Rapidly rising health care costs are a frightening reality for businesses. Mercer research company’s latest research projects benefit holistic health cost per employee will increase by 5.8 percent in 2025. Despite the influx of digital health and wellness providers promising to add value and reduce costs, employers are facing rising costs and expecting greater accountability from their colleagues. In response, many retailers are rethinking their pricing models, moving away from traditional per-payer models that create a revolving door of inbound and outbound dollars and exploring risk-free, results-based structures. In this way, companies make money only when they make the offer we propose, whether that is engagement, better information, improved results, cost savings or, ideally, all of the above.
Sixty percent of employers polled in the Business Group on Health’s Annual Survey plan to reevaluate their current health and wellness vendors in 2025, either by changing vendors or by initiating RFPs. This indicates a high demand for proof of value, especially for digital health vendors who often maintain partnerships without clear evidence of their cost-saving or health-improving impact. As a result, the business models of many point solutions have changed over the last decade from “paying all employees” to “paying the colleague” and now “paying for the value actually created.” Employers are challenging the model of working with vendors to maximize the value of their investment and generate meaningful returns.
Purpose-built companies to drive health outcomes and reduce the total cost of care are now offering risk models to align incentives with better patient outcomes, experience and cost effectiveness. This approach encourages healthcare providers to focus on what they do best: delivering high-quality patient care and managing costs, while ensuring a clear “win-win” for the organization. Although the goal remains the same, there are different ways this model can be implemented:
- Performance-based contracts: Vendors are paid based on certain characteristics and clinical outcomes such as reductions in emergency visits or pharmacy use. Providers can earn more if they meet or exceed these goals.
- Performance Guarantees with Fees-At-Risk or ROI Guarantees: Providers may initially collect full payments, which are then de-risked based on their performance against defined key metrics or against delivering ROI.
- Risk Sharing in Consolidated Payments: With bundled payments, providers receive a set payment for a package of services, but if the cost of care exceeds the payment, the provider may be responsible for covering the excess, putting their finances at risk.
- Caption models: Usually on a fee-for-service basis, providers are paid a fixed amount per patient per month to meet all of their care needs. Providers who manage care properly and keep patients healthy, can make a profit, but they may also take a lower risk and risk loss if the cost of care exceeds the estimated amount.
These value structures position both the healthcare company and the business to have equal skin in the game, transforming healthcare from volume to foundations and ultimately aligning incentives to improve outcomes, patient satisfaction and cost effectiveness. By establishing the tangible impact of their programs, companies are able to put their money where their mouths are in this “save or nothing” pricing model.
A growing number of retailers are adopting these performance-based models. The latest is Sword Health, which has revealed its pricing, closely following Spring Health’s lead in providing a complete ROI performance guarantee to their clients. When WellTheory launched its business solution earlier this year, it chose to risk investments based on ROI and cost savings based on high-cost interventions that come from addressing autoimmune disease—the platform’s focus. Unlike other vendors in the market, they look at claims data to compare patient usage before and after their program. As a result, it saw an average of $7,200 in cost savings per patient due to reduced ER visits, medical procedures and outpatient care, in addition to other savings due to reduced reliance on expensive medications.
Oshi Health significantly reduces the total cost of care for patients with gastrointestinal conditions. Its payment model is inherently responsible for getting patients suffering from GI problems better and faster—payment tied to progress within its physical clinic and achieving symptom control. Oshi Health has invested in ensuring that its model works through a clinical trial conducted by a national health system, which showed that 92 percent of patients achieved symptom control within 4 months while driving a total cost savings of $10,292 per patient in six months through the reduction of avoidable images and tests, ER visits and the use of expensive medications.
For companies that distribute these models, there are considerations to keep in mind to help set your partnership up for success. Using clinical studies in your program helps win funding for these risk-sharing arrangements, as it allows employers to see evidence that your program not only improves employee health but also effectively reduces health care costs. There are even creative opportunities for companies to provide a large part of the funds at risk, including ROI guarantees, to change the marketing commitment from the benefits partners, to further align motivation and drive employees to a more powerful and effective care journey.
The shift to risk-free and profit-based care models is transforming the health care landscape, aligning incentives between health and wellness solutions and employers to prioritize patient outcomes and cost savings. As health care costs continue to rise, these new models not only improve the quality of care, but also empower employers to make informed decisions that benefit their employees and their bottom line.
