The Basic Elements of a Contract - Assignment Example

This section includes details of the period of the contract. Generally, the managed care contracts lock the parties for multiple years with a consistent increase of charges each year. However, other terms and termination clauses may also be recorded in the managed care contract. Other details like address of health care provider, laws and regulations to be used in case of arbitration, rights of both parties in case of the legal proceedings, etc. are documented in the general provision section.

It may also state other clauses like the severability clause. This phase includes gathering information about the plan, its scope, general market sentiments, and its applicability in the provider's area. This assists in deciding if the provider wants to enter into a relationship with the health plan, and also assists in the contract formulation stage where bargaining power can increase if the parties have sufficient information about each other. This flows from the information-gathering phase.

It is always good to know one's strengths and weaknesses. For example, if a health plan is new to an area, the provider can leverage this information to negotiate a better deal; as opposed to negotiating the same prices if the health plan is widely known and popular in the locality. Alternatively, if the health plan is in existence for years, the health provider may find it difficult to get any negotiating power while dealing with the health plan. The balance would thus be shifted towards a health plan.

FinancesThis is a sensitive area and warrants careful analysis before locking oneself up in a contract. This includes an assessment of the health plan's fee schedule, capitation and other items that require both parties to jointly manage the risk. Some of the concern areas include capitation as per age, gender, employer-specific capitation, financial incentives, etc. A financial evaluation may be termed as one of the most critical factors during the contract negotiation stage and maybe the showstopper if not carried out carefully.

ContractA contract is the underlying legal document that defines the responsibilities, rights and obligations, termination clauses, etc. The final stage of contract negotiation is signing the contract. Care should be taken while reviewing contractual terms for both parties to determine if the contract is skewed towards one party. Additionally, all legally unenforceable clauses should be removed prior to signing the contract.What if a contract contains provisions for performing illegal activitiesIf a contract contains provisions to allow illegal activities, then this contract is not enforceable by law.

Thus, neither of party is bound to do as obligated by the contract.