Top 5 mistakes dentists make when signing software contracts

There are many business and technical issues in dental software contracts that dentists need to recognize and address, and the onus can fall on them to adequately prepare. Signing a bad contract could negatively impact a practice for years to come.

"The dental software revolution is upon us and with it comes newer practice management systems, cloud-based dental software and most important, 'next generation' dental electronic health records (EHR)," said Mike Uretz, a 30-year technology veteran and nationally recognized health care software and EHR expert. "Whether you have an older system and plan to sign a contract for new software with your existing vendor, or if you're purchasing brand-new software with a new vendor, it is important to be prepared to negotiate the contract terms."

Uretz, who is also the executive director of DentalSoftwareAdvisor.com, recently contributed to CDA's Guide for the New Dentist, available at cda.org/practicesupport. Specifically, Uretz contributed to the chapter that highlights the top five mistakes dentists make when signing dental software contracts.

A dental software contract can be complex and lengthy with many sections and clauses. To help dentists level the playing field, here are Uretz' top five most common dental software contract mistakes.

Mistake No. 1: Not asking for the best price. Dentists can analyze why a vendor should give them additional discounts and how they can help the vendor as a partner. If dentists try to understand their vendors' situation and needs, they may find reasons for them to give the dentist better pricing. Perhaps the vendor is trying to meet a quota, the dentist is a potential source of valuable referrals or the vendor is eager to establish a presence in the dentist's geographic area or particular specialty. A dentist may even be willing to be a beta test site for a new software component. Dentists should get to know their vendors and ask them how they can help their efforts and goals. That type of relationship could result in a better deal and better service. Dentists can also ask their vendors for a detailed breakdown of all costs. All items should be negotiable. Above all, dentists should learn about marketplace pricing. If the dentist negotiates price from a position of knowledge, he or she is likely to get better terms.

Mistake No. 2: Accepting poor payment terms. Dentists should never pay a vendor most of their money upfront. Instead, ask for milestone-based payments. As vendors complete certain predetermined project milestones, they receive a portion of their fee. A milestone-based payment system is the best incentive for vendors to complete projects successfully and in a timely fashion. If a dentist has his or her vendor develop interfaces to devices such as imaging systems or imaging software, the dentist should not pay more than half upfront and the remainder upon completion. Interfaces can be tricky and issues can come up along the way. Dentists should ensure they have a little leverage to get the job completed and working properly.

Mistake No. 3: Not asking for performance guarantees for cloud-based systems. When exploring cloud-based software vendors it's essential that the contract states that the vendor will help with the transition of data to a new vendor. Remember, the contract the dentist signs is critical to the success or failure of the web-based vendor selection decision.

Mistake No. 4: Not demanding service and support guarantees. How a dentist receives service and support is a major factor to his or her long-term success. There is no such thing as a system that doesn't need a solid plan for maintenance, support, upgrades and enhancements. And this is where many contracts fall short — they don't take into account the "after" implementation problems in enough detail. Dentists need service level agreements, which are the standard mechanism to document vendor commitments. The agreement outlines various areas of accountability in which the vendor commits to service and support.

Mistake No. 5: Not planning for worst-case scenarios. Dentists have the right to request that their vendors put their software and documentation in escrow to safeguard against the vendor going out of business at some future point — this is known as "software escrow" or "source code escrow." Think of it as a form of insurance. It's also important that the dentist have access to the vendor's database schema in case he or she has to transfer to another vendor. Database schema is a roadmap showing how the dentist's data looks inside the system. It's the formal structure of the database, including tables, forms, fields and their relationship to each other. A dentist also should make sure that the vendor agrees to help transition to another system should the dentist decide to go this route later on.

More information on each of these common mistakes is available in chapter 18 of the Guide for the New Dentist. The 20-chapter guide serves as a checklist that leads a dentist from graduation through retirement, providing tips on licensing, permits and certifications; marketing; preparing for associateships and practice ownership; and understanding dental benefit plans.

The Guide for the New Dentist was primarily written by CDA Practice Support analysts, with contributions from several CDA members, CDA Endorsed Programs and TDIC. Though it is not to be considered an "all-inclusive" resource for a dentist beginning his or her career and purchasing a practice, nor a substitute for legal, financial or other expert counsel, it is full of important information, broken down by career stage.

In addition to the Guide for the New Dentist, CDA Practice Support also provides a plethora of resources for members on issues involving practice management, employment practices, regulatory compliance, dental benefit plans and education.

For more information on the guide, visit cda.org/newdentist, or to connect with a CDA Practice Support content expert, call 866.232.6362.