For decades, the adversarial relationship between payers and providers has been treated as an immutable feature of American healthcare — a friction built into the system’s DNA. Increasingly, health system leaders are taking matters into their own hands.
At Baystate Health in Springfield, Mass., President and CEO Peter Banko is taking perhaps the most direct swing yet. As a self-described “true payvider” — an organization that functions as both insurer and care delivery system — Baystate aims to remove the friction between payer and provider at its source.
“If we brought to life a solution rooted in our integrated system’s Core Values of Courage, Respect and Agility, where could we create greater vulnerability, reliability and transparency between payer and provider?” Mr. Banko asked. “We are working through the operational details right now to eliminate prior authorizations and denials for all employed and tightly aligned providers. Stay tuned.”
The approach is radical in its simplicity. Prior authorizations cost health systems billions annually in administrative overhead and delay care. By eliminating them within a self-funded, integrated model, Baystate is betting that what it loses in utilization controls it will more than recover in efficiency, loyalty, and cost reduction across the system.
On the other side of the country, a similar logic is playing out at scale. In Hawaii, two of the state’s largest healthcare organizations — HMSA, the state’s largest health plan, and Hawaii Pacific Health, one of its two largest health systems — are pursuing a structural integration they’ve called One Health Hawaii. Both CEOs described the same core premise: that the fragmented, incentive-misaligned status quo is making healthcare less affordable and less accessible for Hawaii families, and that the only real fix is to bring financing and care delivery under a shared strategic umbrella.
“By moving beyond the current fragmented system, One Health Hawaii creates a more accessible, affordable, and seamless experience that improves outcomes for patients,” said Ray Vara Jr., President and CEO of Hawaii Pacific Health. “It reduces administrative burdens and strengthens care coordination, giving our providers more time to focus directly on the individuals they serve. We are also committed to doing this within an open system that includes appropriate safeguards and regulatory oversight to support a competitive and collaborative healthcare environment.”
HMSA CEO Mark Mugiishi, MD, framed the rationale from the insurer’s side. The merger — currently under federal and state regulatory review — would align clinical incentives with insurance financing in ways that are simply impossible when the two operate at arm’s length.
“Healthcare is becoming harder for too many people to afford and navigate, and in Hawaii, those pressures are felt more deeply,” Dr. Mugiishi said.”Families across our islands are feeling that strain every day, and they deserve a healthcare system that works better for them. That’s why one of the most important efforts we’re advancing this year is One Health Hawaii, a shared commitment to improving how care is delivered in our community by integrating health plan financing and strategy with care delivery.”
The payvider model isn’t new. Kaiser Permanente has operated this way for decades. But what’s changing is the urgency and the range of organizations pursuing it. Others are stopping short of becoming a true payvider, but integrating the care delivery and financial departments through realignment and partnerships.
At Jacksonville, Fla.-based Nemours Children’s Health, CFO Caswell Samms described a comprehensive shift toward integrating clinical, operational, and financial data into a single decision environment — presenting a $250 million operational excellence plan to the board that is explicitly designed to redirect resources to where they drive the greatest value, anticipating continued reimbursement pressure.
“What excites me most is how this work is breaking down silos, empowering clinical leaders, finance, and operations to make decisions together with shared facts and a shared purpose,” he said. “It’s a transformation that’s already improving alignment across the organization and positioning us to respond more effectively to the challenges ahead.”
The health system’s goal is to redirect resources to the areas driving the greatest value for patients and caregivers.
“We are modernizing our capital allocation process to emphasize transparency and speed, ensuring every investment is evaluated not just on ROI, but also on its ability to advance access, quality and long-term sustainability,” he said.
At Richmond, Va.-based VCU Health System, the integration logic played out at a more immediate scale. CEO Marlon F. Levy, MD, launched a Center for Team Care — a primary care service exclusively for VCU Health employees and their dependents enrolled in the health plan. There aren’t any copays or prior authorizations, and the plan includes same-day and next-day visits. In its first year, the center absorbed thousands of visits that would otherwise have gone to competing systems, kept spending within the self-funded health plan, and generated exceptional employee satisfaction scores.
“In the first year, our Center for Team Care team saw a large number of appointments with exceptional feedback – ‘best primary care I ever received’ is just one example – and the care team has grown exponentially,” said Dr. Levy. “We have reached the point where we can accommodate all those who are asking us to. We are proud to be able to offer this essential service to our employees and their families. To be able to do it in a fiscally responsible way within a self-funded health benefits plan is critical. We re-invest in ourselves.”
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