Addressing Payer Costs through a Comprehensive Model
A Blueprint for Achieving Breakthrough Cost Savings

28 Dec 2016
by Abhishek Singh, Jimit Arora, Nitish Mittal

This viewpoint focuses on helping payer executives approach breakthrough cost savings by addressing medical and operational costs together.

Payers leave a lot of value on the table when they manage IT, process, and medical costs separately. Our research shows that payers can achieve breakthrough cost-saving improvements if they manage medical and operational costs together. This paper offers a plan that enables payers to convert their entire spectrum of costs into a utility-based model, and use a best–of-breed service provider that can service these costs on a PMPM basis.

Starting from the key industry imperatives, payer CXOs need to focus on, we then evaluate various outsourcing models that can help address those imperatives. From there, we offer a case-based analysis of the cost structure of a health plan with three million members and dissect the cost savings that result from three different sourcing models. One of the models, Comprehensive Outsourcing (which combines operations and medical cost takeout), achieves significantly better results as compared to the other models. The remainder of the paper addresses the key tenets of this model and its impacts.


The structure of this whitepaper is as follows. Each section addresses key questions related to the business case being presented.

Section 1: Industry context, enterprise imperatives, and actions

  • What are the key industry drivers impacting payers?
  • What are the implications and imperatives for payers?
Section 2: Unravelling the cost conundrum
  • What medical cost components are addressable through outsourcing?
  • What is the baseline PMPM servicing cost that outsourcing can address?
Section 3: Addressing the cost conundrum through outsourcing
  • What are the value drivers for different outsourcing models?
  • Is there a model that is better than others, and why?

Section 4: Achieving breakthrough cost takeout

  • What are the cost takeout implications for each model?
  • Is it possible to do outsourcing at zero cost?

Conclusion: Avoiding Value Leakage by Opting for the Right Model


Healthcare & Life Sciences IT Outsourcing


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