Contract Management Services for the Life Sciences Industry.


Best Practices & Operating Procedures

Contract Management, due to its competitive and legislative nature, is not a subject that Health Care companies can collaborate on, or even discuss in any detail. However, as industry experts, Activus Solutions can offer guidelines, policies and procedures centered around solid and proven business practices.

We all know the phrase, “If it works, don’t fix it.”  But what is the criteria by which we determine whether a particular process “works” or not.  A process may “work”, but does it operate efficiently? Is its operation based on sound business principals?  Does it satisfy you, and your customers?

Activus Solutions, its founders and all the individuals who work for us are experienced Contract Management professionals with real world experience from many health care companies. This enables us to start from a position of knowing and understanding the best and most effective methods of operation. With this knowledge, we can analyze your key processes, recommend and implement business policy and procedures to considerably enhance your overall Contract Management operation.

Administrative fees are a typical component on hospital contracts with the GPO’s. These fees are often calculated as a fixed percentage off indirect and sometimes direct sales, if applicable. Several policy decisions need to be made as to how these should be processed. Which transactions should be included? How should we deal with adjustments that span the quarter close? What data does your GPO need to reconcile the payments, and what does the sales force need throughout the year to track effectiveness of the agreement. Contracts are written with GPO’s to drive sales of your product portfolio and to increase revenue based on the GPO influence over buying patterns of their affiliates. The very existence of these agreements and the nature of GPO’s show that these types of contracts are strategic to your sales. Are there other ways or incentives that could be utilized to leverage the relationship to the GPO and its affiliates to alter buying patterns? 

Managed care contracts can offer complex incentive structures to drive sales through the affiliated health plans. The contracts themselves should be written to define all the rules of trade associated with the contract including data transfers, formats, date sensitive events as well as the incentive components themselves. But what is the most effective configuration of these parameters that will satisfy your trading partner, and optimize your contract? Once the data is received from your trading partner, how should it be analyzed? What checks and balances should be initiated and in the case of adjustments to prior quarters, and how should these be handled from receipt through payment?

Depending on your product portfolio, your largest customers are your distribution partners. Policies and procedures around their direct purchases, chargebacks/distributor rebates, optional additional incentives, reconciliations and deductions are all key processes, which can be optimized to work together.

The other primary factor which works hand in hand with improvements to your processes guided by best practices is that, once established, they must be followed, indeed enforced, to ensure consistency. Employees leave, new employees are hired. Without documented operating procedures on how to handle the entire business process, there is no value to instituting the process in the first place.

In summary, Best Practices and Operating Procedures govern, guide and enforce effective and efficient business operations based on proven techniques and policies.  


Ó Copyright 2006 Activus Solutions, LLC.  All rights reserved.  No portion of this site or its contents may be reproduced, copied, or quoted without the express written consent of Activus Solutions, LLC.

Activus Solutions, LLC | 13 Prince Henry Drive, Suite 1 | Randolph, NJ 07869 | Phone: (800) 471-0522 | Fax: (973) 989-0256