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There are four fundamental elements of a contract. The first element is that the contract must be entered into between two or more parties. Second, the parties that want to enter into a contract must be competent enough to agree with the terms and conditions of the contract. This requires the parties to be sober in mind and to be knowledgeable about what they are doing. The third element is that the contract signed by the parties must provide something of value to all the parties concerned. An agreement in which only one party gains at the expense of the other party is not considered to be a good contract. The last element is that contracts must be lawful. They should be guided and governed by existing laws. The absence of any of the mentioned elements renders the contract non-binding to the parties. Contracts can either be written or in oral form (Buchbinder and Shanks, 2007).
Stages of negotiation and areas of concern
Negotiation of a contract between a managed care organization and another party usually begins when the MCO sends a request for proposal (RFP). Once this is done, the potential providers must carry out some background research on the MCO to gain insight into the type of MCO it will deal with as well as the business practices and approach of operation of the MCO. At the same time, the MCO evaluates the applicants to assess their capabilities. Negotiations between the applicants and the MCO are then carried out through open communication which helps to create a mutual agreement and understanding between the parties involved. It entails extensive dialogue, debate, and conciliation by both parties which center on the results and attainment of agreement. The negotiation must result in the provision of something valuable to each of the parties. All parties must recognize the potential merits and demerits of the contractual agreement based on their goals, resources, and capabilities. The success of the negotiation is normally achieved through a contract. Gibelman and Whiting (1999) argue that “contracts are usually the result of a negotiating process,” (p.183). Areas of concern during the negotiation process include responsibilities and roles of each of the parties in the contract; the extent and type of client’s details that should be provided to the MCO; the maintenance and access of records; and the need for supervision.
Provisions for performing illegal activities
Some contracts have clauses that can provide loopholes for the parties to engage in illegal activities. In such situations, it is advisable for the parties of the contract to carefully examine all the terms and conditions of the contract to ensure that they do not violate their professional codes of conduct (Gibelman and Whiting, 1999).
Severability clause
A severability clause is a clause that asserts that if a portion of a contract is invalidated by a court, it does not have any negative impact on the validity of the rest of the contract. This clause is applicable in contracts in which there exist provisions that cannot be enforced. The unenforceable provision will thus be severed from the contract/agreement but the remaining provisions of the contract will still be valid. Filsinger (2004) states that “the clause may be especially important where there is a non-competition provision in the contract, to ensure that if the non-competition clause is found invalid, the rest of the contract will remain in force,” (p.81). An unenforceable provision, therefore, does not nullify an entire contract.
Reference List
Buchbinder, S.B. and Shanks, N.H. (2007). Introduction to healthcare management. London: Jones & Bartlett Publishers.
Filsinger, E. (2004). Employment law for business and human resources professionals. London: Edmond Montgomery Publication.
Gibelman, M. and Whiting, L. (1999). Negotiating and contracting in a managed care environment: Considerations for practitioners. Health & Social Work, 24(3), 180-190.
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