Excel is Not the Answer for Provider Compensation and Contract Management

How health systems are reducing costs and supporting organizational growth with automation

In the face of rising provider shortages and turnover, the question facing every health system and medical group is the same: how do we enhance provider recruitment and retention effectively, including physicians, physician assistants, and other advanced practice providers? 

Automation offers a powerful answer.  

In the age of emerging AI, “automation” can read like an overused buzzword rather than a genuine, specific solution to immediate problems. However, the traditional manual approach to managing provider contracts and compensation data – spreadsheets maintained by hand – is painfully archaic. At most organizations, for example, it can take multiple days and multiple employees for manual data entry, checking, and rechecking the provider compensation calculations in Excel spreadsheets.  

“Prior to Heisenberg II [Provider Compensation], we were managing it all in Microsoft Excel,” explains the VP of Operations and Finance at a Kentucky-based health system. She explains that their organization was growing fast, and Excel had failed to scale with them. 

They’re far from alone. A 2022 survey of American Association of Provider Compensation Professionals (AAPCP) members by Hallmark Health Care Solutions found that over half (52%) of respondents said updating their patient-provider panel attribution each month can take days because of the labor involved. Only 7% of respondents said they could do it in under 30 minutes with high confidence, emphasizing the need for healthcare data accuracy, an outcome that becomes achievable primarily through automated tools.  

Similarly, the delay in contract approval and signature processes can prevent streamlined contract management, making it drag out for weeks when communicating only through email. Such labor-intensive methods are not scalable, and rather than solving hiring and retention problems, they exacerbate them. Worse, the reliance on manual data entry through platforms like Excel can increase risks, notably human error. In fact, 97% of compensation managers use Excel to manage provider compensation and 94% of those spreadsheets contain errors. 

Getting contracts and compensation right, however, is pivotal to both recruiting and retaining providers. “The right [compensation plan] framework is an important component to becoming a high-performing physician organization,” says Kritiya Gee, Managing Director at Huron Consulting. “It provides a tangible and aligned structure for a winning strategy that benefits patients, providers, and payers.”  

This situation is ripe for improvement via automation. But how does automation improve contract and compensation management enough to alleviate problems like staff shortages and turnover? 

Streamlining Contract Management to Improve Efficiency and Eliminate Errors 

Compensation doesn’t start with the compensation model; it starts with the contract. Organizations that handle this process manually create needless headaches for themselves. Automation closes this gap entirely, and it works in a couple of different ways.  

First, automation can meaningfully streamline and simplify contract communication and review, aiding in efficient provider negotiations and approval processes. For instance, contracts can be automatically generated based on provider negotiations, eliminating the need for manual contract drafting. Detailed workflows/notifications enable admins to gain complete oversight of the approval process. This requires purpose-built contract management technology, ideally specialized for the healthcare industry, like Heisenberg II Contract Management (CM). In that case, however, a solution with built-in automation can significantly increase efficiencies and ensure that contract-related tasks are completed promptly and accurately. 

Second, an automated end-to-end solution like Heisenberg II can do all of the above while simultaneously, seamlessly integrating contract management with provider compensation calculation, thus eliminating any discrepancies. “My underlying philosophy has been to automate wherever possible,” says the Director of Shared Services at one Maine-based health system that uses Heisenberg II Contract Management. “We no longer have to do so much work because any new contract automatically flows into the compensation module and updates that provider’s record.” 

Reducing Administrative Costs Associated with Provider Compensation 

Automation can similarly reduce the strain and burden of administering provider compensation. Absent automation, even simple reporting tasks – like tracking performance per pay element – can require individually separating data and payroll codes when using spreadsheets.  

With automation, however, admins can eliminate hours, days, or even – in some cases – weeks of manual data entry and cross-checking provider compensation calculations. The Maine health system, for example, estimates that by using both the Heisenberg II Provider Compensation and Contract Management modules in tandem, they have saved hundreds of man hours annually, including around 192 hours of contract preparation (67% faster than their prior processes), 120 hours for compensation data entry (now fully automated), and 144 hours for data reporting (also now fully automated). The result is a compensation process that is significantly more efficient than anything possible with spreadsheets. 

Altogether, health plans and providers stand to save nearly $25 billion annually by automating administrative transactions, according to the 2022 CAQH Index. “Over the past 10 years, despite a rapidly changing healthcare landscape, payers and providers have made dramatic gains automating transactions and reducing the cost of business processes,” says April Todd, CAQH Chief Policy and Research Officer. 

Some of those cost savings also come from a reduction in manual errors. “Organizations could realize savings that equal up to two percent of total annual costs by eliminating inaccuracies and noncompliance through contract management automation,” writes Becker’s Hospital Review. 

Cost savings, no matter how significant, are only part of the picture, however. At stake is how effective compensation programs and compensation administrators are in their roles. 

Aarika Cofer, Vice President of Heisenberg II at Hallmark Health Care Solutions, emphasizes that automation enhances administrator effectiveness. “With technology that can aggregate the data you need into one source of truth and validate the accuracy of that data,” she says, “analysts can perform more meaningful evaluations and engage in better strategic planning.”  

Lisa Donaldson, the Director of Talent and Rewards at advisory group WTW (formerly Willis Towers Watson), agrees. “The automation capabilities of compensation software have been a game changer for many compensation professionals,” she says. “Rather than spending time setting up formulas in Excel, compensation managers can focus on analyzing what the data is saying and understanding the business impact of these insights.” 

What does that look like in practice?  

For one thing, automation can help power planning more fine-tuned compensation models and performance tracking. For example, an automated platform will be better equipped than a spreadsheet to effectively manage pay variability, track performance by pay element, and ensure precise provider compensation. 

In the end, the benefits of automation – and more specifically, the technology platforms like Heisenberg II that offer automation designed around the precise needs of contract and compensation administrators – translate into contract and compensation programs that are better positioned to achieve organizational goals and then to grow and adapt as the organization evolves.

“There was no way to manually manage what we already had, much less the growth plan we had in place,” says the VP at the Kentucky-based health system. “Heisenberg II solved that problem.”