Importance of Improving Contract Management for Healthcare Providers

By David Parks

Healthcare organizations in the U.S. continue to face a growing set of market challenges such as rising insurance and drug trial costs, increased regulatory requirements, decreased government spending, mergers and acquisitions, and pressure to create a more patient-centric healthcare experience. For these reasons and more, healthcare payers, providers, and life sciences organizations are turning to digital transformation with the hopes of modernizing processes, improving operational efficiencies, and leveraging data for compliance and insight.

One key area that presents a great opportunity for improvement is the digitization and automation of contract management for healthcare organizations.  In fact, a recent study by Black Book Market Research found that health providers spend nearly $157 billion each year on manual contract management.

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That’s an astonishingly high figure that has a huge impact on a healthcare provider’s ability to provide value-based care. As a result, many healthcare providers are actively researching and evaluating new technologies and solutions such as contract management software to replace their manual approaches to contract management.

After all, healthcare-related contracts are only becoming more complex to create, negotiate, execute, and manage throughout the contract lifecycle. The arduous process of managing various physician and service agreements, along with regulatory compliance standards such as HIPAA, JCAHO, HITECH, and other state and federal regulations is very time-consuming and costly.

Healthcare providers need contract management solutions that help them simplify and streamline the contract lifecycle process across the entire organization. The manual approaches to contract management that many healthcare providers currently use such as shared folders, email, and spreadsheets not only results in high costs but also put the organization at risk. That’s because they increase the chance of contracts being mismanaged, often fail to enforce and increase compliance, result in missed deadlines and other key dates, and make audit trails difficult to track and maintain.

As healthcare contracts become more complicated, the tools to manage them need to keep pace. It’s not uncommon for a healthcare organization to have thousands, if not 10s of thousands of contracts covering a wide variety of departments and facilities, involving multiple payers, providers, and other parties, and potentially governing a staggering volume of transactions via numerous clauses and contingencies.

That’s why adoption of Contract Lifecycle Management (CLM) software should be a strategic priority for healthcare organizations. Contract management software provides a centralized and digital foundation for modern contract management with an integrated set of tools to handle all the tasks associated with healthcare contract creation, negotiation, execution, and management – including post-execution rights, obligations, and reviews.

Adoption of contract lifecycle management software should be a strategic priority for healthcare organizations

Without an automated and standardized CLM process in place, it can be impossible to know with certainty that an organization is complying with Medicare billing rules, Stark Law regulations, the GLBA, and the many other internal and external regulations that govern healthcare. Additionally, trying to manage contracts manually makes it very difficult if not impossible to answer common, yet important, questions such as:

“Where is the contract I need and is this the most recent version?”

“Which contracts are about to auto-renew?”

“What is the stage and status of all the contracts with this payer”

“Does this contract include the latest approved language and terms?”

“What contracts have clauses and terms that pose a higher level of risk?”

Contract management software provides fast and accurate answers to those questions and more. By retiring manual approaches and embracing a cloud-based solution that’s specifically built for contract management, healthcare organizations can:

  • Significantly reduce contract management costs
  • Improve regulatory and internal compliance and security
  • Help improve the patient experience
  • Increase the efficiency of limited healthcare resources
  • Reduce legal, financial, and brand risk


Improving contract management for healthcare organizations should be a top priority given the high costs associated with the widespread manual processes used today. Contract Logix is a leading provider of intelligent contract software and has worked with many healthcare organizations to automate and streamline their contract management. If your organization is still using a manual approach to contract management, or if you are looking for a better solution, we encourage you to schedule a live demonstration of our powerful yet easy-to-use platform to see how we can help.