healthcare-contract-management-life-sciences

Perspectives

Healing the pain points in health care contracts

Strategies that can aid compliance and efficiency

In the life sciences industry, managing contracts with health care professionals (HCPs) is a critical yet complex task. While essential for advancing medical research and patient care, these relationships are subject to stringent regulations and scrutiny. Explore the intricacies of health care contract management, potential risks, and strategies to improve compliance and operational efficiency.

Health care professionals (HCPs) play a pivotal role in the life sciences industry, contributing to research, development, and the dissemination of medical knowledge. However, the financial relationships between life sciences companies and HCPs are heavily regulated to prevent conflicts of interest and prioritize patient care. Effective management of these contracts is crucial for compliance, operational efficiency, and maintaining the integrity of HCP-company relationships.
 

A brief history of HCP payment regulation

The regulation of payments to HCPs has evolved significantly over the years. In 2010, the Physician Payments Sunshine Act was enacted as part of the Affordable Care Act, requiring life sciences companies to disclose payments and value transfers to HCPs publicly. This move toward transparency was followed by similar laws in various states, such as California’s gift ban bill. The increasing complexity of therapies and patient needs has necessitated these regulations, with studies showing that a significant portion of hospital doctors receive payments from pharmaceutical companies. This regulatory landscape aims to make sure that HCPs prioritize patient interests over financial incentives.

HCP contracting pitfalls

Against that backdrop, what potential risks may be associated with HCP contracting? Here are some of the common ones:

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Compliance and legal risks

Noncompliance with global and local regulations can lead to legal actions, financial penalties, and reputational damage.

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Financial risks

Errors in fair market value (FMV) assessments can result in overpayments, translating to significant financial losses for large companies.

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Reputational risks

Public and regulatory scrutiny of HCP payments can lead to negative perceptions and potential biases in HCP recommendations.

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HCP contracting steps: What can be improved?

Improving HCP contracting processes is not just about risk management but also about capturing value and enhancing efficiency. The contracting process involves several steps:

  • Need identification: Determining the need for engaging HCPs.
  • Selection and qualification: Setting criteria for HCPs and conducting diligence and screening.
  • Contract negotiation: Defining terms and conditions, including FMV and transparency considerations.
  • Contract approval and execution: Carrying out internal reviews, securing approvals, and finalizing contracts.
  • Monitoring and management: Managing contracts, tracking performance, and strengthening compliance with payment reporting requirements.
  • Payment reporting: Automating data flows to support payment reporting requirements in line with federal, state, and global transparency laws.

HCP contract management often involves time-consuming, redundant steps and a lack of standardization, leading to delays and missed opportunities. Aligning HCP contracting roles with medical and compliance teams is challenging for multinational companies as they have to harmonize global processes. Cross-border management becomes difficult with varying contract templates and unclear roles, affecting reviews and approvals. Inefficient processes impede visibility into HCP engagements and compensation tracking.

Enhancing efficiency with a two-pronged strategy

Streamlining HCP contracting involves breaking down the process into manageable tasks along two dimensions: process area and organizational capability.

By addressing specific process areas such as HCP selection, event planning, payment processing, compliance reporting, and data-sharing, companies can improve each step for efficiency and compliance. Additionally, enhancing organizational capabilities through cross-functional collaboration, clear communication channels, defined roles and responsibilities, and continuous education on legal standards can further streamline workflows. This dual approach helps life sciences companies reduce operational burdens, strengthen regulatory compliance, and increase the value of their HCP engagements.

Reduced risk, greater rewards

HCPs play a crucial role in the life sciences industry as trusted resources for patients and advisers to organizations. However, financial ties with HCPs are under increasing scrutiny from lawmakers and regulators, posing potential reputational and financial risks. An effective HCP contracting process can mitigate these risks while capturing value and reducing operational burdens. By streamlining HCP contract management through process area and organizational capability improvements, life sciences companies can enhance efficiency and compliance.

Contacts

Paul Silver
Principal
Deloitte & Touche LLP
psilver@deloitte.com

Brent Griffith
Managing Director
Deloitte Consulting LLP
bgriffith@deloitte.com

Jaspreet Anand
Vice President, Service Delivery
Deloitte Transactions and Business Analytics LLP
jaanand@deloitte.com

Juan Tessi
Senior Manager
Deloitte & Touche LLP
juatessi@deloitte.com

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