Payor Contracting

Checklist For Negotiating Contract Vendors

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Checklist for Negotiating Vendor Contracts

Negotiating with vendors can be tricky. If you’re going to depend on one provider for an extended period of time, it’s vital that you don’t rush the contract negotiation process. As the buyer, you want to ensure you’ve worked out a fair price, without pushing the provider too hard and ruining the vendor relationship.

Beneficial negotiations—not just those in healthcare—depend on both parties walking away happy.  

Before making any decisions, follow this checklist for everything you need to know about negotiating vendor contracts.

#1 Know What You Want

The first step toward any successful negotiation is knowing exactly what you want. When creating a contract, don’t be afraid to be outspoken about your position. While you may not get everything you initially ask for, it’s important to start with high expectations and work your way down to a healthy agreement.

Some helpful contract negotiation strategies to employ for a fruitful negotiation are:

  • Asking for more at the beginning so you give yourself leeway
  • Understanding what the vendor wants
  • Separating benefits you need and benefits you want
  • Keeping negotiations polite and formal

#2 Be Upfront About Price

The most significant part of all types of vendor contracts is negotiating the price. Prices can be broken down into multiple categories:

  • General service price – This is what you’ll be paying to the vendor on a regular basis. Whether this is all at once, annually, or in a series of payments throughout the contract, you’ll want to make this payment crystal clear before signing anything.
  • Fees and upgrades – Fees and upgrade costs should be a separate part of the negotiation. You don’t want to be misled into believing you’ve determined all the payment terms, only to be hit with an expensive software upgrade or training fee.
  • Repairs and support – It’s important to note the details in your vendor’s service. If their software crashes or their service requires extra support, will they fix it for free? Don’t get stuck with added costs for the vendor’s mistakes. Make sure you’re signing an agreement that outlines how the vendor will support you if these issues arise.
  • Warranties – Protect yourself by defining the terms of your warranty. In the case of the vendor being unable to fulfill the job outlined in the contract, you want to ensure you have a warranty that both parties have agreed upon. These terms should include a warranty period, the details of replacement, and any cost savings that would be refunded to you.
  • Technology and Hardware – In addition to the costs of service, your vendor may require you to have specific instruments for use. It’s essential to determine whether the overall price covers the cost of technology and hardware, or if the vendor will require you to make extra purchases to make their service compatible with your system.

#3 Determine Data Ownership

When negotiating favorable terms for an Electronic Health Record (EHR), you’ll need to clearly define the terms of data ownership. Your employees’ and patients’ data should be protected, and it’s your job as the employer to negotiate a contract that keeps their personal information safe.

When negotiating data ownership, consider these key factors:

  • What data the vendor has access to
  • Who has ownership of the data collected by the vendor
  • How long the data is kept for

#4 Outline Required Experience

Your vendor’s staff should have a level of experience that is agreed upon by both parties. You want to make sure the vendor provides you with the appropriate level of expertise you’ve paid for.

Make sure your contract details the amount of training, certificates, and knowledge required by staff to provide adequate service to your company. You don’t want to negotiate a high-priced contract just to end up with rookie staff members who could make costly mistakes at your expense.

#5 Keep a Record of the Vendor’s Response

When negotiating vendor contracts, it’s vital to keep a record of everything.

Additional clauses, exact payment terms, and especially verbal and written agreements should all be recorded with the utmost precision.

When the vendor agrees to include something you’re negotiating for, make sure to record their response. Whether they fully comply or have some caveats, you want to have legal proof of their response. Don’t base any negotiations on contracts that don’t have a paper trail.

PayrHealth is Here to Help

By enlisting a professional’s services, you can avoid missing any loopholes or fine print in your contract negotiations. This is where PayrHealth can help.

PayrHealth manages and negotiates better contracts for healthcare facilities by becoming an extension of the provider’s team.

While it’s essential to know the basics of what you want from your vendor, a company that specializes in contract negotiations may save you time, money, and the headache that comes from overlooking small details. Their services can be especially important when those small details could result in pricey consequences down the line.

The most important thing to remember is that your vendor works for you. If you feel you’re not being heard during the negotiating process, don’t be afraid to speak up, stand your ground, and look for assistance.

Sources: What are Important Items to Include in a Vendor Contract?

Gatekeeper. Negotiating with Vendors – Five Tips for Success.

Integrated General Counsel P.C. Vendor Contracts – What Are They and Do You Need Them?

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