Related Links

Web Seminars

But many chief financial officers, like Howard Tepper, play an important role in the process.

Tepper is vice chair and CFO at the Samuel Bronfman Department of Medicine at Mount Sinai School of Medicine in New York.

For some projects, Tepper is "just crunching the numbers," he says. But if an I.T. purchase could have a considerable impact on revenue, he's heavily involved in negotiations, he says. Tepper also sits on the I.T. steering committee, which chooses Mount Sinai's technology vendors.

CFOs often find themselves playing a supporting role in I.T. contract negotiations. However, it's usually a significant role, experts say.

CFO approval at many organizations is required before any large-scale contract can be signed. But many CIOs seek CFO involvement because of their unique understanding of enterprise financial and corporate strategy, and their experience with contract negotiations, including the mind-numbing task of combing through contract minutiae.

Number crunching

When I.T. negotiations get down to the dollar amounts, CFOs typically are at the table to go line-by-line through the contract, says Deborah Kohn, a 20-year contracting veteran and principal at Dak Systems Consulting, San Mateo, Calif.

But during negotiations on software functionality, most CFOs are part of the supporting cast, she adds. "Negotiations are a team effort, but the CFO typically is one of the signers of the contract."

One of the important skills CFOs do bring to the table is political savvy, Kohn says. Every organization has its politics. The CFO knows the various issues and players, and most in the organization respect the CFO.

Internal politics can make it tough for leaders of a hospital to reach consensus on issues that will land on the negotiating table. A CFO, for instance, knows how to mollify an influential but stringent physician, Kohn says.

Or, a team member may have difficulty understanding an issue and the CFO often is the best one to explain it. "Their answers and suggestions are listened to," Kohn says.

At CRC Health, a Cupertino, Calif.-based operator of 90 drug and alcohol treatment centers and residential facilities, Chief Technical Officer Jay Raimondi leads contract negotiations with the aid of corporate counsel.

But he often relies on the organization's CFO for his industry contacts and institutional knowledge, he says.

For instance, CRC Health recently bought the CareLogic practice management and electronic medical records software from Qualifacts Systems Inc., Nashville, Tenn.

At the time, the organization didn't have a corporate counsel, and the CFO recommended a law firm he used at a previous organization to assist in final negotiations.

More than anyone else in a hospital, a CFO understands the financial position of the organization. So sometimes it's the job of the CFO to make sure additional items don't get put into a project that had been financially manageable and blow the budget.

When Lakeview Center in Pensacola, Fla., bought Qualifacts' practice management and records software, CFO Allison Hill was significantly involved from the start.

That's because the software and related technology represents the largest I.T. investment ever for Lakeview's behavioral health unit. Its 900 employees provide mental health and drug/alcohol treatment services to more than 25,000 patients each year. The center, part of Baptist Health Care, also offers vocational and adult/child welfare services.

While Lakeview's director of I.T. handled the bulk of contract negotiations and now leads the 12- to 18-month implementation, Hill set many of the guidelines and terms for the negotiations.

The guidelines primarily were finance-related. "I prioritize what to dedicate dollars to, to make sure we don't have 'scope creep,'" she explains.

Scope creep happens when a project expands after the contract is signed and implementation work starts.

For instance, the idea of using document imaging to digitize paper forms and get them in the EMR became an attractive option, but would have added cost to the existing contract.

Hill pushed to wait on imaging until after records implementation to better manage dollars and resources for the EMR and other projects. "We're also rolling out a time and attendance system," she says. "You just have to prioritize what you want to tackle now and what you can do later."

Setting clear expectations of the vendor implementation team and the degree of attention the vendor will give to the project also can reduce the risk of scope creep, Hill says.

Controlling scope creep helps prevent a contracted implementation from financially spiraling of control. But it's also important to make sure vendor payments are tied to realistic implementation timetables, Hill notes. "If you miss a milestone, other milestones are pushed back and that affects cash flow and resources not just for that project, but other projects as well."

Negotiating the contract with Qualifacts brought up an issue Hill had never dealt with.

The vendor will remotely host the software, but Lakeview wanted its I.T. staff to be able to perform some maintenance and make periodic changes to the software. "We needed to balance our resources with theirs because when they do the work, it costs money," Hill says. "We were trying to manage future cost of ownership."

The result was one of the longest talks she can remember to nail down a particular clause in a contract. "It was a different way of working for us and the vendor, and we had to find a middle ground."

A good partnership with the CFO can bring additional benefits to CIOs when negotiating deals. CFOs can give CIOs the financial flexibility they sometimes need to close a deal, or help them find funds if they're convinced a purchase will be beneficial for the organization.