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Top 10 Legal Issues - IT Procurement for Aged Care and Retirement Living

Gina Tresidder, Kate Littlewood and Michael Cassidy

The digital transformation of the aged care and retirement living sectors has already begun. Larger providers and operators have long recognised the efficiencies and improved quality of care that can result from automating manual processes. With the increased data collection requirements resulting from the Aged Care Royal Commission, it is only a matter of time before smaller organisations also avail themselves of IT solutions.

However, IT procurement can be a significant investment when licensing, implementation and ongoing maintenance are considered. So how can you avoid making a costly mistake?

In this article we highlight the top 10 legal issues to consider when embarking on an IT procurement project.

  1. Enterprise Software or Software as a Service (SaaS) – Not all IT solutions are created equal. Enterprise software is software that your organisation buys or commissions and installs on your organisation’s servers. SaaS is software that is hosted and managed by a third party. You essentially pay for an account that you access via the internet. Enterprise software can be customised to your organisation’s specific needs but it is expensive and it can take time to work out the bugs. SaaS has more limited functionality but it is usually tried and tested and includes regular upgrades and updates. For these reasons, SaaS can be more cost-effective for smaller operators.

  2. Supplier contracts – You will be presented with the supplier’s contract, which may be lengthy or quite brief. In either case, the contract will be drafted to protect the supplier, for example, limiting the supplier’s liability in the event of breach. It is important that you have the contract reviewed by your lawyer, who will be able to negotiate amendments to protect your interests or at the least, identify any particular ‘red flags’. In some circumstances it may make more sense for your lawyers to draft a bespoke contract that is tailored to your needs rather than amending the supplier’s contract.

  3. Scope – It may not be possible to nail down in detail all your requirements before engaging the supplier. However, the more you can specify your requirements and include these in the contract, the better position you will be in once works begin. If the contract leaves key requirements such as functionality of the software, timing, pricing, etc. to be agreed at a later point, then unless your contract includes a right to terminate early (with no penalty) you may find you have signed on to a project that is vastly different to what you anticipated.

  4. Timing – Are you working to a deadline? For example, you may have a contract with a legacy provider that you do not want to renew, or a new compliance requirement to meet. If so, you must ensure this timeframe has been factored into the contract as configuration, implementation, migration of data, testing and training all take time. Make sure that any milestone dates are included in the contract and you have allowed for inevitable delays.

  5. Costs – The contract should specify in plain English what you are paying for and what you receive in return. Is the charging mechanism clear? Are the costs fixed or time-based? How many hours of support services, training, etc. are included? These are all important considerations to mitigate any blow-out with costs.

  6. Scalability for future strategy – The needs of your organisation in five years’ time or even one year's time may be very different to what they are today. Scalability is one of the most attractive feature of SaaS solutions but this flexibility needs to be reflected in the contract. For example, how does it deal with increased/reduced usage, additional functional requirements, and early termination? It’s important to consider what your organisation’s long-term objectives are to have the right systems in place to help you get there.

  7. Ongoing services – Regardless of the product you choose, it is likely that you will require ongoing support and assistance with bugs / defects and also day-to-day issues and questions. Does your contract include ongoing support? A helpdesk? Most IT procurement contracts will include a set of agreed service levels, such as response and resolution timeframes for reported issues. Check these carefully to ensure they will meet your organisation’s practical needs, and that there are real consequences in the contract if the service levels are not met.

  8. Privacy and Security – If you choose an SaaS solution then your data will be accessible by the supplier and hosted on the supplier’s, or a third party’s, servers. It is important that your contract addresses your obligations under the Privacy Act 1988 (Cth) and other legislation dealing with personal information and health information. It should also detail each party’s responsibilities in the event of a data breach, which you may be required to report to the Office of the Australian Information Commission (OAIC) and the individuals concerned.

  9. Changes to the Project – More often than not, the parties will agree to change the specifications, costs and timelines over the course of the project. You should have a clear change control process specified in the contract and comply with it so that you can keep things on track and easily identify non-compliance in the event of a dispute.

  10. Transition Out – From the very start of your relationship with a supplier, you should be thinking about the end of that relationship. When the contract expires or is terminated, you will need to be able to transfer the services and data to another supplier and require your current supplier to assist you in that process. Ensuring you have this specified in your contract will minimise time, cost and potential loss of data at the conclusion of the relationship.
How can we help?

The IT Team at Russell Kennedy does more than just draft or review contracts – we work closely with clients, as well as our Aged Care and Retirement Living teams to provide legal and practical guidance throughout the whole lifecycle of the project for our clients.

Contact one of our Russell Kennedy expert IT team members, Gina Tresidder (gtresidder@rk.com.au / (03) 8602 7243), Kate Littlewood (klittlewood@rk.com.au / (02) 8987 0020) or Michael Cassidy (mcassidy@rk.com.au / (03) 9609 1556) if you have any questions regarding your IT procurement project. Alternatively, our aged care team members Rohan Harris (rharris@rk.com.au / (02) 8987 0024) or Solomon Miller (smiller@rk.com.au / (03) 9609 1650) can assist you with any broader aged care related assistance including supplier contract assistance.

If you would like to keep up to date with Alerts, news and Insights from our IT, aged care and retirement living teams, you can subscribe to our mailing lists here. We also have a broad range of standard and tailored template aged care agreements, policies and other documents you can find more information about here.

The information contained in this Alert is intended as general commentary and should not be regarded as legal advice. Should you require specific advice on the topics or areas discussed please contact the Russell Kennedy lawyers listed above.

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