From the Consultant’s Corner 5/17/13

Vendor Selection Strategy
By Brad Boyd

Many healthcare organizations are evaluating the potential benefits and tradeoffs associated with replacing their legacy application vendors with a core vendor to meet their enterprise-wide patient access, clinical, and revenue cycle requirements. Core vendor solutions promise a variety of benefits, including streamlined workflow efficiencies, business intelligence enhancements, reduced operating costs, and tools to help a healthcare provider meet the various changes facing our industry (ex. bundled payments and value-based contracting).

Making an uninformed decision can have far-reaching consequences in terms of costs, patient care, and revenue cycle performance, so it’s important to approach this evaluation process in a holistic manner.

The CIO of an integrated delivery network recently asked me what I thought were the five most important things to keep in mind when evaluating core vendor solutions. The following contains some of the details of our conversation:

1. Know yourself first. It’s critical to have a full appreciation of not only your current business and clinical needs, but most importantly, the future state requirements of your organization. A comprehensive discovery process should engage C-suite leadership, physicians, patient access executives, revenue cycle management, practice managers, and department administrators.
2. Perform a total cost of ownership analysis. Not all vendors offer similar licensing and support models, and there is great variance in vendors’ implementation methodologies and staffing models, as well as post-live support requirements. As a result, an organization must calculate the costs of acquiring, implementing, and supporting each vendor. For example, a system may be expensive to buy and implement, but the costs of maintaining the system over time could be relatively low. Another system may be less expensive upfront, but the costs of long-term maintenance could be higher. To get a true appreciation of the financial implications of a potential choice, spend time calculating the total cost of ownership over 5-10 years—considering the costs to acquire, implement and maintain the technology.
3. Understand the vendor marketplace. Consolidation is the name of the game in this industry and companies are constantly being acquired and sometimes dissolved. Know where a potential vendor sits in the marketplace and how stable that position is. The last thing you want is to pick a vendor only to have the company acquired, forcing you to convert to another system because the acquiring company will no longer support the initial vendor’s product.
4. Have a conversation with the vendor without the sales people. Although the sales staff serves a purpose in explaining the product and its benefits, I find it valuable to talk with a vendor’s executives without the sales people present. During this time, ask the executives where they think the healthcare industry is going and what the vendor is doing to navigate those changes. I’ve found that this type of strategic discussion can reveal a vendor’s research and development priorities and give a sense of how the organization is preparing for the future.
5. Look at the culture. Basically you want to know whether a vendor is going to play nice in the sandbox. If the vendor is committed to implementing its product in its own way and is not willing to customize the process for your organization, that’s something to know upfront. While I think a detailed plan for implementation is valuable, the vendor should be willing to compromise in certain areas to ensure your organization’s unique needs are met.

As with any big decision, it’s important to garner multiple perspectives. I recommend putting a team together that represents all potential users of the system. In my opinion, an organization should also bring in a consultant who can offer an unbiased perspective on different vendors, cut through the sales speak, and get to the real value and help your organization fully understand the ramifications of your choice.

Brad Boyd is vice president of sales and marketing for Culbert Healthcare Solutions.