Imagine for a moment that you’re an experienced legal counsel for a healthcare system tasked with negotiating, drafting and managing contracts. On this particular day, you are frantically searching through multiple Excel spreadsheets and paper-based contracts in an effort to locate a vendor contract you suspect is up for renewal. With unsatisfactory service from this particular vendor, it’s the perfect opportunity to analyze the contractual obligations to either renew at a reduced term or cancel altogether.
After several painstaking hours spent manually digging through hundreds of contracts, the search ends in upset, and this particular vendor contract is auto-renewed; putting a halt to any negotiating power, or hopes of improving your company’s bottom line.
Sound familiar? You’re not alone. Independent research conducted by the International Association for Contract & Commercial Management (IACCM) suggests poor contract management costs organizations as much as 9% of their annual revenue. This figure is significant for healthcare providers who have small margins and try to cost cut costs to gain competitive advantage and be more revenue-rich.
Sean Cleary, Strategic Sourcing Analyst at Louisiana-based healthcare system LCMC Health, spoke on a recent webinar about the financial risks of not being aware of upcoming contract renewal dates and the “cost avoidance” (actions are taken to reduce future costs) of implementing an automated contract management platform.
“If you miss an auto-renewal, you can be locked in for another three years on that contract and in turn, thousands of dollars a year. If you’re not happy with that vendor, you could be missing out on (in his case) 300-600 thousand dollars just on that one contract,” he said, adding, “If you have poor contract management, it can absolutely lead to high costs of doing business. The minimal cost associated with a contract management platform doesn’t even begin to compare to the costs avoided with auto-renewals or the soft-cost avoided in time spent rummaging through paper copies, old emails that contains a contract, or waiting a day or two for someone to email you back a copy.”
Having covered the cost of poor contract lifecycle management, it’s time for some good news: Overpayments, missed deadlines and wasted time from inadequate contract management can be a thing of the past by embracing web-based solutions that automate, centralize and enable visibility into all contracts system-wide. Here are four positive outcomes that switching to a Contract Management Platform has on staff productivity and satisfaction:
- No need to rely on memory alone. Avoid being on the hook for forgetting about contract renewal dates (and the costly penalties and financial risk that come with it) by receiving automated email alerts and notifications. Never miss a deadline again!
- Put an end to manual labor. Shorten the time spent on finalizing contracts from weeks to days by establishing a centralized digital repository of all contracts. Banish the spreadsheets and paper trail!
- Work seamlessly with the team. Standardizing on one web-based solution fosters collaborative workflows and offers document editing/collaborative tools so staff can work easier and faster together. Electronic signature modules also save you time chasing around signers by instead sending electronic triggers to complete signing documents.
- Go deeper in contract evaluation. Easily run reports that provide an in-depth look at all contracts including those at risk or contracts requiring deeper evaluations, assessments or amendments.
To learn more about taking control of healthcare contracts with a web-based contract lifecycle management system, watch the video below and see how easy it is to streamline workflows from start to finish.