Contract management: control your contracts to boost the bottom line

Contract management: control your contracts to boost the bottom line

How up-to-date are the contracts in your practice? Where are they located? Do you know how many signed agreements you have, perhaps hidden in the dark recesses of multiple file cabinets? Contract management is a task that, while far from glamorous, is critical to practice success. Outdated, lapsed, or unintentionally automatically renewed agreements can cost your practice real money. With the new year right around the corner, November/December is an excellent time to get your contracts under control. Here’s how.

Pull them all out of their hiding places. You might be thinking, “We don’t really even have that many contracts around here,” but in all likelihood, you have many of the following on file:

  • Third party payer contracts
  • Office rent/lease agreements
  • Service contracts (janitorial, mobile phone, etc.)
  • Equipment leases (medical equipment, computers, copies, credit card terminals, etc.)
  • Software agreements
  • Independent contractor agreements
  • Employment agreements
  • Insurance policies
  • Benefit package agreements

Dig around in your files and pull out everything you can find that looks like it might be a contract or an agreement. If a piece of paper includes payment terms and a date, it’s probably a contract.

Make a list. Using an Excel spreadsheet, record all of your contracts and agreements with, at minimum, the following basic information: original date, expiration/renewal date, who signed the document, payment amounts and terms, and what that contract is for. Once you have all of this in spreadsheet format, you’ll find that it’s pretty simple to keep track of when agreements are about to expire, when they’re up for automatic renewal, or when they otherwise need attention.

Purge and cancel. If you find that you have contracts on file that are out of date or no longer needed, get them out of your current system. Depending on what it is, you may need to formally cancel a contract by writing a letter. If you’re not sure, ask your attorney what to do. You might need to keep some contracts in storage for a period of time, just in case questions arise after they have expired. Again, check with legal counsel about how long to maintain these types of records.

Give contracts a common home. Keeping all of your agreements in a single location will make it easier to retrieve them when they’re up for renewal or renegotiation, and make it possible for others in the office to locate the documents should the person primarily responsible (e.g., practice administrator, managing partner) be out of pocket when a contract needs to be referenced.

Renegotiate. Once you have all your contracts and agreements well organized, go back through them and see where you might be able to renegotiate to save money. Examples: ask about new deals on phone/internet/mobile phone services; lower certain insurance premiums by raising deductibles; put the office cleaning service agreement out for bid; renegotiate or pay off an equipment lease.

Going through this exercise will give you peace of mind that your contracts are in a manageable state. Taking time to work through the process also has the potential to boost your bottom line as you review and renegotiate. Just think how good you’ll feel when you push the file cabinet closed on your new and improved, highly organized “contract and agreement” drawer.