In 2021, the United States spent $4.3 trillion on health care or $12,914 per person. This is more than any other country in the world. American healthcare costs have been rising more quickly than the economy for many years. Healthcare expenditures in 2021 might account for up to 18.3% of the US GDP. As a result of the elevated cost of health insurance, almost 28 million Americans struggle without it. This issue highly impacts the nation's debt. That’s where tech tools come in – tools like contract lifecycle management software.
Healthcare Negative Issues — its impact.
The elevated costs of healthcare have negatively impacted both patients and medical professionals alike.
- Elevated health costs: patients and medical providers are financially strained due to the elevated costs of medical insurance and technologies, as well as medications.
- Medical insurance costs: it is impossible for individuals and families to obtain proper medical coverage due to the expensive health insurance premiums.
- Administrative costs: difficulties with coding, billing, and processing claims in healthcare can result in higher administrative costs.
- Controlling chronic diseases: it can be costly to manage and treat chronic diseases in need of long-term care, medications, and specialized treatments.
- Costs of prescription medications: patients who require ongoing treatment, are unable to purchase expensive life-saving medications.
Healthcare's High Cost Impact on Patients and Medical Professionals
Both healthcare professionals and patients are significantly impacted by the aforesaid difficulties with healthcare costs:
- Financial Difficulties: Providers face financial challenges due to rising costs of medical supplies, equipment, and labor expenses. This can strain their financial stability and impact their ability to provide quality care.
- Reimbursement Challenges: Providers may experience difficulties in receiving adequate reimbursement for services rendered, especially from insurance companies and government programs. This can impact their revenue streams and overall financial viability.
- Administrative Burdens: The administrative complexities of billing, claims processing, and compliance with various regulations increase the administrative workload for healthcare providers. This can divert resources away from patient care and lead to additional costs.
- Affordability and Access: Increasing healthcare costs make it challenging for individuals and families to afford necessary care and insurance coverage. This can result in delayed or inadequate treatment, leading to negative health outcomes.
- Financial Hardships: High out-of-pocket expenses, including deductibles, co-payments, and coinsurance, can impose financial burdens on patients, potentially causing them to forego necessary care or accumulate medical debt.
- Limited Choices: Rising costs may lead to a reduction in healthcare options, restricting patients' ability to choose providers or access specialized services.
What is Contract Lifecycle Management?
Contract lifecycle management – CLM – refers to the process of effectively managing the entire lifecycle of a contract. From initiation and negotiation to execution, performance, and renewal or termination. It involves organizing, tracking, and optimizing all the stages and activities related to contracts within an organization. By employing CLM automation tools, professionals and institutions can decrease some of their expenses.
CLM typically encompasses the following key stages:
- Contract Creation: This involves drafting the contract terms, including legal and financial components, and defining the obligations and responsibilities of all parties involved.
- Negotiation and Approval: During this stage, the contract is reviewed, modified, and negotiated to reach mutually agreeable terms. Approval workflows ensure that all necessary parties, such as legal and financial departments, review and provide their consent.
- Contract Implementation: After the contract has been finalized and accepted, it is signed by all parties and the implementation process starts. Tracking significant deadlines, deliverables, and obligations is required at this point.
- Performance Monitoring: CLM includes monitoring the performance of the contract, ensuring that all parties comply with the agreed-upon terms and conditions. This stage involves tracking key metrics, milestones, and deadlines.
- Renewal or Termination: Near the contract's end date, CLM helps in evaluating whether to renew, renegotiate, or terminate the agreement. This stage includes timely notifications, renegotiations, and contract amendments.
Effective contract lifecycle management for healthcare streamlines and automates these processes. This enables organizations to optimize their contractual relationships, mitigate risks, and maximize operational efficiency.
The Role And Importance Of Contract Lifecycle Management In Various Industries, Especially Healthcare.
Contract lifecycle management plays a crucial role in various industries, including healthcare, by providing the following benefits:
- Efficient Contract Management: CLM streamlines and automates the entire contract lifecycle, reducing manual effort, administrative errors, and delays associated with contract management. This ensures contracts are handled efficiently and expedites the contracting process.
- Risk reduction: CLM gives businesses the ability to recognize and reduce the risks connected to their contracts. A proactive approach can be taken to prevent legal conflicts, financial losses, and reputational damage by keeping track of contract responsibilities, milestones, and compliance requirements.
- Cost Savings: By maximizing contract terms, finding cost-efficient suppliers, avoiding overpayments, and lowering penalties for non-compliance, successful contract management can result in cost savings.
- Improved Compliance: CLM supports firms in ensuring adherence to legal and regulatory obligations. It makes it possible to track contract clauses, requirements, and deadlines, ensuring that all parties fulfill their commitments and stay clear of fines or breaches.
- Improved Negotiation and Collaboration: By giving visibility into contract terms, obligations, and historical data, CLM supports better negotiation processes. This enhances negotiation power, enables data-driven decisions, and improves collaboration between parties involved in the contract.
Contract lifecycle management for healthcare providers, payers, and other stakeholders streamline their contracting processes. They can also manage relationships with vendors and suppliers – and ensure regulatory compliance, and optimize financial and operational outcomes.
The Role Of Healthcare Contract Lifecycle Management Cost Reduction
Contract lifecycle management – CLM – plays a significant role in reducing healthcare costs through various mechanisms:
- Improving Operational Efficiency.
- Reducing Risks and Associated Costs.
- Enhancing Negotiation Power and Contract Terms.
- Ensuring Compliance and Avoiding Penalties.
By leveraging CLM tools and practices, healthcare institutions can optimize their contract management processes.
Contract Lifecycle Management For Healthcare and how it reduces Cost
Contract lifecycle management – CLM – tools offer several features and functionalities that contribute to cost reduction in the healthcare industry:
Improving Operational Efficiency
CLM tools automate manual processes, such as contract creation, review, and approval workflows. This eliminates time-consuming tasks and reduces administrative overhead, allowing staff to focus on value-added activities and increasing operational efficiency.
Streamlining Contracting Processes
CLM tools provide standardized templates, pre-approved clauses, and workflows that guide users through the contract lifecycle. This streamlines the contracting process, reduces errors, and minimizes delays, resulting in faster contract turnaround times and cost savings.
Centralized Contract Repository
CLM tools offer a centralized repository for storing and organizing contracts. This ensures easy access to contract documents, reduces the risk of lost or misplaced contracts, and facilitates efficient contract management and tracking.
Automated Notifications and Reminders
CLM tools can send automated notifications and reminders for contract milestones, renewals, and key obligations. This proactive approach helps healthcare organizations stay on top of contract-related tasks, avoid missed deadlines, and prevent costly penalties or non-compliance issues.
Analyses and Reporting of Data
Healthcare firms are able to get insights on contract performance, vendor relationships, and cost-saving potential thanks to the data analytics and reporting capabilities provided by CLM tools. These insights support contract expenditure optimization, better term negotiating, and identification of areas for improvement.
Tips to Implement Contract Lifecycle Management Software In a Healthcare Organization
Careful planning and execution are necessary for the successful implementation of contract lifecycle management – CLM – software in healthcare organizations.
Here is a checklist of tips to ensure a successful implementation:
- Define Objectives and Requirements.
- Conduct a Needs Assessment.
- Research and Evaluate CLM Software Providers.
- Plan for Data Migration and Integration.
- Engage Stakeholders.
- Customize and Configure the Software.
- Provide Training and Support.
- Establish Governance and Change Management.
- Test and Validate.
- Monitor and Continuously Improve
By following this checklist, healthcare institutions can successfully implement contract lifecycle management software, streamline their health contracting processes, and realize the benefits of efficient contract lifecycle management.