Crisis Analytics for Healthcare Organizations

How to Quickly Identify and Act on Force Majeure Language or Its Absence.

The deeply earned recognition of healthcare workers as frontline heroes in the fight against COVID-19 has not immunized them or their employers against the threat of financial ruin. Healthcare organizations, long considered recession-proof, are struggling to survive financially and have begun massive furloughs at a time when the demand for their services is as urgent as it has been in quite some time. As these organizations race to avert financial calamity, their ability to quickly and accurately identify force majeure language in existing contracts — or its absence — offers one promising escape route.

According to a May 6 article in U.S. News & World Report, “The healthcare industry experienced an estimated $500 billion reduction in revenue during the first quarter of 2020.” The near-total elimination of elective procedures during the pandemic, a rash of canceled visits, and the costs of protecting employees from infection are exacting enormous costs, only partially alleviated by the federal stimulus package and decisions such as CMS allowing Medicare beneficiaries to receive more medical services via telehealth. Therefore, it’s not surprising that even a revered, well-known institution has announced it will cut $1.6 billion in employee pay after suffering a $3 billion revenue loss; the cuts include furloughs or shorter hours for about 30,000 staff members. If a landmark destination such as this, with its considerable resources, is suffering these kinds of losses, many smaller institutions are likely facing much greater threats to their financial stability.

Part of the difficult cost bind in which healthcare organizations find themselves results from contractual obligations they’ve put in place over a number of years with providers and a vast array of vendors, from medical equipment manufacturers to food services. Force majeure — a common contract clause that allows either party to limit its liability in the face of an unforeseeable, extraordinary event — offers a relief valve. Although there is some controversy about the degree to which COVID qualifies as an “unforeseeable” event, contract termination or renegotiation can free healthcare organizations from hundreds of thousands, if not millions, of dollars in costs. Moreover, ensuring proper force majeure language in contracts that currently do not have it can guard against severe financial crises in the future.

The problem is that having already cut staff, most hospitals don’t know what remedies force majeure might offer, because they don’t have the people available to do the time-consuming work of sifting through thousands of contracts to identify those that contain force majeure language and those that need it or need it to be modified. Even if staff were available, it could take months to do the work manually.

There is, however, a solution: artificial intelligence-driven contract analytics can quickly and reliably identify force majeure language in an organization’s contract database. Studies have shown that AI-driven analytics are considerably faster and more accurate than humans in situations like this, where the challenge is clearly defined. For example, in a week or less, TractManager’s contract analytics solution can create lists of contracts with force majeure clauses and those that need such clauses. This type of crisis analytics provides attorneys with the information they need to review all pertinent contracts in a timely fashion, and identify where savings can be had — and where the hospital or health system must add force majeure language to protect itself in the future.

Equally important, once attorneys have reviewed and prioritized the list and identified what needs to be done next, organizations can use this type of solution to place the contracts into an automated workflow that will appropriately route each document so it gets to the right people at the right time in a way that is both trackable and auditable.

In the middle of this pandemic, healthcare organizations are under more than enough pressure to deliver the care that their patients need. They clearly don’t need the added burden of having to deliver that care with inadequate support because of the punishing costs associated with contracts that no longer meet the moment. In this context, finding savings qualifies as a critical need. If a solution can also prepare organizations to weather the next storm — which almost surely will come — all the better.

Read more information on TractManager’s Contract Analytics.


Kimberly Hartsfield

Chief Data Officer

Kimberly Hartsfield became Chief Data Officer for TractManager in June 2017.


Our Solutions Automate and Streamline Your Provider Management Processes.

Learn how our integrated MediTract CLM, Provider Onboarding, and Physician Analytics capabilities deliver measurable results to your healthcare organization.

Share This