The ROI Reality Check: What Payers Actually Pay For and Why
Updated: Sep 23
The ROI Story Payers Trust Is Usually Smaller Than the One Vendors Want to Tell
A digital health company can undermine a strong product by claiming too much. A model with nine categories of savings may produce a larger return, but it also creates nine assumptions for the buyer to challenge. A 15-to-1 ROI can sound impressive and still make a payer wonder what has been omitted.
Credibility often improves when the story becomes smaller: a defined population, a short list of cost drivers, a familiar unit of analysis, and explicit acknowledgment that some costs may increase. The goal is not to minimize value. It is to make value believable, measurable, and useful in a decision.
ROI is contextual, not portable
The same technology can produce different economics across Medicare, Medicaid, and commercial populations. Prevalence, utilization, unit cost, benefit design, risk model, member tenure, and data availability all affect the result.
The source of the budget matters as well. A clinical program may be evaluated through medical cost and medical-loss-ratio treatment. An administrative tool may need to prove staff efficiency, revenue capture, or a lower operating expense. A solution that creates a compelling return over three years may not fit a buyer that needs results inside an annual budget cycle.
The company should therefore resist treating one published ROI as universal evidence. That result can establish plausibility, but the buyer will ask what happens in its population, under its contracts, and within its operating model.
A useful model makes those contextual inputs editable. Eligible population, baseline utilization, unit cost, expected effect, engagement, price, implementation expense, and measurement period should be visible. The payer can then replace vendor assumptions with internal data.
Free still consumes scarce resources
Offering a product at no charge does not eliminate the payer’s investment. Security review, legal work, integration, data exchange, member communication, clinical oversight, customer service, analytics, and staff attention remain.
Those resources have opportunity cost. A payer may choose among dozens of business cases across unrelated conditions and functions. A free diabetes tool can lose to a required compliance project because the implementation team can support only one.
Free pricing can also weaken the signal. If the vendor cannot explain who benefits and how value will be measured, removing the fee does not solve the underlying business-case problem. It may create concern that the company has not identified a sustainable model.
The better strategy is to reduce total implementation friction. Define the exact work required, provide ready security and legal materials, minimize data dependencies, own member activation where possible, and design a pilot that answers a consequential question.
Engagement belongs inside the financial model
Payers have moved many contracts from broad per-member-per-month pricing toward payment based on engaged members or completed activity. That shift reflects a basic reality: eligible members do not create outcomes; participating members might.
An ROI calculation should show the full funnel. How many members are identified? How many can be contacted? How many enroll? How many engage at a sufficient dose? How many are expected to experience the modeled outcome?
The denominator is important. A 50 percent engagement rate can mean half of all eligible members, half of those reached, or half of those enrolled. Each produces different economics.
Activation is also a joint operating responsibility. The plan may control eligibility files, portal placement, provider relationships, or permitted communications. The vendor may control messaging, onboarding, support, and product experience. The business case should state which party supplies each dependency and how underperformance changes the result.
Speak in the buyer’s walking-around numbers
An unfamiliar value framework forces the payer to translate before it can decide. The webinar describes a solution that attempted to prevent emergency department and inpatient visits at the moment they were occurring. The proposition was powerful, but the language was difficult for buyers to verify. Reframing the story around unit cost and utilization changed the conversation.
Health-plan leaders often know the approximate utilization and cost of important events in their lines of business. Expressing value in familiar terms allows them to quickly test the logic by looking at the number of eligible members, the baseline number of events, the expected reduction in those events, and the cost associated with each event.
The model can become more sophisticated later. The first conversation should let the buyer recognize the problem and estimate the order of magnitude without learning a new economic vocabulary.
This discipline applies beyond medical utilization. Administrative solutions can use staff hours, error rates, turnaround time, rework, or cost per transaction. Quality solutions can use gaps, completion rates, measure movement, and financial thresholds. The unit should match how the buyer manages the business.
Four strong drivers beat nine fragile ones
One case in the webinar involved an ROI model with nine savings categories. The first few produced most of the value, while smaller additions made the total look more ambitious but less credible. The model was simplified to four core drivers.
That is a valuable editing rule. Rank the candidate benefits by financial contribution, evidence quality, measurability, and attribution. Build the primary case around the few that are material and defensible. Keep secondary benefits in the broader value narrative rather than forcing them into the total.
The model should also include expected cost increases. A program may generate more preventive visits, screenings, medications, or appropriate treatment before it reduces emergency and inpatient events. Hiding those costs makes the calculation appear one-sided. Including them demonstrates understanding of the care pathway and can increase buyer trust.
Sensitivity analysis should focus on the assumptions that matter most. If the first three drivers represent 85 percent of expected savings, test their ranges deeply instead of polishing six immaterial line items.
Attribution should be negotiated before the contract
A member may use multiple digital programs, receive care-management outreach, change medication, and experience natural variation in health status. Each vendor cannot claim the same avoided admission.
Payers manage this problem by limiting which outcomes a vendor can count, defining comparison methods, or tying payment to more proximal measures. The webinar describes a case in which a payer allowed only two of many proposed KPIs to support the savings claim after the contract was signed.
That negotiation should happen earlier. Both parties should agree on eligible members, attribution logic, data sources, baseline, comparison group, measurement window, claims runout, and how overlapping interventions will be handled. If causal evidence is weak, the contract can use an operating or intermediate outcome while the partnership builds stronger proof.
A concise attribution model protects both sides. It prevents the payer from paying several times for the same result and prevents the vendor from being evaluated against outcomes it cannot observe or control.
Target the population where the economics can work
A premium service offered to every member in a broad category may cost more than the underlying burden it is intended to address. That does not mean the product lacks value. It may mean the population is too wide.
The webinar presents a case in which a vendor proposed screening members and enrolling only those at high enough risk to generate a plausible return. The buyer responded positively because the approach reflected the payer’s economics and the vendor’s capacity.
Targeting should be clinically appropriate and operationally feasible. The company needs a transparent method for identifying members, a plan for people outside the initial cohort, and evidence that the selected risk factors predict the outcomes being modeled. Narrowing solely to improve the spreadsheet can create access and equity concerns; narrowing to match intervention intensity can improve both care and value.
A credible model advances the decision
Payers rarely reject an ROI by attacking every assumption in a meeting. They may respond politely, ask for more evidence, or allow the conversation to lose momentum. A warm discussion without a defined next step is not validation.
The business case should be designed to produce a decision: proceed to diligence, build a payer-specific model, approve a pilot, or stop. It should be easy for an internal champion to explain and difficult to misinterpret.
The most trusted ROI story does not claim ownership of every positive outcome. It identifies the buyer’s problem, uses familiar numbers, counts a few defensible benefits, acknowledges costs, and sets clear attribution rules. That smaller story can carry a much larger commercial result.
About the Speakers
Clem Foltz, FSA
Founder of Momentum Actuary
Clem is a healthcare actuary who translates clinical impact into payer-aligned financial outcomes. He helps healthcare organizations quantify value, navigate risk arrangements, and frame solutions within the budget constraints facing health plans and risk-bearing providers. Connect with Clem on LinkedIn.
Demi Radeva, MSc
Founder and Chief Strategist at Akros Advisory
Demi has more than a decade of experience across Medicaid, Medicare, and Commercial health plans, including leadership roles at UnitedHealthcare and Optum. She now advises HealthTech companies on reimbursement, payer strategy, market access, and commercialization. Connect with Demi on LinkedIn.
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