS, EMR, EHR and other clinical systems, it’s a bit different, but still necessary to have support from the vendor.

How much support varies depending on the capabilities of the facility that has the software installed. Clinical information systems are often sold at a discount, which can be significant, in the hopes of making up the difference with a long-term SA. The expectation is that the client will maintain an SA for several years. In fact, almost all clients keep an SA indefinitely. That is why you rarely see a clinical information system sale lost on price alone.


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SAs typically include, but are not limited to, the following areas, with additional areas covered by some vendors:

1. Covered components (hardware/software/network)
2. Environmental requirements
3. Services provided
4. Priorities
5. Roles and responsibilities of each party/lines of demarcation
6. Hours of coverage/availability
7. Serviceability/requirements (including prerequisites)
8. System performance and operation
9. Response times (based on problem severity)
10. Problem resolution (including support
tiers and escalation process)
11. Service and costs outside normal coverage hours
12. Termination
13. Fees

Understanding the vendor’s obligations and yours for all these items is essential, and you should, of course, negotiate the terms in your favor, as best you can. Notice there is no limitation of liability (LOL) clause on the list, or uptime guarantees.

The reason for this is simple. The LOL clause in every contract is etched in stone in favor of the vendor and there is no sense in trying to change it. Uptime guarantees, while nice-sounding, rarely come with financial penalties, and without a cost to the vendor, these are statements of hope rather than real guarantees.

SAs often, though not always, provide high margins to the vendor due to the fact that prices are based on the list price of the software, not the discount price. Over a typical 5- to 6-year life cycle of most PACS, EMR and other clinical software, customers typically will spend several times the cost of the original software.

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