The power of payers: leading the way in healthcare innovation

With constant shifts in demand and an aging population, it's clear we're facing some pretty unique challenges — from the aftermath of the COVID-19 pandemic to the need for personalized and preventative care — the demands on our healthcare system are higher than ever and are calling for creative solutions.

But there is promising news. Deloitte, for example, shares that healthcare spending is projected to rise to $8.3 trillion globally by 2025, opening the door and creating new opportunities for organizations like payers to be a force for positive change in healthcare and lead the way toward a better future.

With that in mind, in this article, we'll explore the crucial role of payers in supporting and encouraging innovation in healthcare today and beyond, as well as share examples of the initiatives successful payer organizations are undertaking to drive positive change in the industry.

Overview of payers and their role in healthcare

Payers are integral to the healthcare ecosystem, with the top five health organizations covering over 50% of the insured population in the United States. 

Payers are critical players in the healthcare industry, providing financial support to ensure patients receive necessary medical care. Third-party payers, including private insurance companies, employers and government programs such as Medicare and Medicaid, help to cover the costs of healthcare services and products. In fact, in 2020, private health insurance spending in the United States amounted to over $1.2 trillion.

But payers do more than cover costs. Payers are instrumental in ensuring patients receive quality care without incurring excessive expenses by negotiating agreements with providers and setting coverage policies. They also play an essential role in preventive care and disease management, helping to keep costs low and improve health outcomes.

Furthermore, payers are vital in setting healthcare standards and monitoring outcomes to maintain the quality and value of care. They play a crucial role in developing and enforcing policies that ensure patients receive the highest level of treatment. Without their guidance, it's unlikely that patients would receive the same level of care, and costs would be significantly higher.

In recent years, payers have faced several challenges as they strive to drive innovation in healthcare. These challenges include the complexities of balancing core services with investments in new solutions, provider preferences for traditional approaches versus payers' desire for more drastic innovation, and navigating the regulatory landscape.

However, payers have also begun exploring new strategies to encourage and support innovative solutions. For example, a Healthcare Financial Management Association report found that 61% of payers are currently investing in telehealth initiatives to improve access to care and reduce costs. 

Payers role in healthcare innovation

Payers have traditionally played a significant role in driving healthcare innovation. They use their influence over medical reimbursement policies and access to data-driven insights to shape the market for technology and services.

A study published in Health Affairs found that private payers were more likely than Medicare to use alternative payment models that reward quality and value over volume, which has been a significant driver of healthcare innovation in recent years. 

Furthermore, payers have incentivized providers to offer higher quality care, invest in research and development, and promote evidence-based approaches.

Payers have also facilitated much of the progress in personalized healthcare treatments, such as precision medicine, 3D printing, virtual care programs, and connected devices. In fact, a report from the Healthcare Information and Management Systems Society (HIMSS) found that 85% of payers are investing in technology to improve care coordination and population health management.

These efforts have improved patient outcomes and reduced costs, making healthcare accessible and affordable for everyone. As the healthcare landscape continues to evolve, payers are perfectly positioned to drive positive change in the industry. 

But it comes with some key challenges. 

Key innovation-related challenges payers face

Payers face many challenges in encouraging innovation and driving change in the healthcare industry. 

Technology and infrastructure

Innovation in healthcare can be a challenge, with outdated technology and infrastructure being a significant obstacle. In fact, according to a survey conducted by the Healthcare Financial Management Association, 50% of payers identify outdated technology and infrastructure as a significant barrier to innovation. 

This includes the lengthy provider verification and credentialing processes that can be plagued with issues such as incomplete documents, errors and overwhelmed medical staff offices.

The requirements for payer-specific documentation and credentialing are also becoming more complex, making the process even more challenging. Overcoming provider resistance to change is another major challenge, with many clinicians hesitant to abandon traditional approaches. 

However, as healthcare continues to evolve and healthcare reform efforts become increasingly important, it's essential that payers and providers work together to overcome these challenges and embrace new and innovative solutions.

Regulatory complexities

A report by McKinsey also highlights the complexity of regulatory environments as another obstacle, with 67% of health system executives identifying regulatory and reimbursement policies as the primary challenges to implementing digital health technology. Payers must also balance the need for innovation with budgetary constraints and develop incentives to encourage providers to adopt new models of care delivery. 

The aftershock of the COVID-19 pandemic

The COVID-19 pandemic has introduced new challenges for payers in encouraging healthcare innovation. Payers have had to adapt their policies to support the sudden shift to telehealth and remote care delivery, highlighting disparities in access to care and the need for more innovative solutions. 

The pandemic has also emphasized the importance of data sharing and interoperability between healthcare systems, which can be challenging due to privacy concerns and technical barriers. Additionally, the economic impact of the pandemic has led to financial strains on payers, which may limit their ability to invest in new technologies and approaches. 

Despite the issues, they've created opportunities for payers to support innovation, such as through the rapid development and adoption of virtual care technologies leading to significant benefits for these organizations.

Benefits for payer organizations pushing forward

Payers and health plans can reap significant benefits by supporting innovation in healthcare. Investing in new technologies and processes provides payers access to patient data that can be used to set realistic goals for better outcomes. 

Improved costs and patient outcomes 

According to a report by Deloitte, value-based care models that incentivize innovation have been shown to reduce costs and improve patient outcomes. In addition, payers can use predictive analytics based on patient data to understand how medical treatments or programs are likely to provide better results. 

Higher-quality of care delivery

A study by the American Hospital Association found that inefficient workflows are a significant contributor to rising healthcare costs and can lead to medical errors and lower quality of care. By promoting and adopting innovative, tech-backed solutions, payers can also develop more efficient approaches that prioritize the quality of care. This leads to a higher level of engagement between providers and beneficiaries, ultimately resulting in better health outcomes.

Deeper collaboration, faster results

Payers can also foster collaboration between providers and other stakeholders in healthcare delivery, such as employers and patient organizations. Another report by Deloitte found that collaboration among healthcare stakeholders is crucial for driving innovation and improving patient outcomes.

Payer-led initiatives driving change

Payers are instrumental in driving innovation in the healthcare industry by supporting various initiatives transforming care delivery and here are some of the ways they’re doing just that: 

Value-based care models

Value-based care models incentivize providers to deliver high-quality care that improves patient outcomes and reduces costs. According to a Health Care Payment Learning & Action Network report, over 40% of healthcare payments were tied to value-based care models in 2019, up from 23% in 2015.

Telehealth

Telehealth initiatives have become increasingly popular recently, with the COVID-19 pandemic accelerating adoption rates. A report by McKinsey found that virtual healthcare visits surged from 11% to 46% of office and outpatient visits in the early months of the pandemic, and telehealth visits still abound. 

A Healthcare Financial Management Association survey also found that 61% of payers are currently investing in telehealth initiatives to improve access to care and reduce costs.

An important industry note is that the end of the public health emergency for telehealth is set to arrive on May 11. This could mean compliance issues for healthcare organizations who have grown accustomed to relaxed policies during the pandemic, and it’s key to leverage the right tools and tech to adapt quickly to ensure the continuity of care.

Precision medicine

Payers are investing in precision medicine, which involves tailoring medical treatments to the unique needs of individual patients. According to a Personalized Medicine Coalition report, the global precision medicine market is expected to reach $87 billion by 2023.

Data analytics

Payers are using data analytics to gain insights into patient populations, monitor outcomes, and identify opportunities for improvement. A Healthcare Information and Management Systems Society (HIMSS) report found that 85% of payers are investing in technology to improve care coordination and population health management.

Collaborative care models

Payers are working with providers to develop care models that improve care coordination and enhance patient outcomes. A study published in the Journal of the American Medical Association found that collaborative care models reduced hospital readmissions by 20%.

What lies ahead

Optimizing healthcare and provider operational workflows is essential for payers to achieve their goals of driving positive change in the healthcare industry. 

Payers can play a crucial role in improving workflow processes by investing in innovative technologies, streamlining communication between providers, and offering training and education programs to enhance providers' knowledge and skills. 

By prioritizing workflow optimization, payers can create more efficient and effective healthcare delivery models that result in better patient outcomes and lower costs. 

Medallion's platform is built with this in mind, offering a single, streamlined platform for provider onboarding, communication, and real-time analytics to expedite workflow processes. With optimized workflows, payers can focus on their mission of improving public health and driving innovation in the healthcare industry.

By investing in new technologies and approaches, payers are helping to improve the quality of care, reduce costs, and increase access to care for patients.

The time for innovation in healthcare is now, and payers are perfectly positioned to lead the way. With the right strategies and support, payers can deliver better care to patients, drive the development of new technologies, and ultimately improve the health of the communities they serve. 

Let's make it happen.