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Payer Provider Convergence- The Future of Healthcare
Ramanathan Vaduganathan Senior Manager, Digital & Analytics | August 17, 2020

In the last few months, the world has turned upside down. Covid-19 has quickly gone from a distinct concern to overwhelming hospitals and forcing the economy to a standstill. As the pressure to deliver care mounts, so does the urgency to deliver solutions to healthcare issues. This is where the health insurance payer provider convergence comes into play.

There are multiple paths to payer provider convergence:

  • Health insurance can acquire care delivery assets
  • Healthcare providers can become the insurer
  • Virtual integration/partnership of insurers and healthcare providers in new ways, such as ACO’s

The strength of the relationship between health insurance payer and provider lies in their ability to share and communicate information. The Affordable Care Act (ACA) brought considerable changes for stakeholders across the healthcare value chain. The shift from volume to value had far- reaching benefits for providers. ACOs and value-based care contracts are the important first step in payer-provider convergence. Evidence shows that a well- run converged health insurance  payer provider models can succeed at delivering high quality care at low cost.

Value based models for instance, have helped achieve 15-40% savings in cost share. 


  Source: CHILMARK Research

The Big Payvider Market

In an era of value-based care, the term ‘payvider’ is popping up often. It describes new kind of organizations or partnerships that focus on delivering lower cost of care. If we want to deliver evidence-based high-quality, harm free care, we need the right people and data to align the economic incentives. With all these tenets aligned, we can reduce unnecessary testing and get a better outcome. While bringing payers and providers together to align the incentives while transitioning to a payvider model, the provider incurs more risk.

We know that healthcare costs are climbing at an unsustainable pace. Crisis calls for new  opportunity. New organizations has been formed over the years to expand access to affordable, high value care and reduce cost. One such recent partnership is the Geisinger and Highmark joint venture to support healthier communities by incentivizing physicians to keep their patients healthier through better care coordination and disease management, ensuring recommended screening and adopting preventive measures.

Moving toward Value-based Models

The rising cost of healthcare has created the need to make our healthcare systems more efficient and cost effective. Value based models aim to provide cost effective, science-based healthcare that incorporate patience values to improve life expectancy and quality of life for patients. There is a clear conflict between payer and provider in value creation. However consumer centricity compels healthcare participants to change operating philosophes. Fostering an environment with patients at the center and attracting and retaining members over the long term demands health plans to adopt a financial services mind-set. A personal retail touch will take on a new meaning in the future of healthcare.


Converged organizations will become more prevalent and result in increased patient engagement. The payer arms of converged organizations will leverage IT solutions, enabling improved management of chronic conditions with better health coaching from the provider arms to reduce total cost. A connected care framework keeps providers, payers, and patients connected. There has been a lot of discussion whether claims data or clinical data is most useful in healthcare. Provider clinical data is very deep, but often misses the bigger continuum of care picture that claims data can process. As healthcare providers model out what value based contracts make sense for them and figure where their process improvement teams need to focus, the combination of data becomes critical for healthcare issues.

Partner for Value:

So how do you get it right? Health insurers and providers are trying to work together to solve key issues. They need to break down barriers and create transparency about incentives.  Providers have to be able to profit despite utilization.  What used to be revenue is now cost. Organizations have to move quickly from small pilot projects to large scale value-based transformation models. This involves productizing ACO’s to bring as much of the commercial patient population into the value based umbrella as possible.  Sometimes we digitize even before we make the process efficient. Healthcare is data rich, and vast opportunities now exist in taking the existing data such as digital records (claims, clinical results, SDOH, lifestyle habits), analyzing them, and providing insights to clinicians at the right moment. 

Digital health should be more consumer-focused to make value-based healthcare models successful.

CMS is moving forward with interoperability policy on both payer and provider side to promote API usage and allowing patients to download their data. With both claims and clinical data moving to API, this move represents a significant step forward in data convergence between the two. Expertise in the integration of EHR, care management, core claim system, clinical research, and devices is the key for the future of healthcare. They lay the foundation in making the digital health more consumer-centric and help value-based health models succeed.

As healthcare delivery in the US moves to consumer-oriented marketplaces, consolidation in the highly fragmented provider segment continues to rise, creating M&A and integration engagement opportunities for many of the HITS vendors. IT Vendors should blend high-value solutions and technologies with genuinely human focus with the realization that healthcare is personal, emotional and impacts all of us.