Creating Predictability in the Face of Uncertain Litigation: A Strategic Approach for Healthcare Leaders

In the ever-evolving landscape of healthcare, executives are consistently tasked with making critical decisions that balance cost, risk, relationships, and brand reputation. Nowhere is this balancing act more difficult than in the legal domain, particularly when it comes to managing disputes. Whether stemming from vendor relationships, provider or employee issues, or disputes with patients, litigation is inevitable in the business of healthcare. 

What remains uncertain, however, is when these disputes will arise, how much they will cost, and how significantly they will divert attention and resources away from core operations.

Traditionally, litigation has been viewed as a reactive process, one that is managed after a dispute escalates. But healthcare leaders today have an opportunity to reframe their legal strategy with a proactive approach that brings predictability, efficiency, and cost control into what has historically been a chaotic and expensive aspect of business. By implementing three key actions, healthcare organizations can better manage risk, reduce costs, and preserve valuable relationships, all while staying focused on their mission of caring for patients.

Build an Early-Stage Alternative Dispute Resolution (ADR) Process

One of the most effective ways to manage disputes is to address them before they escalate. Internal methods, such as HR intervention or call center escalation, are important first steps, but quickly warrant more professional solutions.  By establishing a formal Alternative Dispute Resolution (ADR) process, healthcare organizations can proactively reduce the financial and relational costs associated with legal conflicts.

Early intervention through a neutral third party—such as a mediator or arbitrator—can help de-escalate tensions, clarify misunderstandings, and achieve mutually acceptable outcomes. This is especially important in the healthcare industry, where relationships with vendors, providers, and patients are built on trust. Resolving disputes early not only protects these relationships but also saves time and money.

Healthcare executives should work with their legal teams to ensure standard contract language includes ADR clauses, laying the groundwork for smoother resolutions. However, just as important as having an ADR process is ensuring it is economically and operationally feasible. Historically, cost was a barrier, but that landscape has shifted. More affordable, accessible ADR services have emerged, making it feasible to resolve even minor conflicts without going to court.

Embrace Flat Fees and Alternative Fee Arrangements

The legal industry’s traditional billable hour model has long been a source of frustration, largely because it creates misaligned incentives. The longer a case drags on, the more revenue it generates. This model does little to promote efficiency or cost transparency.

Forward-thinking law firms and dispute resolution forums are beginning to offer flat fees and volume-based pricing structures that are more aligned with client goals. Additionally, digital tools and AI have streamlined many legal processes, expediting timelines and creating a more streamlined experience. 

These predictable cost models enable healthcare executives to treat each legal dispute as they would any other business decision. With a clear understanding of time and cost, leaders can weigh the potential impact and make strategic, data-informed choices on how to proceed.

Segment “Bet-the-Practice” Cases from Routine Disputes

Not all disputes carry the same weight, and they shouldn’t be handled in the same way. Healthcare organizations typically face a wide range of legal challenges—from high-stakes litigation involving malpractice to intellectual property or regulatory compliance, to routine employment or contract disputes. Trying to manage these all with the same level of intensity leads to resource strain and sacrifices.

Executives should apply a segmented approach. The top 10% of legal issues—those with the potential to severely impact the organization—should receive the lion’s share of attention, resources, and strategic oversight. However, the remaining 90%—routine disputes that are unlikely to pose existential risks—must still be resolved swiftly and cost-effectively.

Without a system in place, these lower-tier issues can become distractions or, worse, grow into more significant problems due to neglect. By developing a modern expedited ADR approach, leveraging forward-thinking partners and pricing structures, healthcare organizations can create a scalable process that addresses everyday issues without overwhelming legal teams or diverting focus from more critical matters.

Summary: Turning Legal Uncertainty into Strategic Certainty

Legal disputes are inevitable, but the chaos and cost that typically accompany them don’t have to be. Healthcare leaders have a unique opportunity to modernize their approach to litigation by implementing structured, strategic processes.

By embracing early ADR interventions, demanding fee transparency through flat and alternative pricing models, and segmenting legal matters based on their strategic importance, organizations can significantly reduce legal spend, mitigate risk, and maintain the relationships that are vital to long-term success.

In doing so, healthcare executives not only gain control over legal uncertainty; they build a more resilient, agile organization better equipped to focus on what truly matters: delivering high-quality care to their patients.