Traditional contract management solutions really struggle to handle the complexities of physician...
People, Process, Tech: Driving Forces Behind Effective Contract Management
Hospitals are hiring more physicians than ever, and that comes with an often-overlooked complication: more contractual agreements than ever. In this article, we’ll take a hard look at the contract management challenges facing the healthcare industry, and more specifically how Human Resources and Recruiting are directly impacted by the absence, or on the flipside, the presence of a contract management technology platform.
In fact, hospitals and corporate entities now own nearly half of medical practices, with nearly 70% of physicians now employed by hospitals or corporations, according to the Physicians Advocacy Institute. The pace of acquisitions even increased during the COVID-19 pandemic. And with the Association of American Medical Colleges (AAMC) forecasting a shortage of as many as 124,000 physicians by 2034, the hiring and recruitment function is growing ever more important for successfully attracting and retaining providers.
Getting their contractual agreements right is pivotal to that goal.
The contract management workflow starts with recruitment
Unfortunately, in the 96% of health care organizations that lack a contract management system, or that use one that’s sub-functional or ill-suited for complex provider arrangements, contract problems can start accruing even during the earliest recruitment efforts.
As the function that manages the entire recruitment process, Human Resources (HR) oversees almost every aspect of pre-execution contract management. Inadequacies here make it difficult-to-impossible for HR to track contract requests, edits, and approvals; to facilitate collaboration with other departments; to ensure compliance with all applicable regulations, benchmarks, etc.; and to minimize errors or inconsistencies.
The last point alone can be a surprisingly common problem: a survey by DocuSign found that two-thirds (63%) of business professionals say they end up having to rework contracts due to “human error and data entry errors.”
In fact, many of the problems with contracting at most organizations are stunningly basic. A study by consultancy group Ernst & Young (EY) found:
- 78% "do not systemically monitor contractual obligations"
- 71% do not monitor contracts "for deviations from standard terms"
- 69% of organizations "do not require staff to use a template when drafting contracts"
- 69% also "do not demand adherence to any rules or guidance"
- 49% have no "defined process for storing contracts"
Though EY wasn’t studying the healthcare sector specifically, many of these issues occur at hospitals, health systems, and medical groups. John Knox, EY Global Legal Managed Services Leader, says: “With the right transformation efforts focused around people, process, and technology, contracting can actually become a business enabler and differentiator. The survey shows that one way in which organizations aim to tackle these challenges is through working with subject matter leaders and external providers.”
Contract management must align people, process, and technology
Knox’s comment zeroes in on the core issue: optimizing contract management, especially for providers, is a matter of aligning three elements: people, process, and technology. Smart contract management systems, like Heisenberg II Contract Management (HII CM), should not only automate and streamline the entire contracting process, they should facilitate alignment in those three areas. That, in turn, produces an automated and streamlined approach to contract handling that can benefit the entire recruitment function in the following ways.
Efficiency gains and cost savings
A smart contract management platform like HII CM can reduce workflow steps. With a system that can automate the contract creation and approval process, generate follow-up notifications and alerts, and so on, HR and Recruiting can eliminate a once manual effort. In other words, the technology streamlines the process to free up people’s time. In turn, that reduces both contract cycle times and overall administrative costs.
A transparent process fueled by the right technology means the people involved – recruiters in particular – can see the contract document as it moves through the workflow. With version controls built into the system and exception alerts to ensure recruiters don’t miss anything, there are no worries about edits slipping through the cracks. Further, from the provider’s point of view, all of this happens invisibly, as it should, which maximizes the chance of a long and fruitful relationship.
Overall effectiveness gains
HII CM functions as a contract document manager as well, users can do everything in the system. That turns it into a source of truth solution that ensures users from all departments – are collaborating on the right contract version and can see all edits throughout the contract process. This not only increases accuracy, it speeds up the process and minimizes compliance risks. Then, by easily interfacing with compensation management, credentialing, and payroll – documents and data can all be sourced from one place. Ultimately, contract management is a multi-stage, multi-function process that starts with attracting and hiring providers in the first place. A smart contract management platform, in turn, can offer value at every stage and for every function, including HR and its recruiters.