Contract and Risk Management: How to Reduce Risk in the Contracting Process

Signing a contract and later regretting it is something businesses do every day. Yet once it’s completed, facing the consequences becomes a challenge.

In healthcare, contract management isn’t just a formality. Get it wrong and it could have a critical impact — compliance issues, trouble safeguarding patient safety, and an increase in organizational risk.

Contracts govern relationships with vendors, suppliers, service providers, and staff. It creates a web of obligations that directly impact all business practices, from patient care to regulatory adherence. If not managed effectively, the risks can be substantial.

To mitigate these risks, many healthcare organizations are turning to advanced contract lifecycle management systems to streamline the contract management process from start to finish. These systems are designed to handle every aspect of contract and risk management, ensuring that nothing slips through the cracks. What would that do for business?

Why Contract and Risk Management Is Critical in Healthcare

Contract and risk management in healthcare is more than just organizing documents and getting signatures. It also involves ensuring all contractual obligations are met in a manner that supports patient safety, compliance, and operational efficiency. Contracts in healthcare cover a wide range of agreements. They can include supplier contracts, physician agreements, staffing contracts, and service agreements. Each carries specific requirements and risks. Poorly managed contracts might:

• Miss deadlines for renewals or updates that can lead to expired agreements, leaving the organization vulnerable to compliance violations or lapses in service.
• Fail to adhere to confidentiality clauses, resulting in costly data breaches or HIPAA violations.
• Leave outdated versions of contracts in place, which can lead to confusion, conflicting obligations, and potential legal disputes.

The healthcare landscape is heavily regulated. Non-compliance with contracts can have severe repercussions, including financial penalties, loss of accreditation, and reputation damage.

Having a robust contract management process will keep the organization on track. It’s the easiest way to minimize risks and ensure all agreements are followed correctly.

The Role of Contract Lifecycle Management in Reducing Risk

Want an effective way to reduce risk in the contracting process? Use a contract lifecycle management system. Contract management software helps organizations manage every stage of a contract’s life, from creation and negotiation to execution and renewal. Here’s how a contract management system can help reduce risks at each stage of the contract lifecycle.

1. Centralized Contract Storage and Access

One of the primary benefits of a contract management system is the ability to store all contracts in a centralized location. This eliminates the need for manual tracking through spreadsheets or email chains, which can lead to confusion, lost documents, and compliance risks. With centralized storage:

• Contracts are easily searchable and accessible to authorized personnel.
• All stakeholders can view the latest version of a contract, ensuring that everyone is on the same page.
• The risk of using outdated or incorrect versions of contracts is minimized.
• This feature is particularly important in healthcare, where timely access to the correct contract can be crucial during regulatory audits or disputes.

2. Improved Version Control and Audit Trails

One of the biggest challenges in contract and risk management is ensuring that the most up-to-date version of a contract is always in use. In healthcare, contracts may be amended multiple times over their lifecycle, and it’s critical that every update is properly documented and tracked.

A contract management system provides built-in version control to allow tracking every change made to a contract. This ensures that:

• Audit trails are automatically created, showing who made changes and when.
• A previous version can be quickly reverted to, if necessary, without losing key information.
• Regulatory compliance is maintained by keeping a clear history of all contract changes and approvals.

These features reduce the risk of contract disputes and provide peace of mind during audits or legal reviews.

3. Automated Approvals and Signatures

The process of getting contracts approved and signed can be cumbersome, especially in large healthcare organizations where multiple signatures are required. Without automation, it’s easy for approval delays to slow down important agreements, increasing the risk of non-compliance or missed deadlines.

A contract lifecycle management system automates the approval and signature process by:

• Routing contracts to the appropriate parties for review and approval.
• Sending automatic reminders to ensure that key parties complete their tasks in a timely manner.
• Allowing for electronic signatures, which speeds up the process and reduces the risk of lost or delayed paperwork.

This is how to speed up the contracting process. It ensures all necessary approvals are obtained, reducing the risk of unauthorized or incomplete agreements.

4. Confidentiality Permission Controls

In healthcare, contracts often contain sensitive information. It’s critical to control who has access to this information to avoid breaches of confidentiality or unauthorized changes.

A contract management system allows the designation of role-based permissions, ensuring only authorized individuals can view, edit, or approve contracts. This limited access helps reduce the risk of:

• Unauthorized changes that could lead to compliance violations.
• Accidental disclosure of confidential information could result in data breaches or HIPAA violations.

By maintaining strict controls over who can access and modify contracts, the organization can protect sensitive information and reduce the likelihood of compliance issues.

5. Tracking Critical Deadlines and Renewals

Missing a contract deadline can have serious consequences. Whether it’s a renewal, a compliance review, or a regulatory submission, failing to meet a critical deadline can lead to lapses in service, financial penalties, or legal complications.

A contract lifecycle management system stays on top of these critical dates by:

• Automating the notification process by issuing reminders when a contract is nearing its expiration.
• Tracking renewal periods, ensuring that contracts are updated or renegotiated well in advance of deadlines.
• Prioritizing contracts based on their importance so nothing is overlooked.

Missing a critical deadline highlights the importance of proactively managing deadlines. Implementing this system will help the organization overcome these risks and stay ahead of potential problems.

How an Automated Contract Management Process Reduces Risk

How have contract management processes been handled in the past? Manual processes are prone to inefficiencies, human error, and compliance gaps — not something that works anymore as the regulatory environment grows more complex. Healthcare organizations cannot afford to let critical contracts slip through the cracks. Implementing an automated contract lifecycle management system helps to significantly reduce these risks while increasing efficiency and oversight across the entire organization. Here’s how to mitigate risk at each stage:

1. Improved Compliance and Regulatory Adherence

With regulatory requirements at an all-time high, any misstep can result in significant financial penalties, loss of accreditation, or even legal action. Healthcare contracts are especially vulnerable due to the many regulations governing patient care, supplier relationships, and staffing agreements.

An automated contract management system can help maintain compliance by:

• Tracking renewal and expiration dates and sending out email reminders, ensuring deadlines are met and compliance is maintained without delays.
• Providing healthcare organizations with a full-service electronic contract storage, management, and approval system, streamlining the contract review and revision process for greater efficiency.
• Ensuring every contract is handled correctly and efficiently, reducing the chances of missed steps or misplaced information, so nothing falls through the cracks.

This setup leads to smoother workflows and improved overall compliance, helping your organization ensure that contracts align with current laws and regulations, and the organization reduces the risk of costly violations or disruptions during audits.

2. Enhanced Visibility Across the Contract Lifecycle

Manually managing contracts often results in limited visibility across departments. Key personnel are often left unaware of critical updates or changes. This lack of visibility can increase the risk of non-compliance, duplicated efforts, and missed opportunities.

Having an automated contract lifecycle management system provides a centralized dashboard where all contracts can be viewed and managed in one place. With enhanced visibility:

• All affected personnel can track the progress of contracts at every stage, from drafting and negotiation to final approval and execution.
• Real-time updates allow departments to collaborate more effectively, ensuring that contracts are always up-to-date and no details are missed.
• Potential bottlenecks in the contract approval process can be identified and addressed early, ensuring smoother workflows and reducing the risk of delays.

Every organization is striving for more transparency. This promotes accountability and ensures that every contract is handled with the care and attention it requires.

3. Reduced Human Error With Automation

With manual processes, human error is more likely. Ever missed a signature, overlooked clauses, or misplaced documents? It can lead to problems such as contract disputes or non-compliance. In a healthcare setting, even minor errors can result in major consequences.

That’s why automating the contract management process is becoming more important. It eliminates much of the manual handling that leads to these errors. Here’s how automation helps:

• Automated workflows ensure that each step of the contract process is followed, from drafting and review to final execution. This minimizes the likelihood of errors or missed steps.
• Version control features ensure that everyone involved is working on the most current version of a contract, reducing the risk of outdated terms being used.
• Automated notifications and reminders prevent missed deadlines or incomplete approvals, ensuring that contracts are executed correctly and on time.

Automation works well for handling repetitive tasks and safeguarding against human error. It provides a straightforward way for the organization to reduce the risks associated with manual contract handling.

4. Streamlined Approvals and Contract Turnaround Time

How many contracts require approvals from more than one level of personnel? They often must be forwarded to legal teams, compliance officers, and executive leadership. That’s where problems arise. At a minimum, it can slow down operations. It can also jeopardize supplier relationships or cause lapses in critical service agreements. The longer the approval process takes, the greater the risk of non-compliance or service interruptions.

That’s where automated contract lifecycle management reduces risk. It streamlines the approval process by:

• Routing contracts to the appropriate approvers automatically, ensuring the right teams or personnel review the contract at the right time.
• Providing notifications to alert approvers when their input is needed, reducing bottlenecks in the process.
• Offering electronic signature capabilities, which eliminate the need for in-person sign-offs, speeding up the turnaround time for critical agreements.

No more following up the manual way. Automating the process can significantly reduce the time it takes to execute contracts while ensuring that all necessary checks and balances are in place. Faster turnaround times also means quicker response to changing needs or opportunities without risking operational disruptions.

Staying on Top of the Contract Lifecycle Management Process

With regulations changing all the time, healthcare is increasingly growing in risk. Ever lost a contract or forgotten a signature? The risks are real.

Fortunately, leaving it to chance is no longer necessary. Implementing an automated contract lifecycle management system reduces the risks associated with contract management, improves accountability, and streamlines processes across the board.

Whether current contract management processes are manual or weak at best, now is the time to explore how a contract management system can help. It creates an efficient management process that leads to greater compliance, better patient care, and more efficiencies in an already difficult process. Download our free brochure today. Or schedule a contract manager demo to assess how an automated and simplified contract management process can offer assistance.