For any organization across all kinds of industries, contracts represent the foundation of business. They contain information that is vital to the practices of every organization, regardless of what that organization does. A contract outlines the flow back and forth of all commercial relationships, whether with vendors, individuals, or other agencies, and it includes details about how you receive or deliver products and services, how you receive or give payment for those products and services, and what needs to happen if something goes wrong in the middle. This is no different for contracts in the healthcare industry.
Unique Needs for Healthcare within CLM
There are unique needs within the healthcare industry that make contract lifecycle management (CLM) essential in order to keep everything running smoothly and help your organization function at its highest capacity. Year after year, compliance requirements only seem to grow more and more complex, meaning that contracts must adapt to fit into these ever-changing regulations. With a variety of requirements to keep in mind at both the state and federal level, including HIPAA and JCAHO, along with physician and service agreements, managing your contract process can quickly turn into a somewhat daunting task. Not to mention, as complexities increase, risks do as well. If contracts are not properly managed, it can be difficult to produce a proper financial trail under an audit, keep track of changes and deadlines, and access data across a large variety of business relationships. This is where CLM software comes in handy.
How to Incorporate Contract Management
Incorporating a CLM tool to help manage your contracts is an excellent way not only to simplify your contract processes but also to free up more time for your employees and finish tasks much more efficiently. Read on to learn more about the inner workings of CLM software and how to find the best CLM solution for your healthcare organization.
CLM Software: The Basics – Simplify your Contracts – H2
CLM software is designed to help simplify your contract experience by automating extraneous steps in your contracting process and creating a storage space for all things contract-related. There are a huge number of CLM tools available on the market, each one with its own unique features that make it geared more toward one industry or another. But, at the core, a good CLM software should offer your organization two things: a database and automation. A database exists to backup all contracts and their information as well as provide quick and easy access to templates that allow contracts to be written with both more efficiency and standardization. Having this database is essential for maintaining order in organizations that likely have thousands of contracts sweeping across a huge number of different vendors, agencies, and other commercial relationships, all with their own unique contingency concerns.
The other standard feature that we mentioned for many modern CLM tools is automation, often paired with AI. Automation helps to free up more time for your employees not only in legal, but across all departments companywide. In the healthcare industry, mitigating risk is at a higher priority than it would be in other fields. Therefore, it is important that all contracts maintain the same degree of high quality risk management while still adhering to the unique needs of each particular business relationship. In the past, this meant that the legal team would need to review all changes made to a contract throughout negotiation, majorly slowing down the process and making the contract experience less enjoyable. With AI and automation from CLM software, however, this in-depth level of review is not necessary for every single negotiation. Instead, your CLM tool can either review contracts against a template and place a risk score on them that dictates how much attention they need, or it can even suggest replacements from a database of prewritten clauses from other agreements. With more time to spend on fewer tasks, employees can make sure the right agreements are always receiving the right amount of attention rather than spreading their time thin across many different negotiations.
These features and many others are what allow CLM tools to help simplify the way you manage your contract lifecycle. They provide easy access to essential information about the contract process, including deadlines, expiration dates, past versions of contracts, status of contracts (final draft, revision, approved, etc.), risk levels for a certain contract, and standard language for the type of contract currently being handled. With increased communication and information sharing between all parties involved in the negotiation of a contract, the process speeds up and the chances of running into problems due to miscommunication, delays, loss of work, and lack of compliance go down. Overall, CLM software is an excellent solution for any organization looking to streamline the contracting process.
What to Look For in a CLM Tool
With the basics of CLM software in mind, let’s consider the different ways it can help you better your organization’s performance in some of the core areas of contract management. The first area, centralization, taps into a key CLM feature we mentioned in the previous section: the database. Your CLM tool allows you to catalogue all past and future contracts online in one singular place. This eliminates delays caused by a variety of issues such as relaying information between different parties in different locations or teams and losing access to past agreements entirely. With your documents all safely stored in one online location, you can also begin to compile a library of standard language to be used in future agreements, cutting down the time it takes to write out a brand new set of clauses for each contract.
Going hand in hand with centralization is accessibility. An online database filled with all past and future documents provides a wealth of information to every employee in the organization, allowing them to better understand their role in the contract process and work to build high quality business relationships. Accessibility is especially important for companies with remote workers who do not have the ability to go rifling through filing cabinets at the office in order to locate an older contract. It also provides greater opportunity for input and revision from various people and departments, giving them the ability to make changes to a document completely online and in real time.
Visibility is perhaps the most important area of contract management to receive assistance from your CLM tool’s database. With the database in place, your CLM software can begin analyzing the wealth of information stored within your organization’s contracts. This analysis provides you with any number of valuable statistics about your contracting process, from the average time it takes to complete an agreement, to risk scores, and much more. Armed with an in-depth knowledge of your contract process and the statistics to support it, you can pinpoint problematic areas in your contract lifecycle and feel confident taking steps to improve your relationships with vendors, agencies, and individuals of all sorts. The inclusion of a dashboard in most CLM tools also provides a handy view of current tasks to be completed and increases workflow by helping employees prioritize deadlines and focus on developing their own individual role in the larger contracting scheme.
The final area of contract management, which we touched on in the previous section, is automation. The main goal of automation is to increase efficiency and lower risks within your overall contracting process by either decreasing the amount of tasks that must be performed hands-on or making those tasks significantly easier. Oftentimes, the simplest tasks in the contracting process are overlooked, leading to disputes which can damage your organization’s reputation. Some of these common mistakes include missing deadlines, auto-renewals, or expiration dates, losing files needed in case of an audit, and failing to comply with state or federal regulations. The automation features provided by your CLM software decrease these risks via the use of alerts and synchronization. Alerts notify employees of deadlines and auto-renewals while also helping them to focus their attention on the next task in the negotiation process, boosting efficiency and building better relationships with outside parties.
How CLM Software Benefits Your Entire Business
As we mentioned previously, contracts are the lifeblood of your whole organization. Contract management is a huge part of the roles that employees in the legal, sales, and procurement departments play every day. However, even the employees not working with contracts on a daily basis will experience the benefits of a CLM tool that simplifies the contracting process and improves both business relationships and the overall experience of working at your organization.
Any employees on the management side of things will be extremely pleased by the increased efficiency that a CLM tool provides. More efficiency in the contracting process speeds up transactions and leads to greater productivity among employees in all departments. With access to the entire online database of past and future documents as well, executives can use the information from these contracts and the statistics provided by a CLM software to make decisions about how to improve different processes and take actionable steps. Not to mention, this accessibility also gives them the ability to learn where a particular agreement is currently sitting in its negotiation process and provide input when it is needed.
CLM tools are an invaluable source of information to any organization, but especially to those in the healthcare field. With a database backing up all past and future business relationships and automation to eliminate common or unnecessary mistakes, your CLM software will provide your organization with greater peace of mind when it comes to handling risks and audits as well as increased time for employees to spend on the most pressing matters.