As employers navigate rising healthcare expenses along with pressures to improve their employee benefits, many are considering contracting directly with healthcare provider organizations instead of traditional health plan contracts as a way to manage costs. This practice, known as “direct contracting,” is something roughly three in four employers are already doing—and another 41% are likely to consider doing by 2025.

That’s according to an HR Dive and Brighton Health Plan Solutions LLC survey that asked 150 benefits executives about their awareness, engagement, perceived value and future plans for direct provider contracting. Now available in a free, downloadable report, the survey insights reveal important details about employers’ appetite for direct contracting, including their strong interest in this model but also their specific expectations surrounding cost, benefits and implementation. 

Based on the survey, here are the top takeaways of what employers want from these relationships and how provider organizations can best meet those needs in the years ahead:

Ample Direct Contract Activity and More to Come

Direct provider contracting has become commonplace according to the survey sample. Not only are 75% of employers already engaged in some form of direct contract, but also, more than 4 in 10 of those respondents reported managing multiple such contracts simultaneously.

“These results are somewhat surprising and certainly suggest a wider interest in direct contracting than previously understood by the market,” noted Michelle Zettergren, chief sales and marketing officer for Brighton Health Plan Solutions, in the report.

That wider interest indicates the current market is increasingly more open to direct contracts, particularly with health systems that offer robust primary care networks. However, provider organizations must meet employers’ demands for improved benefits and cost control—something that 49% and 47% of respondents, respectively, said they considered the best outcomes of a direct provider relationship.

Employers Interested in Hearing from Provider Organizations

Although most—74%—of respondents said they were extremely or very knowledgeable about direct contracting, four in 10 respondents still said they were extremely interested in learning more about these contracts and how they might benefit their organizations. 

However, just 39% of employers said health systems and provider groups had discussed the topic with them. This indicates employers seem to be a receptive audience, so provider organizations may need to increase their planned outreach to them. Third-party administrators may need to help jump-start those conversations.

Employers Want Cost Reduction, Shared Savings and Easy Implementation

Achieving cost reduction of between 6% and 20% may be the sweet spot for employer expectations of direct contracting. According to the survey, 76% of employers wanted to see savings in that range over traditional health plans. Shared savings models are the top criteria considered when employers assess potential direct contracts, followed by provider/health care incentives and shared risk.

“Employers want to save on their current costs, and they're open to partnering with provider organizations who can offer shared savings arrangements,” Zettergren said in the report. “To generate savings for employers in both the short- and long-term, provider organizations should assess their unit costs and explore what medical management programs they may need to implement.”

Additionally, respondents valued reputation, specialist variety, Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores and a wide geographic presence as extremely important in their decision-making around direct contracting—but not necessarily previous experience with direct contracting, which appeared further down the list of desirable attributes in a partner. Respondents did, however, note ease of implementation as a high priority.

“Employers and provider organizations hold high expectations, as they should, particularly when they're transitioning their members to a direct contract. Implementation, service quality and reporting must be impeccable,” Zettergren said. “In fact, in Brighton’s experience, our direct contracting partners expect the type of provider-branded, flexible, packaged third-party administration experience we can provide, which can be implemented within a relatively short timeframe.”

For complete insights from the HR Dive and Brighton Health Plan Solutions, LLC  survey, download the report here. 

Survey Methodology

The survey polled 150 participants across retail, services, construction, technology and other industries. Participants reported working in HR (55%), finance (31%) and operations (14%). When asked about their funding model, 64% were self-funded, 24% were considering self-funding for the future, 11% were not considering self-funding and 1% were not sure. Employer size included 1,000 to 4,999 benefit-eligible employees (58%), 5,000 to 9,999 benefit-eligible employees (23%) and 10,000 or more benefit-eligible employees (19%).