Posted by: Robert Markette
March 29, 2007
Topic: Miscellaneous

The Remington Report recently published its technology issue. As I flipped through it, I found an interesting article on how one agency went through the process of procuring new software for clinical and billing purposes. The article raised a number of interesting points and focused very hard on the idea of using the bidding and evaluation process to develop a relationship with the vendor you ultimately choose.

The article did not touch much on the process of developing a contract once you have settled on a vendor. Although you may think you have a good relationship with the vendor, you may run into problems down the road. (Many software or system agreements are for periods of up to five years.) When problems arise between you and your software vendor, the contract will determine what remedies you have, if any.

Most software contracts are written by the vendors attorneys and are decidedly favorable to the vendors. They usually include very few, if any, performance warranties. They contain a specific limitation of liability and they may provide you with few options to suspend payment if the software fails to perform or to rescind the contract if the software fails to perform.

Without any specific performance warranties, anything the sales reps told you during the sales process may not matter. If a sales person promised certain performances, features, or anything else that you relied upon to purchase the software, it should be stated in the contract, because the contract will likely have a clause that says the only representations you relied upon where those in the contract.

Another example of something to specifically set forth in the agreement is how the software support is provided. The contract should state who is responsible for each aspect of tech support and it should identify the types of support available and the timeframes within which support must be provided. For example, if a support issue has rendered the system unusable, the company should respond to the support call within an hour and work on the problem continuously until the problem is solved. While the software is not functioning, your payment obligations should be suspended.

You will spend a large amount of money to purchase a clinical software system. You should be sure that the contract provides clear statements about what the software will do and what remedies you have if it does not perform as advertised. If you simply accept the default agreement from the vendor you will find that even if the software causes you a great deal of financial loss, you may only be entitled to a refund of some of the purchase price. Or worse, you may find you have to pay a substantial penalty to get out of the contract early. This will inevitably lead to you incurring legal fees as you fight with the software company to get out of the contract.

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