The growing challenges facing payers
Healthcare payers are grappling with a perfect storm of financial and operational pressures as national health spending surged by 8.2% in 2024, with a projected 7.1% increase in 2025, according to the Centers for Medicare & Medicaid Services (CMS). These challenges threaten profitability and the ability to deliver value, driven by unsustainable medical expenditures from rising chronic disease prevalence, costly treatments, pharmaceuticals and an aging population. Additionally, administrative inefficiencies—spanning prior authorizations, claims processing and customer service—are straining resources and driving up costs, further complicating operations in an increasingly complex healthcare landscape.
In addition, unpredictable regulatory changes make it difficult for payers to plan ahead and maintain financial stability. There are over 100 bills across at least 30 states impacting payers from Prior Authorization to usage of AI.
Doing nothing is not an option
For Chief Medical Officers and population health leaders, the status quo is no longer sustainable. Leaders are at capacity, managing day-to-day operations while trying to address current trends and expectations. The answer isn’t more headcount, it’s smarter technology.
To survive and remain competitive, payers must embrace digital transformation. This means enabling business value through the power of artificial intelligence (AI) and emerging technologies. Organizations that fail to act risk falling further behind, while those that embrace innovation will be better positioned to navigate uncertainty and seize new opportunities.
AI and emerging technologies: The key to transformation
Artificial intelligence and emerging technologies are essential tools for driving efficiencies, reducing costs and improving outcomes. Forward thinking organizational leaders are now looking to AI to deliver transformative results, with expectations of meaningful cost reductions ranging from 20-40% that have been realized in areas like customer service. Today, payers have opportunities to use these new technologies to combat rising costs and increasing regulations.
- Tackle Cost Pressures
- Using Data Science to identify high risk members with refined predictive analytics models and increase engagement through member preferred channels and mechanisms
- Review contracts and provider performance with AI/ML driven insights to identify opportunities to enhance outcomes (reduce out of network utilization)
- Manage Regulatory Pressures
- Develop internal real-time ‘Compliance-as-a-Service’ tools that automate regulatory compliance, reporting and adherence reducing risk and cost. Reduce prior authorization burden and improve provider and patient satisfaction with Precision Routing Engine to shorten decision times
- Transform interoperability from a regulatory requirement into an enterprise-wide strategic asset
The role of data accessibility
Data is foundational and to unlock the full potential of AI, payers must have access to relevant clinical data, medical policies and other critical information. This requires eliminating silos and investing in data infrastructure that supports sharing information across the organization and real-time insights.
Equally important is securing organizational buy-in. Transformations of this scale require change management with alignment across leadership, operations and IT teams. Without a shared vision and commitment, even the most advanced technologies will fail to deliver results.
A phased approach to change
Transformation doesn’t happen overnight. Implementing AI and emerging technologies requires a strategic, phased approach, start where you are:
- Crawl: Start small by identifying areas where AI can deliver immediate value. For example, automating call summaries and workload routing can free up resource bandwidth.
- Walk: Build on initial successes by scaling AI capabilities across the organization. Predictive analytics can be used to improve risk stratification, while natural language processing (NLP) can enhance customer interactions (e.g., AI-powered chatbots can provide instant responses to customer inquiries, reducing wait times and improving customer satisfaction).
- Run: Fully integrate AI into the organization’s operating model. This enables continuous innovation and positions the organization to capitalize on new opportunities.
The future of healthcare belongs to innovators
The healthcare industry is undergoing a seismic shift and payers must act now to remain competitive. Rising costs, regulatory uncertainty and intensifying competition have made it clear that now is the time to act decisively.
The journey to transformation won’t be easy, but the rewards are well worth the effort. With the right strategy, data accessibility and organizational alignment, payers can position themselves for long-term success. The future of healthcare is being shaped by innovation—those who act boldly and strategically will lead the way.
About the Author
Dr. López is a practicing physician and former executive at Blue Cross Blue Shield and Google. He helps organizations navigate the intersection of clinical care, business strategy, and digital transformation. To connect, reach him at [email protected].
