5 Reasons Payers and Providers Are Getting Together


Why old-school payer-provider partnerships don’t cut it in today’s marketplace and a new kind of partnership is gaining hold.

Josh Michelson and Tom Robinson

4 min read

Payer-provider partnerships are on the rise, but these are not the simple, narrow-network arrangements of yesterday. A new type of partnership is emerging, one that is more coordinated and mutually aligned around reducing the cost of care. Here, Oliver Wyman’s Josh Michelson and Tom Robinson explain why old-school partnerships don’t cut it in today’s marketplace and why a new kind of partnership is gaining hold.

1. The system is disjointed. It’s plain as day the consumer experience is disjointed; but what makes it even more confounding for consumers is they often don’t know who is responsible for the various aspects of their experience, and they don’t know who is to blame for their frustration. For example, hassles regarding an out-of-network denial may be attributed to the provider when it is really a payer issue. And several of the Medicare Advantage measures that are traditionally thought of as payer categories are actually heavily influenced by provider experience.

2. Simply narrowing a network doesn’t work. Curating providers is not sufficient. Changes to both the underlying product and incentives are required to deliver from both a cost and experience standpoint. This requires extensive adaptation that affects both the payer and provider side of the business. Further, there needs to be a value-orientation to the partnership. The prevalent “skinny network,” where a provider makes a fee-for-service base-rate concession for steerage/volume shifts and limited risk (shared savings) is not sustainable.

3. Too many middlemen: Payers, providers, and their employer customers today are besieged with middlemen – a patchwork of disconnected vendors each getting paid a PMPM. This ecosystem needs organization and integration, with a focus on where there is a real ROI and what pieces provide strategic control. This integration needs the end-to-end and multi-year perspective that comes from a more engaged partnership.

4. New data capabilities needed: Future success lies at the seams between payers and providers. If we are to apply advanced analytics to get the right care to the right people at the right time, we need to be able to analyze comprehensive data sets that encompass both the payer and the provider side of the business. New partnership models can lay the right foundation for data analysis.

5. Transactional and contentious relationships are the norm. Defining objectives, charting how to realize them, and then mapping the road to scale is challenging for any partnership, but particularly so if attempted in the mold of typical contracting negotiations. More long-lasting and well-aligned partnerships can move payers and providers beyond the contentious discussions to a more productive dialogue. Only then can they both justify the levels of investment they need to deliver great consumer experiences and health outcomes.

For more on how payers and providers are structuring these new partnerships, watch this video interview with Oliver Wyman partner Tom Robinson.

  • Josh Michelson and
  • Tom Robinson