Why the healthcare industry needs CLM 

While common threads run through every industry, such as managing customers, tracking financials, assessing risk, and hiring employees, each one of these functions has unique attributes for each industry. Take risk, for example.  

Some industries have a much higher risk relating to data breaches versus others – like hair salons versus hospitals. The risk still exists for both, but the hospital has a higher chance of risk just from the sheer number of employees and entities that they interact with. Or, consider the number of regulations a clothing retailer contends with versus a biotech company.  

While risk is a common theme for the healthcare industry, what we know as “healthcare” can include a myriad of different kinds of enterprises; hospitals, biotech research, assisted living, nursing facilities, doctors’ offices, and the list goes on. These various sectors of the healthcare industry each have a different function, but they all deal with high levels of risk, tight regulations, and a multitude of different types of contracts. 

Healthcare and Contract Lifecycle Management (CLM) 

One way for healthcare entities to manage risk and regulation is Contract Lifecycle Management (CLM). Rather than relying on the faulty precision of humans, CLM software can help with both accuracy and increased flow of contracts.  

Let’s look at the various concerns healthcare systems have in common and how a CLM can help their legal teams sleep better at night: 

Compliance and regulatory risk 

As mentioned before, health care contends with some of the highest number of regulations of any industry. There’s HIPAA, Stark Law, Anti-Kickback Statute, FDA regulations, Sunshine Act, and a multitude more.  

By automating contracts with clause libraries and standardizing templates, you reduce risk and chance of error in language or straying off the path of what’s acceptable for your healthcare organization.  

Instead of different departments stowing finalized contracts away in their emails and folders, there is finally one source of truth for all contract data. With a CLM you centralize your contract data into a repository so the ease of finding information will improve exponentially.  

Clinical trials and research agreements: 

Research contracts in the healthcare industry must be executed rapidly to keep studies on schedule, often involving multiple parties across institutions.  

Through template-driven contract creation, clause playbooks, collaboration tools, clear approval routing, and e-signatures capabilities, the time to signature is significantly lessened.  

Lack of visibility into contract obligations and spend 

Disconnected systems make it impossible to track contract terms, rebates, expirations, or renewal windows. This leads to revenue leakage and/or non-compliance. 

With a CLM system, healthcare organizations can centralize their data and with more robust CLM systems, use AI to find nuanced information, such as “how do higher tariffs impact my contracts?”. Customized alerts also provide assurance that obligations are met, and deadlines are not missed.  

Managing complex relationships 

Healthcare entities often juggle a high volume of contracts with physicians, providers, vendors, payers, and research institutions.  

Flexible CLM platforms provide role-based access for a variety of permissions and capabilities and contract hierarchies so that relationships and impacts to a family of contracts is well understood before changes are made to a single contract.   

Integration with procurement, ERP, and CRM systems 

Because contract data is typically siloed from other departments and functions within a healthcare organization, the chance for inefficiencies and duplication of efforts, or even contract duplication, is significantly higher.  

A CLM platform is most successful when it does not stand on its own, but is instead integrated with other healthcare enterprise systems like Workday, SAP, and Electronic Health Records (EHR)) so that there is a seamless data flow and contract-triggered processes. 

Legal resource constraints 

In-house legal teams are stretched thin in many industries, managing risk, litigation, and administrative duties, all while also managing large volumes of standard contracts. 

By using CLM software to create self-service contracts and utilizing AI-assisted review you can reduce the load on Legal while maintaining control. 

Difficulty reporting on contracts across the organization 

Boards and executive leadership need reports on contract value, performance, and risk – but a clear picture of data may be hard to get, even if the data is centralized.  

A CLM platform provides dashboards and advanced analytics for you to dig in and uncover trends that support strategic decision making.  

Healthcare contracting differences 

While the healthcare industry has these similarities, there are also attributes that make every player in the healthcare industry unique and processes or workflows that are distinctly their own. No two businesses operate in exactly the same way within any industry, and the same goes for healthcare. The contract workflow for bringing in a new resident at an assisted living facility is very different from an intake form in an emergency room or a new physical therapy patient.  

With this in mind, the true test of a CLM system is in the flexibility it has to meet the demands of every unique business as they change and grow. How easy is it to adapt established workflows to new processes? Do you have to call in a technician from the vendor or your IT department or is it something an admin can do themselves?  

And it’s not just the capabilities of the CLM itself, but the vendor that you choose to do business with. How was the implementation experience? Is their customer service responsive? Have they been recognized in the CLM industry? Reputation is very important when considering a software purchase. Listen to your peers, not just to sales reps.  

Industry and organizational considerations 

While there are certainly commonalities industry-wide in healthcare, there are unique attributes for every healthcare organization that must be considered when thinking about what will perform best for your healthcare organization. Regardless of your organization’s specialization or function, CLM is something all healthcare entities should have in their arsenal to keep pace in today’s business environment and continue to serve their patients.

Find out how Agiloft’s CLM has helped other healthcare entities
like OB Hospitalist Group.