Finding the Needles in the HaystackMany healthcare organizations were already operating on razor-thin margins, even before the financial crisis triggered by the COVID-19 pandemic.
Finding new strategies to reduce costs has never been more important. Healthcare contracts hold a wealth of opportunities to control costs—by securing the right pricing and contract terms and preventing expensive compliance violations. To identify those opportunities, you have to start by analyzing your contract data. Like the proverbial needle in a haystack, that essential contract data is often buried in thousands of paper contracts stored in filing cabinets at multiple locations. How can you uncover the invaluable information that’s hiding in your contracts?
Centralize your contracts. The first step is to consolidate by digitizing and storing all contracts in one central, searchable database. Then, you’ll be able to promptly locate and better manage your contracts.
Use Artificial Intelligence (AI)-powered contract analytics to quickly and accurately scan your contracts. Manually reviewing all your contracts to unearth contract terms and identify compliance risks can take weeks, or even months. Most health systems don’t have the resources to take on that colossal project. Artificial Intelligence transforms typical human language into machine-readable terms and enables the computer to analyze the unstructured data of contract language. AI technology efficiently scans thousands of contracts in days, allowing you to extract and analyze key business and legal terms without tapping staff who are already spread too thin. AI scans your contract language with fewer errors than people could achieve, giving you an extraordinarily reliable view of your contracts and their impact on your organization. The combination of speed and reliability enables you to identify opportunities to control costs in a timely manner.
AI-powered contract analytics will identify:
Auto-renewals and redundancies. Auto-renewals can be costly contractual obligations when the terms are unfavorable, or when you no longer require a particular service. In the case of a merger or acquisition, you may wind up with duplicate services. If the new healthcare organizations are in the same geographic area, you won’t need multiple contracts offering the same service. Additionally, contract analytics identifies contracts that contain auto-renewal clauses so you can track critical dates, review, and determine necessity prior to contract renewal. Contract analytics identifies redundant contracts and pricing that is higher than benchmarks, helping you determine which contracts should be canceled or should not be auto-renewed.
Compliance risks. The fines for missing Business Associate Agreements (BAAs) are steep—up to $31k for a single missing BAA. Contract analytics quickly scans all your contracts, pinpointing those that require BAAs but do not have one associated. In TractManager’s experience, most healthcare organizations are missing BAAs in at least 10 percent of the contracts that require them. By using TractManager’s Contract Analytics to proactively evaluate its contracts and identifying 143 missing BAAs, one healthcare organization avoided as much as $4.4 million in potential fines.
Provider compensation. Healthcare organizations must comply with regulatory requirements related to provider total compensation and Fair Market Value (FMV). You can examine variability in total compensation for providers in your healthcare organization, identifying payments that exceed FMV and may lead to compliance violations.
Potential lease agreements. Contract analytics identifies agreements that are categorized as leases under the new lease accounting standards, helping you comply with GAAP ASC 842. This is very important for healthcare organizations. If the SEC’s Division of Corporate Finance reviews your healthcare organization’s filings, you may face these consequences for noncompliance:
- Cost of bringing in fraud examiners to investigate (if fraud was involved)
- Cost of responding to an SEC Comment letter
- Cost of bringing in consultants to restate prior years
- Auditors being fined for the misstated financial statements
- Lawsuits from investors (public companies) for the misstated financial statements
By centralizing your contracts and using AI-powered contract analytics, you can find the needles—that invaluable contract data that holds the key to controlling costs and mitigating risk—buried in your contracts. TractManager’s MediTract CLM is the nation’s only patented healthcare-specific CLM designed for healthcare professionals by healthcare professionals to optimize your organization’s contract management. TractManager’s Contract Analytics provides the insights you need to avoid compliance, security, financial, and other contract risks.
For more information on AI-powered contract analytics, download the white paper: “The AI Uprising: You Can’t Control Your Costs, If You Can’t Control Your Contracts.”
The AI Uprising: You Can’t Control Your Costs If You Can’t Control Your Contracts
Analyzing your contact data helps you secure the right price and terms and prevents expensive compliance violations.