Why Tech Companies Need Contracts Built for Marriage, Not Divorce

Last week, a healthcare technology CEO told me something that perfectly captures what’s broken about how we approach client contracts:

“We just spent four months negotiating a contract and now I’m concerned its impossible for us to deliver what the client really needs. Now they’re frustrated with our performance, and we can’t explain that their contract prevents us from giving them what they want.”

This isn’t unusual. In fact, according to World Contracting & Commerce, on average contracts underperform against expectations by 27%.

In helping healthcare technology companies negotiate hundreds of customer agreements, I’ve watched this scenario destroy relationships, make contract renewal very contentious and forget having a reference-able client! Companies invest enormous time and money creating contracts that sound legally bulletproof but set them up for operational failure – often at the insistence of the client.

The Problem: We’re Building Contracts for Failure

Most healthcare technology contracts are written as if the relationship is destined to collapse. Legal teams craft elaborate penalty structures, impossibly tight SLAs, and complex liability frameworks. They build legal fortresses designed to protect against vendor failure – but they actually create the conditions that make failure inevitable.

But here’s what I’ve learned from the vendor side: contracts written for divorce create exactly the adversarial relationships that kill renewals and referrals.

When I review contracts that healthcare technology companies have agreed to, I consistently see three critical problems:

Operational Impossibilities: Service level agreements that sound reasonable to procurement teams but ignore the realities of how healthcare technology actually works. I’ve seen contracts requiring 24/7 phone support from companies with 12-person teams. Data requirements that exceed the vendor’s actual technical architecture. Implementation commitments that don’t account for the reality that healthcare organizations move slowly through change management.

Success-Killing Restrictions: Terms that prevent vendors from delivering their best work. Communication requirements that bypass the vendor’s proven support processes. Customization demands that break the vendor’s core product functionality. Integration requirements that force vendors to work around their customers’ technical limitations rather than optimizing performance.

Profit-Destroying Economics: Pricing structures that look competitive upfront but become unsustainable when you factor in the actual cost of delivery. Penalty clauses that can wipe out margins on a single incident. Payment terms that force vendors to finance their customers’ implementations long-term.

Why This Approach Destroys Vendor Relationships

This adversarial approach creates a fundamental problem: when vendors are set up to fail, customer relationships deteriorate regardless of how good the underlying technology is.

I’ve watched exceptional healthcare technology companies struggle with customer satisfaction not because their products don’t work, but because their contracts make it impossible to deliver the experience their customers actually need.

You can’t contract your way to customer success when the contract prevents you from being successful. You can’t build long-term relationships when every customer interaction is filtered through adversarial legal terms. You can’t grow through referrals when your existing customers are frustrated by artificial constraints.

The most successful healthcare technology companies I work with share one characteristic: they negotiate contracts that let them over-deliver, not just meet minimum requirements.

The Better Way: Contracting for Marriage

What if healthcare technology companies approached customer contracts differently? What if we designed agreements that help both parties succeed together instead of preparing for inevitable conflict?

This isn’t about accepting bad terms or ignoring risks. It’s about understanding that your customer’s success drives your success. The most effective contracts I’ve negotiated create conditions where delivering exceptional service is profitable and sustainable.

Built on Operational Reality

Every term in these agreements reflects what your company can actually deliver at scale. Before I agree to an SLA, I understand the vendor’s actual infrastructure and support capabilities. Before I commit to implementation timelines, I map out both the vendor’s delivery capacity and the customer’s realistic change management timeline.

For example, instead of accepting generic 99.9% uptime requirements, I work with customers to define maintenance windows that work with their clinical workflows while allowing the vendor to perform necessary updates. Instead of blanket 2-hour response times, we create escalation procedures that match the vendor’s actual staffing model while meeting the customer’s operational priorities.

Designed for Vendor Success

Rather than penalty-focused compliance mechanisms, these contracts include collaborative problem-solving processes. Instead of rigid communication requirements, they establish partnership rhythms that let vendors use their proven support methodologies. Instead of blame assignment, they focus on outcome improvement.

I include quarterly business reviews where both parties assess what’s working and what could be better. I build change processes that let vendors adapt their delivery as customer needs evolve. I create shared metrics that align everyone around patient outcomes and operational efficiency, not just contract compliance.

Profitable and Sustainable

The best contracts ensure that delivering great service remains profitable throughout the relationship. This means realistic pricing that accounts for actual delivery costs, payment terms that don’t force vendors to finance implementations, and scope definitions that prevent endless customization requests.

I’ve seen too many healthcare technology companies accept contracts that looked profitable at signing but became margin killers once implementation began. Building in sustainable economics prevents these relationships from becoming financial disasters.

The Business Results for Healthcare Technology Companies

This partnership-focused approach delivers measurable business results:

Higher Customer Satisfaction: When vendors can focus on delivering value instead of managing contractual constraints, customer satisfaction scores improve dramatically. I’ve seen NPS scores increase by 40+ points when companies move from adversarial to partnership-focused contracts.

Better Renewal Rates: Customers who feel like they’re in true partnerships renew at much higher rates. Partnership-focused contracts create the conditions for long-term relationships instead of one-and-done transactions.

Increased Expansion Revenue: Happy customers buy more. When your existing contracts set you up for success, customers are more likely to expand their usage, add modules, or purchase additional services.

More Referrals: Your best source of new business is happy existing customers. Partnership-focused contracts create the customer experiences that generate referrals and case studies.

Sustainable Profitability: When contracts are built on realistic operational and financial foundations, they remain profitable throughout the relationship lifecycle.

How Healthcare Technology Companies Can Apply This Approach

Start by changing your negotiation perspective. Before your next customer contract discussion, ask yourself: “How can we structure this agreement so we can consistently over-deliver?”

Lead with Your Operational Reality: Don’t agree to terms that you know will create problems later. Be upfront about what you can realistically deliver, and explain why those boundaries actually serve the customer better.

Focus on Outcomes, Not Activities: Instead of accepting elaborate activity-based requirements, negotiate outcome-based metrics that let you use your expertise to determine the best way to deliver results.

Build in Flexibility: Your customers’ needs will evolve, and your product will improve. Create mechanisms for adapting the relationship without renegotiating from scratch.

Price for Success: Ensure your pricing covers the actual cost of delivering great service, not just the minimum viable service. Profitable vendors provide better long-term value.

Why This Requires Different Expertise

Here’s what many healthcare technology companies are discovering: the most effective customer contracts are negotiated by people who understand both your operational capabilities and your customers’ real needs, not just legal risk management.

Traditional legal review focuses on liability protection. But the biggest risk in healthcare technology isn’t contract breach—it’s customer dissatisfaction that kills renewals, damages referrals, and requires expensive remediation efforts. These risks can’t be lawyered away; they have to be designed out through smart partnership structures.

As someone with deep operational experience in healthcare technology, I can spot the disconnect between what sounds reasonable in contract negotiations and what actually works in delivery. I understand your company’s limitations and your customers’ real constraints. Most importantly, I can structure agreements that set your company up to consistently deliver exceptional results.

This doesn’t mean legal review isn’t important—it absolutely is. But it means leading with operational expertise and customer success focus, then adding appropriate legal protections, rather than starting with legal risk management and hoping for business success.

What You’ll Learn Next

Over the coming weeks, I’ll be sharing specific strategies, real examples, and practical tools for negotiating healthcare customer contracts that actually work for technology companies. You’ll discover:

• How to identify contract terms that sound reasonable but create operational nightmares
• Proven frameworks for structuring service level agreements that you can actually meet consistently
• Negotiation strategies that position constraints as customer benefits
• Pricing structures that remain profitable throughout the relationship lifecycle
• Communication processes that build partnership instead of adversarial oversight

Whether you’re a business development leader at a healthcare technology company, a contracts manager negotiating customer agreements, or a consultant working with health tech vendors, these insights will help you build customer relationships that drive sustainable growth.

Because the best healthcare technology contracts aren’t the ones that prepare for failure—they’re the ones that architect mutual success.

Ready to transform how your healthcare technology company approaches customer contracts? Subscribe to get these insights delivered directly to your inbox, and let’s build client relationships that drive sustainable growth.

Struggling with customer contract terms that make delivery difficult? I’d love to hear about the challenges you’re facing. Leave a comment below or reach out directly to discuss how these principles might work in your specific situation.