Payor Technology & Services

Our view on Payor Technology & Services

Employee healthcare benefits represent one of the largest components of a company’s cost structure and are growing at an unsustainable rate. These costs are rising rapidly, driven by secular trends including changing workforce demographics, the growing prevalence of complex and chronic diseases, continued provider consolidation, and sustained increases in drug prices. To mitigate rising costs, improve employee satisfaction, and maintain affordability and competitiveness, companies of all sizes continue to migrate to self-funded plans.

Implementation and management of a self-funded plan requires significant administrative resources, care coordination expertise, and platform technology. In recent years, a growing ecosystem of Third-Party Administrators (TPAs) and niche, specialty outsourcers have emerged to help employers design and successfully orchestrate self-funded plans. Employers increasingly rely on these strategic partnerships given escalating industry complexity. Meanwhile, outsourced providers have demonstrated the ability to successfully execute cost containment initiatives while enhancing the quality, affordability, and transparency of benefit packages, thus improving member satisfaction.

The addressable market opportunity for outsourced payor services to employers is large and growing. Strategic activity across the sector continues to accelerate as managed care industry consolidators seek to add differentiated capabilities through M&A and/or partnerships to enhance their value proposition. Capital investment from private equity and venture capital is also steadily rising as investors seek to capitalize on significant industry tailwinds.