Behavioral health care and contract management


Treatment, compliance, and operations all tug at the management team of behavioral health care organizations everywhere. All three require equal attention. Emphasis on treatment will produce positive patient outcomes, but the financial of the organization will deteriorate. Compromising patient care to optimize business performance causes patients to vote with their feet. One of the neglected tools for the leadership team to balance all three is superior contract management.

Contracts permeate the behavioral health organization, touching providers, facilities, and regulators.


Behavioral health care organizations have unique contract management challenges. Behavioral health care organizations manage contracts with a diverse set of providers, including psychiatrists, psychologists, physicians, nurses, and health aids. Providers might be individuals, corporations, partnerships, or associations, further complicating the contract management process.


Unlike many hospitals and other health care companies, behavioral care organizations often operate through a bewildering array of facilities. They might rent a drug treatment center in one state and own an in patient facility in another state. Multiple sites in different jurisdictions create a web of state contract compliance issues, to say nothing of the complex state and federal regulatory environment.


For behavioral health care organizations, contract management requires more than simple expiration date tracking. Senior management of behavioral health care firms need to dissect the entire contract portfolio in several ways:

  • contracts by jurisdiction,
  • contracts by type of provider,
  • contracts by facility,
  • contracts by income category (income or expense contracts), and
  • contracts by business unit or department.

Contract categorization is just the first step for behavioral health care leadership teams. It is also important to track individual provisions that have federal and state compliance implications.

The best approach is to maintain a library of important compliance requirements coupled with periodic compliance reviews of contracts. This is an opportunity to integrate compliance and risk management with the core of the business, reducing costs.


A more systematic and granular approach to contract management in behavioral health care field is a cost effective to reduce operating costs while improving compliance.