Negotiating vendor-financed EMR transactions

Posted on January 15, 2010 by Vadim Schick

Ingenix, the technology unit of United Health Group, and Allscripts-Misys Healthcare Solutions joined Siemens, GE Healthcare and IBM in offering financing for purchasers of electronic medical record technology.   This continues the trend of vendors offering interest-free financing until healthcare providers receive the "meaningful use"  incentive payments or reimbursements under the HITECH Act.

While such offers may provide a solution to some of the credit and financing woes facing the healthcare industry, healthcare providers should be acutely aware of the many potential pitfalls and related issues inherent in vendor-financed deals, including: (1) additional pressure from vendors to accept their standard contractual terms and conditions, rather than engaging in full-blown contract negotiations, because vendors have much more leverage if they are also the creditor in the transaction; (2) failing to obtain necessary warranties and representations from vendors that their systems will comply with all relevant requirements under ARRA and the HITECH Act and will permit the provider to achieve meaningful use; (3) dealing with problems that may arise if either the vendor’s product fails to achieve applicable certification (e.g., CCHIT), is not “accepted” by the provider after completion of acceptance testing or the product does not enable the provider to achieve “meaningful use” in a timely manner, as well as a host of other issues.

Steve Fox and yours truly explore the issues around vendor financing of EHR system purchases in the latest issue of the Journal of Health Information Management, where we suggest recommended courses of action for healthcare providers considering acquiring HIT systems, including EMRs, by using vendor financing options.  A complimentary PDF copy of the article is available here.
 

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GE and Siemens provide new financing options for Health IT purchases

Posted on December 29, 2009 by Steve Fox and Vadim Schick

On the eve of HHS releasing the much-anticipated definition of "meaningful use," health IT divisions of GE and Siemens revealed new financing options for purchases of their EMR and other HIT products.

On December 16, 2009, Siemens followed IBM and GE in offering "a series of flexible financing solutions to help healthcare providers pursue meaningful use objectives and meet [HITECH Act] deadlines <...>  Featuring zero-percent interest terms for qualified customers, the solutions enable organizations to defer up-front payments associated with their technology investment while meeting criteria for future government incentive monies."

According to Fierce Healthcare:

To provide the greatest possible range of choices for customers, Siemens offers solutions from Siemens Financial Services, Inc. as well as from selected partners, including IBM Global Financing and 3-D Financial Services. These options allow customers to choose a customized financing solution that matches their individual technology acquisition roadmaps, business strategies, financial profiles, and technology needs. <...>

By bridging the gap between the project implementation and the receipt of ARRA incentive, Siemens will be providing its customers an option which allows them to optimize their cash flow while maximizing return on investment.

Back in June of 2009, GE announced its $2 billion commitment as part of its Stimulus Simplicity program. According to the Wall Street Journal, GE, through its GE Capital division, “expects to offer $100 million in interim financing to hospitals and health-care providers for projects that are expected to qualify for funds from the U.S. government's economic-stimulus package. GE said the move offers doctors, community health clinics and hospitals a bridge to qualify for stimulus funds and faster access to electronic medical records.” While the “meaningful use” definition and the EHR certification are not yet finalized, GE guarantees that its EHRs will meet the upcoming requirements, regardless of the details of the final rule. Like IBM’s program, GE’s financing is also restricted specifically for GE Centricity, GE’s EHR product.

On December 24, 2009, GE extended the financing terms available for its Centricity EMR software to other health IT products, including Centricity Enterprise and Centricity Business, a financial and administrative tool for providers.  According to Healthcare IT News:

GE executives say they have seen strong interest in the program, with demand exceeding $140 million in sales opportunities.

In the current economic environment, vendor financing may be the best (if not the only) option for healthcare providers seeking to qualify for incentive payments under ARRA.  However, such  providers should be aware of the many potential pitfalls and related issues inherent in vendor-financed deals, including: (1) additional pressure from vendors to accept standard contractual terms and conditions; (2) failing to obtain necessary warranties from vendors that their systems will comply with all relevant requirements under ARRA and the HITECH Act and will permit the provider to achieve meaningful use; (3) dealing with problems that may arise if either the vendors’ products fail to achieve certification, or the provider fails to achieve “meaningful use” in a timely manner, as well as a host of other issues. 

These issues are subject of an upcoming article by yours truly, in the Journal of Health Information Management.  We will link to the article when it becomes available online.

"Siemens Unveils Flexible Financing Solutions to Help Providers Achieve Meaningful Use," Fierce Healthcare (December 16, 2009).

"GE expands healthcare IT loan program," Healthcare IT News (December 24, 2009).

"GE Unit Offers Interim Loans to Hospitals, Health-Care Providers" The Wall Street Journal (June 16, 2009), B3.

"G.E. Offers Loans for E-Health Record Purchases," New York Times Bits Blog (June 15, 2009).
 
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