Contract Management Technology Is Core To Modern Compliance

By Bret S. Bissey, Chief Compliance Officer, Gateway Health

Benjamin Franklin, the father of time management, is often credited with the famous adage, "failing to plan is planning to fail." Nothing is more relevant to managing successful compliance programs in healthcare today. Many compliance-related settlements and investigations are the result of companies and people not taking the time to plan for the inherent risks in the industry via the implementation of an effective compliance program. Nor taking the time to seek out technology solutions that can significantly reduce risk and increase efficiencies.

Unfortunately, many healthcare sectors tend to lag in technology adoption. This is an industry that still relies in many instances on old technology, and in some instances file cabinets/ drawers to store important documents. Yet, processes such as contract management that often require significant time and resources to manage manually, are ready to move into the digital age. Recently, a Black Book Market Research study found that 96% of American health systems and provider organizations either don’t use a contract management system or have a system that is outdated. As a result, manual contract management costs healthcare providers nearly $157 billion per year.

Regardless of whether you are dealing with physician agreements, medical directorships, property leases, or value-based agreements— the amount of service contracts healthcare companies have is nothing short of astronomical and all can contain a compliance risk if not monitored on a regular basis. Given the high-profile settlements in this area, all healthcare organizations should consider replacing their dusty filing cabinets with an automated contract management process, which minimizes the potential for inappropriate arrangements.

Many companies learn that by applying technology-based solutions to their contracting efforts, they not only manage a high-risk area, but also achieve operational efficiencies that are critical to the success of the business

Contract management continues to be an area of focus where compliance and risk management can provide organizational benefit and risk mitigation. Today’s healthcare environment is rife with challenges related to evaluating the performance of vendors and partners, but those challenges also present an opportunity for compliance to collaborate with the business in order to achieve success.

An easy win could simply be the integration of compliant contracting efforts into business processes to ensure payments made in association with referral-based contracts are for bona fide work performed, reducing the risk of physicians and hospitals being in violation of the Anti-Kickback Statute or Stark Law, which can result in hefty financial penalties and even prison.

A complicating factor for organizations is the complexity of contracted services that warrant oversight. In the past few years, the pace at which organizations engage third parties to provide services has rapidly accelerated in the healthcare industry. A variety of factors account for this, including cost reduction pressure, the shift from fixed to variable labor, and access to expertise. This increase in contracted vendors can present significant risk if all contracts aren’t centrally organized and consistently evaluated.

In addition, government regulators are cracking down on fraud, waste and abuse associated with Medicare and Medicaid providers. Yet, falling out of compliance with state or federal regulations is often not intentional. Healthcare companies may simply lose track of important contract details, such as fair market value agreements and physician services deals.

As Benjamin Franklin would say, it just takes some planning.

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