6. Design a dispute-resolution strategy
Include a thorough dispute-resolution strategy within the contract. The strategies help facilitate an orderly process for resolving disputes cost effectively, Ms. Hanna said. She suggested that policies start with an informal dispute-resolution process that sends unresolved matters to senior executives at each organization.
“This allows business leaders – and not the lawyers – to find a business solution to a thorny and potentially costly problem before each party gets entrenched in its own position and own sense of having been wronged,” she said in an interview. “The business solution may or may not rely on contract language but may be tailored to keep the relationship moving forward. However, if the informal process proves unsuccessful, then the process gets punted to the legal system – whether in a court proceeding or arbitration.”
7. Have an exit strategy
Include an exit strategy that ensures an end to the arrangement goes as smoothly and fairly as possible. The strategy will depend on the nature and structure of the payer-provider alignment and the value-based payment arrangement, Ms. Hanna said in an interview.
For example, in a true, corporate joint venture, the exit strategy may include buyout rights of the newly formed entity. In this case, it’s important to consider and negotiate the price of the buyout and what circumstances that will trigger the buyout. Termination rights should also be included in an exit strategy, Ms. Hanna said. One option is to allow termination “without case,” by either party.
“Clients often do not like this approach because the intention of the parties going in is to build a strong, long-term relationship where provider and payer benefit,” she said. “A ‘without cause’ termination rights gives the parties a safety valve if circumstances change or the relationship is just not successful.”
An alternative is to allow the relationship time to mature and grow before either party can exercise a without cause termination. A related approach is to develop triggering events that would give one or both parties the right to terminate the agreement, without the other party “having committed a bad act,” Ms. Hanna said in the interview.
“For instance, if the relationship does not meet certain financial or other benchmarks within an agreed-upon time frame, this may be a sufficient reason to terminate the relationship, abandon, or renegotiate the value-based purchasing payment formula or, perhaps, end an exclusive or other preferential relationship,” she said.
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