Vendor Contracting Best Practices in Healthcare
As healthcare organizations optimize for value-based care and respond to changing compliance requirements, the interest in contract lifecycle management (CLM) has grown. Although a great deal of attention is being paid to payer contracts, there are many benefits to improving contracting in the healthcare supply chain. It only takes one missed auto-renewal date for most organizations to realize that creating efficiency in the supply chain hinges on improving contracting best practices.
The COVID-19 pandemic has driven an increased focus on the resiliency of the healthcare supply chain, with 66.7% of healthcare organizations re-evaluating existing contract terms and conditions, according to the IACCM. Such terms may, for example, favor multi-source contracts versus single-source contracts to increase resiliency.
Effective contract lifecycle management is key to reducing risk, capturing economies of scale, and getting the upper hand in price negotiations. One step further, recent advances in artificial intelligence (AI) are transforming how healthcare organizations realize value in every stage of the contract lifecycle.
Unlock Savings in the Contract Lifecycle
It’s no secret that healthcare organizations are struggling to control the growing cost of supplies. This in turn is driving demand for greater cost control and accuracy. Healthcare organizations need to find a way to take control of the thousands of vendor contracts that make up the supply chain. And let’s not forget the many people who have input in procurement decisions, from legal ops and procurement to physicians and nurses, and are often relying on manual processes or systems that lack transparency. Nobody ever claimed vendor cost control was easy, did they?
Let’s dig down to the common areas where contract management can uncover cost savings:
- Duplicate spending -With decentralized purchasing, it’s common for multiple contracts to exist for the same or a similar vendor. Unless physician preference prohibits it, you may be able to consolidate contracts, standardize certain purchases, improve negotiations, or gain economies of scale.
- Auto-renewals- Many contracts renew automatically, locking healthcare organizations into unfavorable terms, missing opportunities to renegotiate, end terms, or go to RFP.
- Rebates - Capturing hospital rebates in compliance with the OIG and Medicare benefits.
- Reduce waste- When you compare consumption to purchase activity, you can change terms to reduce inventory levels or stagger delivery to eliminate product expiration waste.
- Thorough review- Most supply chain reviews focus on products, but reviews should also include service and vendor contracts, particularly with the rise in cloud IT services.
- Contracting efficiencies - Automated CLM tools can speed up the contracting process, leveraging intelligence in contract authoring, review, sign-offs, compliance checks and milestone tracking.
Artificial intelligence (AI) holds the potential to simplify contract review by extracting key terms and clauses and making it possible to mine contracts for opportunities. Look for a CLM tool that does not require costly data field training so that data is actionable from go-live.
Act on Compliance Risks in Real-Time
Healthcare is one of the most complex and heavily regulated industries, with the laundry list of regulations as complicated to say as they are to manage: HIPAA, HITECH, MACRA, HRRP, and more. Worse, the regulations are constantly in flux and new concepts such as value-based contracting with drug companies are introducing risk-sharing to the procurement process.
With manual contract processes, the ”˜people’ cost is high to manually sort through contracts to identify risk. With people, there is always the risk of oversight or that a contract remains overlooked in an email or in a paper filing system.
Healthcare organizations are turning to CLM for faster authoring, negotiation, sign-off and to deliver real-time compliance insight. When your CLM can extract key clauses and data points without manual training, compliance checks become just a few clicks away.
Automate Contract Creation
Empower business partners to create self-service compliant contracts with minimal legal involvement.
Ensure that you do what you are contractually required to do with obligation management and non-standard clause tracking and reporting.
Full Transparency and Visibility
Know immediately the status of a contract in the approval cycle and who still needs to approve.
Supply Chain Resilience
Optimizing the supply chain is about getting the right amount of the right supplies (goods or services) at the right time at the lowest possible price. There are many points of potential failure, from inventory problems to quality issues to delayed or missed delivery. COVID-19 has been an accelerator for change in healthcare, demanding a higher level of supply chain resilience. Many organizations have felt the strain of their manual contracting processes while attempting to expedite new healthcare contracts to meet increased supply demands. While only part of ensuring a resilient supply chain, effective contract management plays a role by ensuring the vendor contracting process moves along quickly. If a healthcare organization is managing contracts manually, they may not react quickly to prevent future delays, find alternate suppliers, or debate price fluctuations.
Automating Healthcare Contract Lifecycle Management
Mature contract lifecycle management solutions have moved beyond operational recordkeeping to become a core system to address risk and control costs.
Evisort is the first end-to-end platform that automatically creates new contracts and provides real-time analysis to empower your legal, supply chain, and contract teams. No need to tag documents or train your AI, Evisort is built with the intelligence of over 230+ contract types. This key difference allows Evisort to provide out-of-the-box readiness to assess and respond to risk, to optimize for efficiency, and to identify new opportunities in the healthcare supply chain.
- Reduce contract review from months to days
- Eliminate data entry
- Extract and search over 50 key data points out-of-the-box
- Track risk, compliance and obligations
- Customizable alerts to stay ahead of notice periods
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Test Evisort on your own contracts to see how you can save time, reduce risk, and accelerate deals.