Be Careful With Automatic Contract Renewals

By Debbie West, Practice Administrator with Birmingham Pediatric Associates and Owner of WestMed Disposal

It is so easy to overlook the fine print in contracts when they sit in a stack on your desk while administrators are putting out the day to day fires that arise in a medical practice. Often times they go from office desk to brief case to bedroom night stand in hopes of a quick glance before the 10:00 news. Those are the pieces of paper that end up in the "Scarlet" pile for tomorrow is another day.

Automatic contract renewals can come back to haunt you if the service provider is not providing adequate service and you have several years remaining on a contract. In some cases where companies have a monopoly in the industry, there is not much incentive to correct the issue. If there is no financial benefit to a long term contract, then keep it to a minimum or 1 to 2 years. Financial benefits such as price guarantee would be a separate issue.

It is very important to know expiration dates of contracts as many companies require 90 day notice in writing. I also suggest sending the letter certified with a return receipt request. Good documentation is critical when ending a contract that has an automatic renewal. When it comes down to providing documentation that the cancellation letter was sent, it can alleviate wasted time by having all your ducks in a row.

Allow yourself plenty of time to price shop. It is a very competitive market due to the economy so make sure to capitalize on this. 

Don't feel bad about asking for references. Also ask counterparts in other practices, round table groups, management organizations or specialty organizations for this information. Other managers are great resources so don't hesitate to utilize this valuable benefit.