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Contracts are the glue holding every operation together within the healthcare industry. They connect employees and employers, suppliers and buyers, ensuring each party remains protected. Whether dealing with hiring, your supply chain or equipment, contracts can be long and complex and require time and effort to ensure they’re structured in your best interest. Understanding the different types of contracts and how they work is the first step to an effective contract management operation.
Healthcare organizations depend on countless materials and products to complete daily tasks. Some of the most common products used throughout healthcare centers and hospitals include syringes, defibrillators, sterilizers, gloves and masks.
You can create supply chain contracts to secure these raw materials, products and services from reliable suppliers. These written agreements guarantee the supplier will provide specified goods or services for a pre-determined period at a fixed cost. They also outline delivery schedules, consequences for failing to adequately buy or supply and termination conditions.
Healthcare professionals use expensive instruments daily, and they might have equipment lease contracts rather than buying items outright. This strategy provides additional flexibility and security to obtain the required tools at a more convenient price. However, there are other solutions healthcare providers might employ to get the resources they need. Common types of supply chain contracts found within healthcare facilities and organizations also include:
Standard labor agreements are legal contracts outlining the terms and conditions of employment at an organization or company. These documents vary by company and position and provide explanations of employee responsibilities and duties, employment terms, compensation and benefits and conditions of termination.
Commonly used labor contracts in every industry include:
Labor contracts are required for every employee within your organization. Which one you use depends on their position and union status and must meet all state and federal employment laws. However, there are special circumstances in which you must utilize other contract types, such as hiring a physician.
Many states prohibit medical facilities, like hospitals, from employing physicians directly. Detailed physician employment contracts or independent contractor agreements are often necessary.
They include schedule expectations, wages and benefits, on-call requirements and a restrictive covenant outlining non-compete conditions. If you are hiring for the role of medical director, a separate contract is also required and includes similar information.
A lot goes into running and maintaining your healthcare facility. It takes time, effort and money to provide patients with the care and attention they deserve. Partnering with outside companies will ensure your operations are sustainable and run smoothly while saving you money. These partnerships are usually called purchased services and are part of your non-labor spending budget.
Purchased services agreements are the contracts between your organization and outside businesses. They include information regarding contract terms, scope of services, pricing structures and scheduling. Standard outside services many organizations choose to outsource include:
Your healthcare business depends on the services you source from outside businesses and contractors. Outsourcing activities like coding, transcriptions and billing collections require managed services agreements (MSAs) and outsourcing agreements. These examples of healthcare contracts outline the promised service, payment structures, liability protections and timelines. They can also include penalties, fines and exit strategies.
Professional service agreements (PSAs) are another form of purchased services contract that aims to reduce company expenses. Facilities like hospitals often use PSAs to enlist the help of specialized physicians such as anesthesiologists, radiologists, hospitalists and many other professionals.
These professionals remain independent from the business while adhering to a contract tailored to fit the needs of your business or organization in return for payment. You can create them for a single service provider or a whole department, varying in term length, schedule type and responsibilities. These contracts tend to be more complicated, yet they can be extremely powerful when they are done right.
As technology has continued to advance, it has become a staple of the healthcare world. Healthcare companies everywhere depend on cutting-edge technology and software to treat patients effectively and deliver reliable services.
Technology contracting is critical to these companies acquiring the resources they need. Most applications, software and information-based technology require licensing agreements detailing necessary fees, the duration of the agreement and prohibited activities.
The healthcare industry is extremely reliant on innovative technology to continue meaningful growth. With this, you may see various types of healthcare contracts, including:
Drugs and medications are heavily regulated at the state and federal levels. Contractual agreements are used between healthcare organizations and pharmacies to protect each party’s rights and meet legal restrictions.
Pharmacy contracts are legal agreements between pharmacies and healthcare organizations. These detailed documents establish the terms and conditions regarding various operations, including purchasing, dispensing and paying for drugs and related services.
Pharmacy contracts will likely vary from pharmacy to pharmacy, and they are heavily dependent on provided services. Essential terms covered within these types of medical contracts include the scope of services, pricing, confidentiality, compliance and termination. Whether you run a pharmacy or work side by side with them, you should be aware of the following contracts you might encounter:
Legal contracts come in all shapes and sizes within the healthcare industry, facilitating integral services that businesses and organizations rely on to succeed. Understanding how each operates and how to navigate through each situation accurately is crucial to your growth. It will ensure you’re capable of effectively helping and caring for customers and patients.
Pathstone Partners is devoted to providing your business with a broad spectrum of exceptional healthcare consulting services to manage all your medical contract needs. We have a long history of working with healthcare organizations of all sizes, identifying challenges and capitalizing on opportunities to enhance performance. Our healthcare consultants have unrivaled expertise to oversee contracts across all your business ventures. Get in touch with us to get started today.