Establishing the basis for successful disease management contracting

Healthcare delivery in the United States has undergone significant changes during the last two decades. In the 1990s, we are witnessing a new phenomenon - contracts between healthcare providers and pharmaceutical manufacturers or disease management companies for disease-specific intervention programs. Although the concept of disease-specific patient care is not new, increasingly, healthcare providers are considering introducing disease management programs and are evaluating the benefits of contracting with outside organizations for specific disease management interventions. If these interventions are to be operationally and contractually successful, then a contract must be negotiated that meets the requirements of both parties, and that minimizes the probability of default and the possibility of dispute. The purpose of this paper is to identify the key requirements for any disease management contract. These requirements are considered in terms of (1) type of contractual agreement; (2) identification of the patient group for the disease management intervention; (3) time frame for retrospective analyses to establish contract cost baselines; (4) profiling of disease or therapy areas; (5) requirements for resource costing and the identification of cost drivers; (6) seasonal adjustment procedures; and (7) definition of terms, contract dynamics and the management and arbitration of the contract. Because few disease management companies appear to have recognized the need to include many of these seemingly obvious requirements in a standard contract framework, this paper emphasizes the importance of incorporating all seven elements in any contract. These requirements are not onerous; rather, the principal obstacle is the failure of prospective contracting parties to recognize their significance.