Finalizing Contracts With Ease: Best Practices for Hospitals

By Your Health Magazine

Your Health Magazine

. http://yourhealthmagazine.net

More Family/Primary Care Articles

Finalizing Contracts With Ease: Best Practices for Hospitals

Hospitals and other healthcare facilities are managed with a clear set of rules and regulations. When it pertains to finalizing contracts in the industry, the process requires attention to detail, compliance, and effective negotiating. The reason for this is that there are different types of contracts and agreements, including single-case agreements, payer contracts, vendor agreements, and unique requirements. This article explores best practices for hospitals when finalizing contracts.  

Understanding Single-Case Agreements

One of the more common contracts to consider is the single-case agreement. These types of contracts are between a healthcare provider and a payer — usually an insurance company. These types of contracts make provision for patient services at an agreed-upon rate. Single-case agreements are generally used by patients with medical coverage whose coverage does not include specific procedures. In essence, a single case agreement ensures a patient receives the medical services they need, simultaneously guaranteeing the healthcare provider is reimbursed fairly.

When exploring single-case agreements, there are some considerations. These contracts should detail patient information, including medical history, diagnoses, and required services. The contract must also detail the procedure and services to be provided, detailing the scope, duration, and special considerations. The reimbursement rate should be clearly stated, reflecting the hospital’s pricing structure. The contract should include the authorization process for billing, the services, and the reimbursement timeline. Lastly, a termination clause should be included, clearly defining the conditions under which either party can terminate the contract.

While the above are but some considerations when creating a single case agreement contract, here are some best practices to review. When finalizing the agreement, always communicate clearly and be as transparent as possible. Check that your documentation is clear and leaves no room for ambiguity. Have a legal representative review the contract to ensure it complies with laws and regulations. Be open to negotiation of payment and payment timelines. Lastly, advocate for patients, ensuring they receive the best medical care with the best rate attached to it.  

Best Practice for Contracts as a Whole

While single-case agreements might be one of the more common types of contracts, several others have regulations. Here are some of the best practices for finalizing hospital contracts.

Contract Management

A large aspect of contract finalization is managing the contract. The task is quite administrative; however, hospitals can incorporate a robust contract management system that is a centralized repository for ease of access. Additionally, a contract management system allows for lifecycle management, tracking contracts from creation until they are signed and filed. The process can also involve alerts to notify the relevant stakeholders of key dates, such as contract renewals or reviews.

Due Diligence

You must conduct due diligence before entering into any contractual agreements — be it employment, vendor, supplier, etc. This involves performing a background and reference check to ensure reliability. You must also evaluate the stability of the contracting party to limit or completely remove any risk of defaults.

Be Clear and Concise

Ensure your contracts use clear and plain language where possible — of course, legal terms must also be used. The idea is to avoid any miscommunication that could lead to disputes later. Define terms and acronyms where legal jargon is used and be specific with obligations, expectations, deliverables, timelines, etc.

Mitigate Risks

One might think it is near impossible to mitigate risks in advance, but you can. You do this by identifying potential risks, and this is done through scrutinizing and reviewing contracts before they are shared with the relevant stakeholders to sign. Include indemnification clauses that protect the hospital from liabilities resulting from the other party’s actions. Specify the insurance coverage for the other party. Detail dispute resolution procedures well in advance as well.

Consider the Finances

While most people do not intentionally plan to underpay, a hospital needs to include all financial terms in a contract to ensure the compensation is favorable for the hospital. For the contract to be effective, it must include clearly defined payment terms with due dates, the repayment total amount, the monthly installment amount, and any penalties and administrative fees that arise for late payments.

Perform a cost-benefit analysis to ensure that the contract aligns with the hospital’s financial goals. As mentioned, the hospital must ensure that the work they are contracting is favorable not only in terms of the work itself but also financially. Ensure the contractual agreement falls within the hospital’s overall budget. The idea is not to overspend, as this can lead to financial difficulties at a later stage.  

Outline Your Best Practices and Stick to Them

Now that you understand the importance of best practices for hospitals in finalizing contracts, you can start implementing said best practices. Consider the following when establishing your process: single case agreements are often the most common contracts, so communicate effectively, ensure your documentation is thorough, have a legal specialist review the agreements, and be open to negotiation. For all other contracts, ensure you have comprehensive contract management in place, complete your due diligence before entering into any contractual agreements, create risk mitigation strategies in advance, and ensure the financial aspect of the contract is favorable for the hospital.