3 Considerations When Implementing CLM for Medical Devices Companies

As more tools and systems are developed to help manage contracts, MedTech companies are beginning to understand how important digital transformations are to maintaining a foothold in the healthcare industry. But implementing a contract lifestyle management (CLM) system in MedTech can be difficult to achieve successfully.

In our article about barriers to CRM implementation, we talked about how complex customer types in MedTech make it difficult to streamline customer data. This complexity also makes it hard to develop and use standard contract templates. Your contract terms will change depending on if you’re working with the British National Health Service or the American Department of Veterans Affairs; they’ll change if you’re working with a corporation or selling to an individual; to a hospital system or an insurance .

How you develop contract terms changes based on whom you’re contracting with, and these differences can add up. If you’re working with a major client, you may have to work within the customer’s contract terms on third-party paper. Even if your company has full control, defining terms can still be tricky. You don’t need to draft an NDA or a CDA for a virtual storefront because an individual consumer will never be privy to proprietary information, but they may need to agree to terms of service or terms of use.

The variety of customers in MedTech increases the number of necessary exception processes, contract changes, renewal processes, and expiration processes exponentially—and while it’s more than possible to incorporate this variety into a CLM system like Salesforce or Conga CLM, it’s important to create a roadmap for how you intend to structure an implementation to avoid getting lost in the details.

Varied Customer Types

Imagine a diabetic in the market for a blood glucose monitor. Their insurance will only cover this device if the person purchases it through the insurance company, as the company has a contract with the medical device manufacturer that grants discounts for specific devices. In this scenario, there are at least two contracts: the contract between the patient and the insurance company and the contract between the insurance and the provider.

Maybe not so complicated.

Now imagine a clinical trial testing the efficacy of a new insulin pump in managing type 1 diabetes. The clinical trial is contracted by a MedTech company to a contract research organization and must adhere to government and state regulations. This is a much bigger undertaking and involves many different agreements like:

  • Non-disclosure agreements to protect proprietary data and patient health information
  • Master-services agreements between the CRO and MedTech company
  • Informed consent agreements for trial participants
  • Purchase orders for the individual insulin pumps
  • Statements of work on behalf of the CRO
  • Authorization agreements from an institutional review board

And that’s assuming that nothing comes up requiring an exception process or a contract change. These two scenarios involve at least eight contracts, perhaps more, and that’s only scratching the surface of how detailed and dense medical device company contracts can be. It’s important to account for redlining and editing processes, to give customers flexibility and let them make and track changes to documents when necessary.

Need for Accurate Contract Migration

Big MedTech companies have been operating for decades—some like Philips and Abbott have been working for over a century—and they’ve had contract partners for just as long. You don’t need to migrate a century’s worth of data when you transfer CLM systems, but with the number of potential contracted customers, patients, and clients, it can sometimes feel like it.

Legal teams can spend hours trading versions, rehashing terms, and negotiating internally and with clients to ensure contract terms correctly reflect what each participant expects from a legal arrangement. Leveraging systems like Salesforce or Conga for approvals enhances efficiency and eliminates much of this back and forth, but these systems work with the data they have. Therefore, contracts must be migrated accurately and preserve version control. This is especially important with MedTech, where confusion about contracts could lead to real issues for patients and clinicians if the delivery of products or services is delayed.

This accuracy extends not only to how the contract is written but also to how it is mapped to various functions in a CLM system and any connected systems. For example, if you use Conga CLM integrated with DocuSign CLM, contracts must be mapped to specific data within both systems.

Importance of automation

There are a few different reasons to automate. First is the obvious: it makes the contracting process faster. But it also allows more flexibility. If a legal team drafts a contract template for use with private practices, then a medical devices salesperson can send a practice a contract without having to double-check with legal first. If a CLM system incorporates a clause library for specific contracts, then the system can even run checks to insert pre-approved clauses into the contract based on regions or other factors, without having to involve legal directly.

The second reason to automate is less clear, but equally important: contracting processes in MedTech can take a long time and churn in the industry means that when a contract is first signed, the person responsible for managing it may have moved on by the time a renewal or expiration comes up. Automating simple processes standardizes a contract lifecycle in a way that’s easy for a new employee to pick up, without having to puzzle through the details and personal processes of someone who is no longer with the company. This increases visibility, making the contract process more positive on every side of the equation.

Last but certainly not least, one of the most helpful tools in contract automation: automated risk assessment. Estimating risk is essential to managing any issues that may come up during the contract lifespan and those involved in risk assessment can spend dozens of manhours on determining risk accurately. Intelligent contract risk assessment tools use scoring mechanisms to estimate risk based on previous contracts and certain clauses, like force majeure and each party’s liability. Having all contract data in one place increases risk visibility and makes it easier to avoid signing high-risk contracts—which in turn creates confidence in the contract and deals struck.

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