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The Importance of Contract Management for Healthcare Compliance

Risk & Compliance

As every healthcare company knows, the repercussions of not remaining compliant with industry regulations are severe. In August of 2018, William Beaumont Hospital, a regional hospital system based in the Detroit, Michigan area, paid $84.5 million to settle alleged violations of the Stark Law (also known as the Physician Self-Referral Law) and Anti-Kickback Statute in connection with “sweetheart deals” benefitting referring physicians.

According to the United States Department of Justice, “...Beaumont provided compensation substantially in excess of fair market value and free or below-fair market value office space and employees to certain physicians to secure their referrals of patients in violation of the Anti-Kickback Statute and the Stark Law, and then submitted claims for services provided to these illegally referred patients, in violation of the False Claims Act.” 

Implementing contract management software is one step healthcare companies can take to improve their compliance procedures and ensure they’re satisfying industry regulations. Below are some ways that contract management software helps healthcare companies remain compliant and avoid costly penalties.

Visibility into Your Agreements

It’s impossible to keep track of contracts and their contents if you don’t know where your contracts live. When contracts are spread across multiple offices, shared drives, computer desktops, and email inboxes, it’s challenging to locate an agreement, let alone a specific clause or term found within one. 

Risks involved: When you don’t have insight into your contracts, you don’t have the relevant background information to take the actions needed to remain compliant with industry regulations. Under regulations like Stark Law and the Anti-Kickback Statute, you must keep a close eye on things like physician agreements and office leases. If you lose sight of where these stand, you risk facing steep financial penalties, in addition to potential losses stemming from poor contracts that should have been renegotiated.

Solution: Contract management software offers a secure location to store all of your agreements, including physician contracts, vendor agreements, building leases, and more. This allows your legal team and key stakeholders the ability to quickly and easily locate any contract on file, and search within the contract to find a term or keyword of interest. With strict healthcare compliance regulations in place and severe penalties for violating those regulations, companies cannot afford to operate with weak contract management processes.

Custom Alerts and Notifications

Healthcare companies clearly need to manage their agreements closely and are forced to pay a hefty price when any details are missed. If some element of a physician agreement needs to be renegotiated for a company to remain compliant - but the contract automatically renews because of a missed deadline - the company is subjected to unnecessary risks and potential fines.

Risks involved: Missing contract deadlines clearly presents significant risks for your business. Missing a deadline to cancel an agreement before it automatically renews could lead to throwing away money on expensive equipment or services that are no longer needed. In terms of healthcare compliance, if you have a physician agreement that needs to be restructured to comply with Stark Law and you miss that renegotiation window, your company is exposed to additional risk. Making sure every contract deadline is on your radar is critical, whether or not action is needed.  

Solution: Setting up alerts and notifications for contract deadlines is a simple way to stay ahead of critical contract management tasks. Knowing exactly when your agreements expire, and having enough time to renegotiate terms within the timeframe allowed, presents an easy way of reducing risk.

Supporting Document Storage

Under regulations like Stark Law and the Anti-Kickback Statute, healthcare companies need to track physician contracts and their outside valuation in order to justify fair market compensation rates and fair market lease rates. To ensure you’re out in front of this, keeping supporting documents on file that demonstrate fair market rates is critical. 

Risks involved: Having easy access to documents that demonstrate compliance with regulations helps protect your business from potential penalties, so not being able to quickly pull up those documents can create holes in your case. Not having the adequate tools and systems in place upfront to keep you organized can lead to fire drills and hours of extra time spent trying to reconcile your files during an audit or compliance exam.

Solution: Companies that use contract management software have a simple, straightforward way of attaching these documents to physician agreements and demonstrating compliance with healthcare laws. 

Comprehensive Reporting 

Once you’ve organized all of your contracts in your contract management repository and set up alerts to stay informed of important deadlines, the next step is to report on your key metrics. Working with your risk and compliance department to establish what data to report on and how often to run the reports will improve transparency into your contracts and demonstrate that your healthcare company has systems in place to address industry regulations.

Risks involved: Failing to take a proactive approach with reporting can lead to a number of issues with both your internal compliance team and industry regulators. Agencies responsible for monitoring compliance with industry laws want to see that you’re taking the appropriate measures to remain compliant, and not having adequate systems and processes in place can create red flags.

Solution: Contract management software offers customizable reporting options so you can schedule reports that track any number of data points within your contracts. This not only shows your internal compliance department and industry regulators that your company knows what’s in your contracts and has a system in place for monitoring them, but having familiarity with the software also makes it easier to create new reports to satisfy specific requests should they come up.


Operating in one of the most heavily regulated industries, healthcare companies have a significant need for strong contract management processes and tools to support your efforts. Implementing contract management software is an important step to take as you look to mitigate risks and remain compliant with Stark Law, the Anti-Kickback Statute, and other healthcare regulations. The penalties for violating these regulations are severe (including both civil and criminal penalties), so purchasing contract management software to help track key components of your agreements is typically well worth the up-front investment.

The Buyer's Guide to Contract Management Software

Quickly identify solutions to your specific contract management challenges.

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