Hospitals and health systems are under unprecedented financial pressure. Labor shortages, rising supply chain costs, shifting regulations, and increasingly complex payer contracts are straining margins and limiting investments in patient care. While many organizations have digitized their EHRs and ERPs to improve efficiency, one of the most powerful levers for profitability remains largely untapped: contracts.
Every payer, supplier, and physician relationship is governed by a contract. Yet most providers lack the tools to fully operationalize these agreements, leaving billions in potential revenue unrealized. According to World Commerce and Contracting, poor contract management can result in value leakage equal to 9 percent. For a health system with $5 billion in annual revenue, that loss equates to millions in value erosion each year from a provider that manages thousands of commercial agreements.
AI-Powered Contracts as Untapped Growth Drivers
Contracts are often treated as static documents filed away after signature, when in reality they are the single source of truth for financial, clinical, and compliance obligations. From payer reimbursement terms to supplier rebates to physician compensation models, the opportunities to recover revenue and protect margins are hiding in plain sight.
The challenge is scale. Large providers manage thousands of contracts, and manual review is slow and error-prone, leaving organizations exposed to underpayments, missed rebates, and compliance gaps.
“When margins are tight, every missed rebate, underpayment, or compliance oversight directly impacts a provider’s ability to invest in patient care,” said Jamiere Mitchell, Senior Director, Healthcare Industry Advisory at Icertis. “Just as providers work hard to transform patient experiences, they must also invest in AI solutions that empower them to negotiate better outcomes, optimize spending, and minimize risk.”
The good news is that the very contracts at the center of these challenges can also become a source of relief. By applying AI, providers can turn contracts into a lever for sustainable growth and leverage their intelligence to recapture value in three critical ways:
- Protect margins by recovering hidden revenue: Instead of leaving rebates or reimbursement adjustments buried in payer and supplier agreements, use a centralized contracting platform with AI capabilities and deep analytics to surface high-cost contracts, flag inflation triggers, and identify renegotiation opportunities. For example, providers entitled to a rebate from a supplier may fail to collect without contract visibility. AI surfaces these entitlements automatically.
- Safeguard compliance by automating audit readiness: Compliance teams often spend weeks chasing documentation for HIPAA, Stark Law, and CMA rules. Standardize contracts with pre-approved clauses and leverage AI to automatically flag risks and enforce regulatory language. Clause libraries also help providers maintain consistency across jurisdictions to reduce risk exposure and avoid costly penalties.
- Improve operational efficiency with a unified approach: Manual workflows and disconnected platforms slow contracting and add administrative burden. Integrate contract intelligence with enterprise systems like SAP or Salesforce to manage obligations in one place, accelerate agreement execution, and uncover potential cost savings. A connected platform frees resources to focus less on paperwork and more on patient care.
Proof in Practice
Forward-looking health systems are already realizing measurable results from AI in contracting. Stanford Medicine, for example, transformed its legacy system with Icertis to streamline the entire contract lifecycle, minimize errors, and strengthen compliance with organizational standards. With AI-powered healthcare analytics, Stanford projects $11.6 million in savings through rebate optimization and enhanced service credit realization.
Icertis is doubling down on these outcomes by advancing its healthcare solution – designed by industry experts – with next-generation AI and applications like Vera Analytics that accelerate time to value with actionable intelligence at enterprise scale.
“Healthcare leaders tell us that visibility alone isn’t enough — they need technology that operationalizes these agreements at scale to realize hidden value and minimize compliance and commercial risk. We are seeing this mindset shift across the industry,” said Sundar Balasubramanian, SVP of Product Management, Healthcare, Icertis. “While some solutions stop at centralizing contracts, Icertis applies advanced AI as a force multiplier to increase revenue, protect margins, ensure compliance, and position providers to invest more in patient care. This is the difference between good enough and transformative — and why more than one-third of the Fortune 100 trust Icertis.”
The bottom line for healthcare providers
The pressures faced by hospitals and health systems aren’t going away. But the tools to withstand them are evolving. Providers that embrace AI-powered contract intelligence will be better equipped to withstand external pressures, reinvest in innovation, and deliver better outcomes for the communities they serve.
Learn more about how Icertis helps healthcare providers drive growth and profitability with AI-powered contracts here.
