Exploring Direct-to-Employer Contracting? How to Get Started and Find the Right Partner

Editor’s note: Christopher McBride, Vizient Principal, also contributed to this post, which was originally published on Sg2’s parent company Vizient Inc’s blog.

Frustrated with high costs, a growing number of self-insured companies are considering going in a different direction: contracting directly with high-performing health systems for their employees’ specialty care. Aiming for healthier, more productive employees and lower costs, industry data show that roughly half of self-insured employers expect to contract with High-Performance Networks in 2021, up from just 16 percent in 2019.

Given the anticipated, rapid growth of these agreements, health systems that are considering direct-to-employer contracting should first understand the attributes for success for direct-to-employer contracting. For organizations that have capabilities in place, the time is now to take steps toward direct-to-employer contracting.

How to get started

Understand the market—The first step for most health systems is to get a deeper understanding of the local employer market. Who are the big employers in the area you serve and what are their needs? How do these organizations make decisions about employee health care benefits and the provider network for services? Talk to employers about their pain points, specific types of health care needs for employees and types of solutions that would solve their challenges.

Start small and build on early success—Be willing to start small with a care manager, an onsite clinic or other benefit plan supplement that allows you and the employer to build a relationship. Then look for opportunities to participate in service line-oriented programs, primary or preventive care programs, centers of excellence programs or even total cost of care programs depending on the needs of the employer to gain experience in managing risk-based direct-to-employer relationships. This will help build the infrastructure, culture and capacity necessary to successfully offer bundled or population-based contracts that improve outcomes and patient experience and reduce costs.

Get access to benefit plan data—Access to an employer’s population data, such as claims data, can shed light on the benefit plan design and employees’ use of health care services. This data analysis enables a health system to see opportunities for improving care delivery and tailor programs specifically for the employee population. It also enables providers to better manage patients and avoid unnecessary surgeries and diagnostics, reduce complications, and reduce time away from work.

Demonstrate value—Employers are seeking relationships with providers who can offer high-quality, appropriate care that emphasizes high patient engagement and satisfaction, with lower readmission/complication rates and predictable, competitive pricing. Providers can demonstrate their organization’s value compared to the general provider network by sharing your outcomes data, such as length of stay, complication rates and readmission rates with potential employer partners.

Three things to look for in a partner

Lists 3 things to look for in a direct-to-employer contracting partner
To enter and succeed in the direct-to-employer marketplace, it’s critical to have the right partners to support your contracting strategy, provide clinical and financial performance analytics, and offer administrative support. Seek out partners who offer:

National scale and scope—Many large employers have a presence in multiple geographic markets. Employee populations and health care needs can also vary widely from one employer to another. A partner can connect providers to form high-value networks across geographies to ensure network adequacy and provide high-quality, cost-effective bundled services that meet the unique health care needs across a range of employee population sizes and geographies.

Employer-focused analytics—Employers want to know that their beneficiaries are getting high-quality, appropriate care at a reasonable price. For success, health systems will need data-backed insights into cost and quality to share with self-insured employers who are interested in developing health benefit plans that include specialized networks of high-performing providers. A partner can bring data to support efforts to design an effective direct-to-employer program.

Expertise to support program design and implementation—Designing direct-to-employer programs is complex and providers are at different stages of readiness. Look for a partner who can assist with program design, success strategies and care model redesign, which could include such things as patient navigators, heightened levels of care integration between providers such that optimal care is delivered in a highly coordinated setting that stresses efficiency and quality, and concierge-type services that elevate and enhance the patient experience. In addition, complexities related to program administration and contract standardization can create barriers to participating in direct-to-employer programs. The right partner has standardized contracting processes and administrative best practices to help alleviate operational and other complexities.

As the cost for health care benefits continues to rise, direct-to-employer contracting offers a promising solution for employers looking to provide high-quality care to employees while managing costs. These contracting agreements offer high-quality, appropriate care and a better patient experience, with lower readmission/complication rates and predictable, competitive pricing. To meet the increasing demand from self-insured employers looking to contract with health care provider networks, Vizient recently launched its Direct to Employer Solutions for health care systems, which include a national high-value network, direct-to-employer advisory services and connections with network administrative partners. Additional information is available online.

Learn more about how Vizient can assist providers that want to participate in direct-to-employer opportunities, and reach out to Jeff Hayes ( on how to chart your own course and contract directly with provider systems.

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