How can today’s healthcare organizations gain operational efficiency and better maintain regulatory compliance? It all starts with the digital transformation of the contract management process. By 2024, the healthcare contract management software industry is expected to grow to $1.763 billion at a compound annual growth rate of 18.5%. This rapid growth rate highlights that this sector sees value in a solution that can streamline the contract request process, increase visibility, and maximize revenue opportunities.
Even with this rapid growth, there are still many companies that are falling further and further behind their competitors due to poor contract management. Are you one of those companies? If so, discover the importance of contract management software for healthcare organizations.
Streamline the Contract Request Process
While it may seem like a straightforward step, having an efficient, streamlined contract request process is crucial to any organization, especially healthcare companies that deal with a high volume of agreements.
Within these healthcare organizations, there are various stakeholders within many departments that may have a new contract request at any given time. As a result, you need to ensure that your team is prepared to handle this workload to prevent bottlenecks in the process. Streamlining the contract request process allows the legal team to send contracts to the appropriate parties, which in turn accelerates the contract lifecycle.
For example, let’s take a payer organization, such as a private insurer or employer plan manager. Its entire business hinges on contracts. Almost everything it does involves processing documentation in some way, shape, or form. The requests for this documentation, furthermore, could originate from a range of sources: Medical Directors as they approve new treatments for reimbursement, pharmacy benefit managers (PBMs) as they update formularies, or simply reimbursements claims from providers or members.
As a result, these organizations need a streamlined method of processing requests and documents efficiently in all facets of their business. Without a tool to help this step of the process, requests get lost in the shuffle or delayed, creating longer CLM processes… and for a business that’s founded on contracts, that doesn’t bode well for long-term growth. The right contract management software allows your team to create an efficient process for managing requests to make sure they end up in the right department’s hands on time, every time.
Increase Visibility and Transparency in Your Contracts
Renewals are crucial to the healthcare industry, especially for heavily sales-oriented organizations such as medical device companies. With this in mind, the key question is, “How do I ensure that I never miss a renewal opportunity?” With increased visibility and transparency in your contracts, your company can gain additional insight into contracts that are nearing expiration, awaiting signatures, awaiting review, or held up somewhere else in the contracting process. The ability to monitor these steps in the CLM process allows your team to never miss a renewal opportunity again while helping you identify potential roadblocks.
Additionally, you can run reports on terms and clauses that are unique to your business. For example, medical device companies need to coordinate sales with payers, patients, and hospitals — leading to complex contracts and HIPAA-compliant requirements.
If you want to, say, track discount rates that you’ve negotiated with vendors, you can run contextualized reports around those rates to identify cost saving opportunities.
To look at it from another angle, pharmaceutical companies have equally, if not more, complex agreements. These agreements dictate their reimbursements and formulary access with both PBMs and payers. Due to the large, complex nature of these contracts, there has to be an easy way of gaining the necessary insights to keep track of their payer rates; in fact, organizations that don’t track these rates are reimbursed 4% less on average. And while 4% doesn’t seem that much, for a $100 million-dollar firm, that could be $4 million on which a company is missing out.
Maximize Revenue Opportunities
For healthcare organizations that typically have higher than average operating costs, top-line revenue becomes all the more important.
The right CLM software can help you extract rates across all your agreements. You can then feed that data into a third-party business intelligence tool to build visualizations and actually forecast these rates. Forecasting favorable rates accurately allows you to maximize potential revenue since you’ll be able to better understand how rates can change over time. By aggregating valuable data and creating custom reports, your company will have the ability to identify key areas of opportunity, such as negotiations and renewal terms, to maximize revenue.
Health technology companies — particularly those that rely on cloud connectivity and data exchange — often have large and complex agreements, which means tracking renewals and other clauses are integral to being able to maximize revenue and create favorable terms. By 2024, worldwide MedTech sales are forecasted to reach $595 billion. As this space continues to shift and big players emerge in each category, smaller MedTech companies must find ways to maximize revenue however they can in order to survive and thrive. Through contract management software, tracking renewals and other important clauses become invaluable, as these can lead to increased revenue opportunities and favorable terms.
Contract Management Software for Healthcare
Through a streamlined contract request process, better visibility into your agreements, and a strategy to maximize revenue, the importance of contract management software for the healthcare industry is quite clear. This sector is quickly learning the necessity of having a proper CLM solution in place, and as the healthcare contract management software industry grows, so too can your business.
Want to see how IntelAgree can help streamline your contract management process? Schedule a demo now to check it out!