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Joel Arun Sursas, Health Informatician, on Evaluating Vendor Contracts in a Post-Surge Healthcare Environment

Originally published on timebusinessnews.com

Amid any unforeseen event or significant natural disaster, such as the COVID-19 pandemic, the unpredictable conditions are the reason many contracts between major healthcare organizations and their vendors are re-evaluated and often broken. The coronavirus pandemic has forced many financial changes; therefore, vendor contracts should be re-evaluated with the new swell of what is now considered normal.

Many healthcare practices are looking at a wide range of vendors, specifically in the emerging telehealth technology revolution, for assistance in meeting patients’ needs during the pandemic [3]. Though there is no current dominating vendor in the industry, a recent KLAS study reported how seriously organizations need to invest in a digital infrastructure to avoid being left behind as telehealth progresses [4]. Evaluating a vendor contract that offers new opportunities can be challenging to pick with so many vendors to choose from along with limited budgets.

A great way to analyze and evaluate a vendor contract is by performing a vendor assessment. A vendor assessment is a procedure based on judgment and acceptance that organizations use to decide whether a new potential vendor aligns with the business’s standards and responsibilities once under an agreement [1]. The key for decision-makers is to find vendors who are both high-quality and low-risk [1]. These types of assessments are also great to utilize for re-evaluation processes.

As a specialist on the matter, Medical Doctor and Health Informatician Dr. Joel Arun Sursas knows that revisiting any vendor contract for an appraisal can be a daunting and uphill task. However, establishing and building a long-term business relationship with vendors benefits both parties involved.

Here, Dr.Joel Arun Sursas provides a checklist of tips to assist in the evaluation process during vendor evaluations and expectations to have for negotiation.

Termination Terms

It is crucial for healthcare evaluators to keep an eye on termination terms, especially during unpredictable times. For non-essential vendors, healthcare legal departments are known to require increased flexibility to execute termination [2]. Health organizations should be aware that vendors will do everything they can to not grant termination for convenience rights to medical facilities. Giving a termination for convenience puts vendors in a position to carry all the risk of a pandemic-level disruption by removing an underlying claim for breach [2].

Force Majeure

Force majeure essentially means the “Act of God” part of the contract [2]. This particular section was never one to pay attention to until the COVID-19 outbreak. The force majeure clauses in an agreement state the right that one or both parties have to terminate the contract if a circumstance or event beyond human control occurs, or in other words, an “Act of God”. However, though before the virus outbreak, the pandemic might have fallen into that category allowing termination, healthcare legal departments might eliminate an epidemic from the list [2]. Supply and service vendor contracts will most likely exclude a pandemic from the list of termination excuses.

Supplies and Inventory Prerequisites

Hospitals and medical offices hold higher value for critical supply vendors after the supply shortage at the beginning of the pandemic. Quality supply and inventory contracts to look for guarantee supplying the minimum levels that align with standards tailored to user demand [2]. Vendors are aware of what comes with an unpredicted escalated fluctuation in consumer needs; this is often a surplus of supplies followed by an overflow of inventory when the demands decrease. Medical care supply customers should contemplate negotiating send-back rights to allow the collection and return of expired supplies or unused products.

Payment

The Intensive Care Unit and the Emergency Room were two hospital departments that increased client care due to the coronavirus [2]. While these departments stayed incredibly busy, other areas of the hospital lacked patient demand. Procedures that once were a vital source of revenue dwindled due to fear of COVID-19. Hospitals faced budget setbacks when money was crucial to assist at the pandemic frontlines [2]. Vendor contracts that will benefit medical facilities in the future consist of more flexible payment requirements during a crisis like a virus outbreak.

About Joel Arun Sursas:

Joel Arun Sursas is a team leader and facilitator with a proven track record and a niche skill-set developed over the past seven years in his capacity as an established Medical Doctor and Health Informatician. He is most passionate about Medical Informatics, working to bridge the gap between doctors and engineers to improve patient care. Dr. Joel Arun Sursas’ interest in the field emerged when he began working as a Project Officer for PACES — the Patient Care Enhancement System for Singapore Armed Forces (SAF).

References

  1. Smartsheet, Vendor Assessment and Evaluation Simplified, 2020, Retrieved from https://www.smartsheet.com/content/vendor-assessment-evaluation
     
  2. Phiflow, Post-Surge Vendor Contract Negotiations in Healthcare: Re-evaluating Key Contractual Provisions, 2020, Retrieved from https://www.phiflow.co/blog/post-surge-vendor-contract-negotiations-in-healthcare
     
  3. Healthcare IT News, Healthcare organizations turning to wide range of vendors in pandemic, July 24, 2020, Retrieved from https://www.healthcareitnews.com/news/healthcare-organizations-turning-wide-range-vendors-pandemic
     
  4. KLAS Research, Vendor Performance In Response to the COVID-19 Crisis, July 23, 2020, Retrieved from https://klasresearch.com/report/vendor-performance-in-response-to-the-covid-19-crisis/1729
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