Up to 80% of transactions in a healthcare organization are governed by contracts. Surprising? Commonly thought-of physician employment contracts are just the tip of the iceberg. Leasing, purchasing, services, supplies, and maintenance contracts impact practically every function in healthcare operations—from the use of surgical robots and shoe covers to lawn care.
Explore the breadth of contract management and you'll see that a single hospital manages more than 1,000 contracts in its portfolio. Yet, while contract management affects healthcare spending across the continuum, manual contract management is still common in U.S. health systems, costing billions annually in wasted resources.
While some contract inefficiencies have existed under the radar in previous years, ballooning costs, deflating operating margins, and extreme regulatory compliance risks have placed the contracting process in the spotlight. Healthcare leaders agree, it's past time for contract lifecycle management reform.
“It would take us at least eight hours to gather and validate all of the data for our reports, and now we get them done in two minutes, and we are able to report each month instead of just quarterly.”
—symplr customer and interim chief compliance officer for a four-hospital, 440-bed health system in the southeast
Internal and external pain points are motivating factors to improve contract lifecycle management:
- Financial strain: 40% of CIOs said financial pressure is the top threat their organizations will face in the coming year, according to the 2022 symplr Compass Survey. Contracts are foundational to financial performance, with annual revenue eroded by ineffective contract management and suboptimal contract terms and conditions.
- The complex regulatory environment: Health systems face a significant regulatory burden, and part of that lies in their accountability for terms within many complex contracts. For example, they must successfully evaluate and track provider time reporting while avoiding conflicts of interest, and record gifts and other non-monetary compensation. The consequences of regulatory non-compliance are severe and include large fines and reputational damage. Absent automated processes and workflow protections, compliance is an uphill battle.
- Decentralized data storage: Health systems often store contracts, policies, and related documentation in disparate systems, wasting costly and finite staff hours when accessing, aggregating, analyzing, and reporting on the data. Instead, contract and legal professionals could be using their time and expertise strategically analyzing contracts. Without giving professionals the tools to collaborate in a centralized, governed contract management platform, systems will struggle to build and maintain a culture of compliance.
Where should organizations start to realize contract transformation?
If health systems continue using the same siloed systems and technology, or no automation, for contract management, how will they be able to control costs and guard against compliance risk? The cost of doing nothing can mean millions in additional cost burden, fines, and capacity drainage. It is all too easy to get bogged down with daily operations and postpone strategic process improvement until it is too late. For most systems, starting with an audit of processes is the first step in making meaningful change and moving the needle. Doing so will provide the building blocks to quickly demonstrate a strong business case for transforming the contract management process with automated workflows and compliance mechanisms.
Start with our 15-second internal contract management audit
Step 1 on the way forward is a current-state analysis. Do any of these challenges ring true for your organization’s contract management process?
- We are at risk of incurring penalties related to regulatory non-compliance due to contract mismanagement. YES / NO
- Our contracts are managed in disparate locations, making it difficult for staff to locate and monitor contracts. YES / NO
- Some contracts are missing historical transparency. YES / NO
- Sensitive contract data exists in insecure environments and/or users lack secure permissions.
YES / NO
- Contracts are sometimes signed without proper compliance review or authority. YES / NO
- Contract renewals are identified after they happen. YES / NO
- There is no single source of truth for contract templates organization wide. YES / NO
Most professionals would agree that in the world of contract management, surprises aren’t welcome. However, when the scenarios above occur, surprises are almost sure to follow. Effectively controlling contracts is paramount in today’s integrated healthcare operations. Lifecycle contract management is complex and its ramifications far-reaching, requiring a flexible, compliance-driven approach. Centralizing contracts and standardizing best practices using digital process tools reduces expenses and ensures your organization is never in the dark when it comes to contracting.
“Physician contracting is high risk. If we pay a physician who doesn’t have a contract, or we pay more than the contract allows us to pay, or we pay for something we are not supposed to pay for, the fine would be in the hundreds of thousands of dollars, and symplr helps us avoid these types of fines.”
—An 11-hospital, 1,600-bed health system in the northeast
If you answered YES to any of the above challenges, Step 2 is to build a business case for improvement. Investing in contract management solutions is a significant decision, both financially and from a change management perspective, requiring a business case to prioritize the decision and set expectations for the anticipated return on your investment (ROI).
symplr recently partnered with Hobson & Company, a value consulting firm with over 20 years of experience, to build a custom ROI tool for this purpose. It is the result of independent validation of “sources of value” across seven symplr customers and identifies specific outcomes they achieved by leveraging symplr’s Contract Management solution.
The research identified four benefits across three business objectives for symplr customers:
1. Reduce time spent managing documents
A central repository for all healthcare-related contracts allows users to quickly and easily access critical contract information.
“Prior to having symplr Contract, I would spend 10–15 hours per week scanning and uploading contracts, and now I spend 3-4 hours per week and can focus my time on drafting contracts.”
—Legal contracts administrator for a five-hospital, 310-bed health system in the west
2. Reduce time spent on reporting
Advanced reporting capabilities automates the process of identifying, managing, tracking, and notifying business owners of expiring contracts.
3. Avoid penalties/fines
symplr Contract helps avoid penalties and fines with simplified data gathering, activity monitoring, and compliance reporting, so organizations can evaluate and manage vendors and associated compliance risks, track provider time reporting, avoid conflicts of interest, and record gifts or other non-monetary compensation.
“symplr Contract helps us avoid 90% of potential penalties associated with non-monetary gifts to physicians.”
—Director of legal operations for a 39-hospital, 6,000-bed health system in the midwest and southeast
On average, symplr Contract customers experienced:
- Positive returns in fewer than three months and a one-year ROI of 598%
- 68% reduction in providers’ contracting cycles
- 90% reduction in time spend on contract-related reporting
- 50% reduction in time spent managing contract documents
- 12% annual spend reduction from auto-renewal management
Calculate your value potential
Prioritizing and investing in your contract management technology can deliver powerful financial outcomes and directly impact the bottom line. However, developing processes and building a culture of compliance requires strong buy-in cross functionally. As a result, you’ll need a defensible business case with clarity on ROI to gain alignment and move forward.
Once you have received your personalized value calculation from symplr, Step 3 is to connect with us. At symplr, we have been working with healthcare organizations for over 30 years, navigating change while helping customers deliver outcomes. We will consult with your organization to make a strategic plan to create a contract lifecycle management infrastructure that delivers risk protection while removing workflow barriers.