According to Conga, “Contracts are the coin of the healthcare realm, defining relationships and agreements between patients, providers, vendors, and other parties, regardless of the organization’s type or size. Because contracts play such a major role, if they are not well administered, they introduce an area of significant potential risk and loss.”
That’s a bold claim to make, but consider the fact that 60 percent of all corporate litigation takes place over contracts. Add the fact that while the number of successful medical malpractice lawsuits has decreased, the average payout has risen 23 percent in the last two decades, and you should be starting to buy the claim. So let’s review some of the unique challenges faced by the health and life sciences (HLS) industry and how contract lifecycle management (CLM) can resolve them.
Regulatory and compliance challenges
Constantly changing laws and regulations can make it difficult for any organization to keep up with healthcare compliance. There’s the HIPAA, HITECH Act, Stark Law, CMS, Social Security Act, False Claims Act, just to name a few, and the cost of violating any one of these is steep. A single HIPAA compliance violation can cost you up to $50K, and inaccurate CMS reports can result in a $1M fine.
Noncompliance is a whole other beast. Factoring in litigation and poor outcomes, FastTrack 365 puts the cost of noncompliance at $600 per employee.
To avoid bank-breaking payouts, organizations need to be able to easily review and access terms and conditions, access and provide documentation in a given timeline, and refer to obligations and commitments. Done manually, however, these tasks are easily forgotten or otherwise susceptible to human error.
Supply chain and manufacturing challenges
According to Bill Siwicki, managing editor of Healthcare IT News, “Rather than merely being a pass-through serving a contracting function, healthcare intermediaries may evolve. They could boost pricing transparency and take charge of more of the value chain, and that means holding manufacturers responsible for drug efficacy, propelling population health by combining pharmaceutical and clinical data, and assisting individual patients in better managing their care.”
HLS can too quickly get stuck dealing with issues in supply chain and manufacturing. But with CLM, working with these intermediaries can be seamless and worry-free.
How CLM can help
Contract lifecycle management is more than finding a program that merely generates documents. A good CLM solution’s purpose is to automate and streamline each and every step of a contract’s lifecycle. That means everything from generating the contract to negotiating the terms, enabling approvals and renewals, and keeping track of deadlines and compliance milestones. According to Conga, organizations that adopt a CLM experience
- 60 percent faster contract cycles,
- 50 percent improvement in negotiation speed,
- 40 percent lower contract administration costs,
- 11 percent improvement in delivery time, and
- 10–30 percent savings in operating costs.
Not only does a CLM make the process easier to manage, but it also minimizes the risk involved. For example, 12–15 percent of all contracts are lost through leveraging manual processes—such as email and paper files—and from a lack of a single, central location where contracts can be easily stored, accessed, and searched for. Automating the process removes the possibility of human error, ensuring all documents are safeguarded and can be found when needed.
For a case study, look no further than Life & Specialty Ventures. As a division of BlueCross BlueShield, LSV’s goal was struggling to improve its contracting process with dental providers. Contacting, credentialing, and executing contracts was costly and time-consuming. In addition, it took an average of 40 days to respond to settle medical committee issues, a period that was negatively impacting customer satisfaction. That would have to change.
Partnering with SpringCM was just what LSV needed. “SpringCM was able to provide a centralized repository for documents, which created greater efficiency and reduced the time to settle medical committee issues from 40 days to less than 25 days. The solution created a standardized process resulting in fewer errors with minimal upfront investment and economies of scale that keep costs very low.”
Like any business, HLS needs contracts to run smoothly, delivering excellent care to customers and profit for employees and managers. With regulations increasing and the supply chain needing supervision, a CLM is the best way to ensure success.