Only Pay if it Works: The Rise of Risk-Free Models in Healthcare

The rapid rise in healthcare costs is a daunting reality for businesses. Research firm Mercer’s recent study projects that the total health benefit cost per employee will grow 5.8 percent in 2025. Despite an influx of digital health and wellness providers promising to add value and cut costs, employers are grappling with rising expenditures and expecting greater accountability from their partners.  In response, many vendors are rethinking their pricing models, moving away from traditional pay-per-employee models that create a revolving door of dollars in and out and exploring risk-free, outcome-based frameworks. Through this approach, companies only make money when they deliver on the promise their solution proposes, whether that is engagement, a better experience, improved outcomes, cost savings or, ideally, all of the above. 

Sixty percent of employers polled in Business Group on Health’s Annual Survey plan to reassess their current health and well-being vendors in 2025, either by changing vendors or initiating RFPs. This signals a heightened demand for proof of value, especially from digital health vendors who have often maintained partnerships without clear evidence of their cost-saving or health-improving impact. As a result, many point solution business models have shifted over the past decade from “pay for all employees” to “pay for who engages” and now to “pay for value actually created.” Employers are challenging the model for vendor partnerships to improve the value of their investments and generate meaningful returns. 

Companies that are purpose-built to drive health outcomes and lower the total cost of care are now offering at-risk models to align incentives with better patient outcomes, experience and cost efficiency. This approach encourages healthcare providers to focus on what they do best: delivering high-quality patient care and managing costs, while ensuring that it’s a clear “win-win” for the organization. While the goal remains the same, there are a variety of ways this model can be implemented:

• Outcome-Based Contracts: Vendors are paid based on specific milestones and clinical outcomes like reduced emergency visits or pharmacy utilization. Providers can earn more if they meet or exceed these targets. 
• Performance Guarantees with Fees-At-Risk or ROI Guarantees: Providers may initially collect full fees, which are then put at risk based on their performance against defined key metrics or against delivering an ROI. 
• Risk Sharing in Bundled 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 overage, putting their fees at risk. 
• Capitation Models: Typically deployed in a payer setting, providers are paid a fixed amount per patient per month to cover all of their care needs. Providers who manage care efficiently and keep patients healthy, can profit, but they also may take down-side risk and risk losses if care costs exceed the capitated amount. 

These pricing structures position both the healthcare company and enterprise to have mutual skin in the game, shifting healthcare from volume-based to value-based and ultimately aligning incentives to drive better outcomes, patient satisfaction and cost-effectiveness. Touting the tangible impact of their programs, companies are able to put their money where their mouth is with this model of “save or don’t pay” pricing.

A growing number of vendors are embracing these performance-based models. The latest is Sword Health, which unveiled its outcome pricing, closely following Spring Health’s lead in offering a net ROI performance guarantee for their customers. When WellTheory launched its enterprise solution earlier this year, it chose to put fees at risk based on ROI and cost savings based on high-cost interventions that come up when dealing with an autoimmune disease—the platform’s focus area. Unlike other vendors in the market, they look at claims data to compare patient spend before and after their program. As a result, it has seen an average of $7,200 in cost savings per patient thanks to reduced ER visits, medical procedures and outpatient care, in addition to other savings due to decreased reliance on high-cost drugs.

Oshi Health is significantly reducing the total cost of care for patients with gastrointestinal conditions. Its payment model is inherently accountable to get patients who suffer from GI issues better and faster—with payment tied to progression within its virtual clinic and achieving symptom control. Oshi Health invested in proving its model works through a clinical trial conducted with a national health plan, which showed 92 percent of patients achieve symptom control within 4 months while driving a total cost savings of $10,292 per patient in six months through reductions in avoidable imaging and testing, ER visits and high-cost medication use. 

For companies that are deploying these models, there are considerations to keep in mind to help set your partnerships up for success. Leveraging clinical studies on your program helps to gain buy-in on these risk-sharing arrangements, as it enables employers to see proof that your program not only improves employee health but also effectively reduces healthcare costs. There are even creative opportunities for companies to offer a significant portion of fees at risk, including ROI guarantees, in exchange for marketing commitment from benefits partners, to further align incentives and drive employees to a more empowered and efficient care journey. 

The shift towards risk-free and value-based care models is transforming the healthcare landscape, aligning incentives between health and wellbeing solutions and employers to prioritize patient outcomes and cost savings. As healthcare spending continues to rise, these innovative models not only enhance the quality of care, but also empower employers to make informed decisions that benefit both their workforce and their bottom line.