Importance of Improving Contract Management for Healthcare Providers
How important is improving contract management for healthcare providers? For most providers, it’s essential for sustainability and future growth.
Healthcare organizations across the U.S. face a growing set of market challenges, including 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. Chief among these solutions is automating contract management in the form of contract lifecycle management (CLM) software.
- Healthcare providers spend hundreds of billions of dollars each year manually managing their contracts
- Digitizing all contracts and automating the contract workflows provide numerous benefits to healthcare providers of all types
- Contract management software can help healthcare providers reduce costs, improve compliance, enhance the patent experience, and reduce legal and financial risk
Why It’s Important for Healthcare Providers to Improve Contract Management
A Black Book Market Research study found that health providers spend nearly $157 billion each year on manual contract management. 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 for healthcare.
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 ensuring compliance with regulatory standards such as HIPAA, HITECH, HCQIA, JCAHO, 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, result in high costs and put the organization at risk. That’s because they increase the chance of mismanaging contracts, often fail to enforce and increase compliance, result in missed deadlines and other key dates, and make audit trails difficult to track and maintain.
Using CLM Software to Improve Contract Management for Healthcare Providers
As healthcare contracts become more complicated, the tools to manage them must keep pace. It’s not uncommon for a healthcare organization to have thousands, if not tens 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.
Adopting 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.
Here are just a few things CLM software can improve for healthcare providers.
Digitizing Healthcare Contracts
One key area that presents a great opportunity for improvement is the digitization of the various contracts engaged in by healthcare organizations. Before contract automation, paper contracts were the norm. Physical contracts are inherently difficult to store, access and protect. Large organizations often had multiple rooms full of filing cabinets, all overflowing with easily misfiled paper contracts.
Digital contracts are much easier to work with. By digitizing existing paper contracts and creating all new contracts electronically, physical storage is no longer an issue. Hundreds of thousands of digital contracts can be stored on a single computer or in the cloud, taking up zero physical space. Digital contracts are not only easier to store but also to search and access; what used to take hours to find amidst all those filing cabinets can now be located with a single keyword search. Digital files are also easier to secure, which is increasingly important in this age of data privacy regulations.
Automating Contract Workflow
Digital contracts also make it easier to automate contract workflow. By automating all aspects of the contract process, CLM software speeds up the workflow, reduces errors, and provides enhanced functionality.
In contrast, the old approach of 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?”
By digitizing all contracts and automating contract workflow, contract management software provides fast and accurate answers to those questions and more.
Without an automated and standardized CLM process, it can be impossible to know with certainty that an organization is complying with Medicare billing rules, HIPAA regulations, Stark Law requirements, and the many other internal and external regulations that govern healthcare today.
Not surprisingly, traditional manual contract management makes it difficult for the healthcare industry to ensure compliance with HIPAA and other regulations. According to the HHS’ latest HIPAA Audits Industry Report, only 2% of healthcare organizations fully met HIPAA’s Notice of Privacy Practices requirements.
That changes when an organization embraces contract automation. By using preapproved contract terms and language, CLM software ensures that all new contracts comply with today’s growing number of healthcare regulations, greatly reducing the risk of noncompliance.
SOURCE: Compliance Junction via YouTube
Benefits of CLM Software for Healthcare Organizations
There’s a reason why the market for healthcare contract management software hit $1.09 billion in 2021 and will grow at a compound annual rate of 22.2% through 2028. 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
These are just some benefits that CLM software brings to healthcare organizations. Automating the contract workflow provides a centralized digital foundation for modern contract management—from which all healthcare organizations can benefit.
Let Contract Logix Help Improve Your Organization’s Contract Management
Improving contract management should be a high priority for any healthcare organization. When you want to benefit from contract automation, turn to the experts at Contract Logix. We have worked with numerous healthcare organizations to automate and streamline their contract management with our healthcare contract management software. Whether your organization is still using manual contract management for healthcare or if you’re looking for a better CLM solution, talk to us. We’ll help you better manage all your contracts, create a more efficient contract workflow, and reduce contract-associated costs—because we know how to improve contract management in healthcare.
Contact Contract Logix today to learn more about contract management for healthcare organizations.