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Payer Transformation Trend:
Payers Buying Providers

APCs such as Iora Health, Oak Street, City Block, and others have demonstrated their ability to deliver high-value care and keep patients out of hospitals and emergency rooms.


Virtual-first providers create far better consumer experiences than traditional provider organizations. Dynamic plan designs reduce cost sharing for consumers who use digital-first offerings. Together, this generates cost savings by steering consumers to low-cost specialty providers, labs, and imaging.



When payers are in charge, employed providers become less incented by volume and relative value unit generation and more incented to provide high-value care and reduce downstream spend.

Payers respond in 3 ways:


Employing their own providers or joint ventures to share risk


Offering “virtual first” and hybrid “care at home” plan designs and service offerings in tight collaboration with virtual providers across the country


Leaning into relationships with “advanced primary care” (APC) practices that truly deliver population health

Payers have immense amounts of data (both claims and electronic health records). They are using these data in various ways:

  • Identifying patients with care gaps

  • Identifying patients with “rising risk”

  • Conducting quality analytics on providers, ranking them for total cost of care and for following best-practice care pathways

  • Using data to steer patients within narrow networks (up to a point if you’re a BUCAH with legacy network contracting restrictions … in a big way if you’re a third-party administrator like Centivo, etc)

  • Innovative contracting

Implications of payers employing some providers and deepening their relationships with others, including virtual care providers: DATA are generated.

Pharma needs to:

  • Have products on formulary

  • Align with value-based care

  • Consider value-based contracts

Other potential implications:

Providers on the payroll or with big contracts do not write off-formulary prescriptions.

There may be an appetite for risk-based or other more innovative contracts.

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