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.



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.

Now, I don’t want to imply or infer that support from the vendor isn’t necessary. It is. In fact, it’s crucial. The question is, at what cost?

In an informal survey of several clients I have had over the past 30 years in the industry, none of the IT departments have ever gone back and compared their service usage against service costs. Why? A lack of time is the biggest issue, and the prevailing attitude is that you must have service anyway. While few would debate that fact, when you compare the costs of an SA against actual usage, the end user often comes out on the short end.

I had an engagement with a client a while back who was having issues with their PACS. The first thing I asked for was a copy of the service tickets. The review of these tickets showed that nearly 50 percent were level 1 calls — crucial calls — and less than 20 percent were identified as system bugs. The balance were tickets the IT department could have, and in most cases did handle, yet a vendor service ticket was generated anyway.

Now, were the 50 percent really crucial problems? Probably not. Perhaps 20 percent of these were, but as Dr. Dalai identified as the No. 1 issue in his “Laws of PACS” blog, PACS is the radiology department, and without PACS the radiology department ceases to function. It is that way with nearly every other clinical system as well. If radiologists can’t read the way they are used to reading, it becomes a serious problem, whether the cause is as simple as a workstation running slowly or as serious as the entire system going down. To radiologists, cardiologists and others whose livelihoods depend on electronic imaging systems, any slowdown is a level 1 issue.

When the service tickets were reviewed and compared against what would have been the time and material (T&M) service costs, the client actually would have been better off on a time and materials basis. Despite this, buying a full-service SA still seems to be the norm.

“As far as costs go, we never really look at how much it would have cost us on a time-and-materials basis versus having an SA. We just have never done that,“ said the IT manager of a multi-hospital facility in the Southeast. “There are things we simply feel we can’t put a price on, like being a priority customer and getting someone from the company on the phone when we need them. We can also budget our service costs this way as well. We may be able to get service cheaper, but it’s just not worth taking the risk of not knowing if we can get help when we need it.”

This confirms that customers will spend millions of dollars on a PACS, yet feel the only way they can get service they need is to get it through an SA. It is important to note that all SAs also cover software updates, which are fixes to problems that have been identified after a product has been released. These can be identified as going from version 10.5 to 10.7, for example.

Interestingly, most software providers outside the health care industry have processes in place to identify software problems in real time (Microsoft Windows is one example) and then automatically submit them to the company for review. This is typically not the case with health care clinical systems.

These require a service ticket to be written up and submitted and then have the logs manually reviewed. The only way you can report a problem is by having a service contract. Most non-health care-related software companies also provide their updates at no charge. Again, in health care, the only way you can get these is through an SA. These updates are also crucial to proper system operation. So since that is the way it is, it is simply accepted.

“We like to keep current with the software, and by having the SA in place, we are assured we get that. Without it, we don’t have access to it, although we don’t usually install the most current version right away anyway,” said the head of IT for a mid-sized Midwestern hospital. “Usually we install upgrades with new feature sets every few years, once they have proven themselves in the field. These have recently been included in the SA prices, which is a plus, but we need to make sure that we have budgeted for the implementation and training costs, which are additional.”

More than half the health care IT companies provide software upgrades at no cost as well. Upgrades are software releases that provide added features and functionality. An example of this would be going from version 10.7 to 11.1. To the vendors' credit, many have begun providing upgrades at no cost versus providing a discount on upgrades. Still, even with “free” upgrades, an end-user is required to pay for professional services and training, as the head of IT pointed out. These costs can also be fairly significant.

Is there a compromise between a full-service SA and time-and materials service? Many facilities have very strong IT and network support staff and frankly don’t need the full gamut of services that a full-service contract offers. "One size fits all” seems to be all that is available. With this in mind, you may try and negotiate an SA similar to what is outlined below:

Tier one — Updates only, no support (this should be free)
Tier two — Updates and upgrades, no support
Tier three — Updates, upgrades and level 1 support (first-line troubleshooting)
Tier four — Updates, upgrades and levels 1 and 2 support (first-line troubleshooting and support escalation), no on-site support (billable)
Tier five — Full service support, including on-site, as/where applicable

This proposal allows a facility to leverage its internal resources with those provided by the vendor. With more sites either purchasing their own hardware and/or going virtual with regard to their hardware, this proposal seems to make sense. There are a few guidelines that any facility looking to use an SA should adopt. These include:

Do your due diligence
Most facilities research the system and how it operates, but rarely ask about service. Talk to the system administrator about service and see what their response times and repair times are, especially initiating a software fix. If they support the system hardware, how long does that take to get parts? Are hot or warm spares allowed? Call the 800 number and see how complicated it is getting someone from service on. Do they pick up on the first few rings, or do you have a complicated keypad sequence you have to maneuver through first?

Have a knowledgeable IT and network department
Better than 90 percent of all system-related software issues can be dispatched in-house if the IT department is well versed in tier 1 troubleshooting. This often requires IT personnel (and the system administrator) to take a vendor-sponsored troubleshooting course. Nearly all network issues can and should be handled in-house, with only IP addresses and VPN issues shared with the vendor. You also want your internal network people to be responsible for all network security as well.

Identify the demarcation lines
With interoperability advancing and EMRs, PACS and other clinical systems all coming together to form an EHR (electronic health record), more systems are being interfaced together. This interoperability is a positive sign, but also can lead to finger pointing as well if clear-cut demarcation lines are not identified. This includes use of both HL-7 and interface engines. Know where the facilities integration responsibilities end and vendors begin.

Have a strong systems administrator who gets yearly re-training on the system
There is nothing more crucial to the successful implementation of a clinical system than a knowledgeable administrator. Not only does he or she know the system from the technical perspective, but in the case of PACS, as an example, from the operational standpoint as well. These are the people who not only keep the system running, but also make the changes to the system as needed. Daily reviews of the system logs are also crucial to understand system issues and correct them.

Negotiate the service contract you need
This is often easier said than done, but you should at least try. The vast majority of times, vendors will take the Henry Ford approach to service contracts: “You can have it in any color you want as long as it’s black.” But you may find a vendor who sees the wisdom in your providing first and even second-line support, and will reduce service costs accordingly. Just reducing the SA price from 15 percent to 12 percent represents a 20 percent cost savings. This can be significant, especially in a larger institution, so do whatever you can to get the price where you can live with it.

Understand the terms and conditions of the contract before you sign
Every contract a hospital enters into is reviewed by its legal department. While legal may understand the technical contractual aspects, they really have no understanding of the criticality of systems and their components, nor are they expected to. It is up to the individual department heads to make sure the system design and operation is clearly defined and included in the SA, and properly covered from a service standpoint as well. Things like response times and the escalation process also need to be very clearly identified and defined. Preserving the investments made in any clinical system is crucial, and is nearly as important as keeping clinicians who use the system happy. Whether you do it yourself, or use an SA to help in the process, how the system is maintained often defines the difference between it merely working, and working well.