Digital Health PBC: Contracts & Performance-Based Payments
New Playbook Aims to Revolutionize Digital Health Procurement with Performance-Based Contracts
A significant shift is underway in how healthcare purchasers are evaluating and paying for digital health solutions. Today, the Purchaser Business Group on Health (PBGH), through its PHTI initiative, unveiled a comprehensive playbook designed to guide organizations in implementing performance-based contracts. This move signals a growing demand for accountability and demonstrable outcomes in a rapidly expanding digital health market. The Rise of Performance-Based Contracting in Digital Health
For years, the digital health space has grappled with a fundamental challenge: proving value. Traditional fee-for-service models often fail to adequately incentivize vendors to deliver tangible improvements in patient care or cost reduction. Performance-based contracts, also known as value-based contracts, aim to address this by tying payment to specific, measurable outcomes. This approach shifts the focus from simply selling a technology to achieving real-world results. Key Components of the PHTI Playbook
The PHTI playbook delves into the intricacies of designing and implementing these contracts, covering crucial areas such as:
Payment Models: Exploring various options beyond traditional fee-for-service, including shared savings, risk-sharing, and bundled payments. Outcome Metrics: Defining clear, quantifiable metrics that align with the purchaser’s goals, such as reduced hospital readmissions, improved medication adherence, or enhanced patient engagement. Accountability Mechanisms: Establishing robust processes for monitoring performance, verifying outcomes, and adjusting payments accordingly. The playbook emphasizes the importance of a collaborative approach, involving all stakeholders – purchasers, vendors, and patients – in the contract design process. It also highlights the need for data interoperability and standardized reporting to ensure accurate and transparent performance measurement. Pro Tip: When defining outcome metrics, prioritize those that are directly linked to the purchaser’s strategic objectives and are readily measurable with existing data sources. Why Now? The Growing Pressure for Digital Health ROI
The release of this playbook comes at a critical juncture. Investment in digital health continues to surge, but skepticism remains regarding its ability to deliver on its promises. Purchasers are increasingly demanding evidence of return on investment (ROI) before committing significant resources to new technologies. This demand is fueled by rising healthcare costs and a growing focus on value-based care. Furthermore, the increasing complexity of digital health solutions necessitates a more sophisticated contracting approach. Many solutions involve multiple components and integrations, making it difficult to isolate the impact of a single technology. Performance-based contracts provide a framework for addressing this complexity and ensuring that all parties are aligned on shared goals. What challenges do you foresee in implementing performance-based contracts with digital health vendors? And how can purchasers best ensure that these contracts truly incentivize innovation and improved patient outcomes? Frequently Asked Questions About Performance-Based Digital Health Contracts
Here are some common questions about implementing performance-based contracts for digital health solutions:
What are the key benefits of performance-based contracts for digital health? Performance-based contracts incentivize vendors to focus on delivering measurable outcomes, improve ROI, and promote innovation in digital health solutions. How can purchasers effectively define outcome metrics for digital health contracts? Purchasers should align outcome metrics with their strategic objectives, prioritize measurable indicators, and involve all stakeholders in the definition process. What role does data interoperability play in performance-based contracting? Data interoperability is crucial for accurately monitoring performance, verifying outcomes, and ensuring transparent reporting in performance-based contracts. Are performance-based contracts suitable for all types of digital health solutions? While beneficial for many solutions, performance-based contracts are most effective when clear, measurable outcomes can be defined and tracked. What are the potential risks associated with performance-based digital health contracting? Potential risks include difficulty in accurately measuring outcomes, data privacy concerns, and the need for robust contract management processes. How can purchasers ensure accountability from digital health vendors in performance-based agreements? Accountability is ensured through clearly defined performance metrics, regular monitoring, and established mechanisms for adjusting payments based on achieved outcomes. This new approach to digital health procurement promises a more sustainable and impactful future for healthcare innovation. Share this article with your network to spark a conversation about the future of digital health contracting! Leave your thoughts and questions in the comments below. Disclaimer: This article provides general information and should not be considered medical or financial advice. Consult with qualified professionals for personalized guidance. Share this:

Digital Health PBC: Contracts & Performance-Based Payments

Oakland, California, Aug. 05, 2025 (GLOBE NEWSWIRE) -- Purchaser Business Group on Health (PBGH) , a nonprofit coalition representing 40 private employers and public entities across the U.S., announces strategic human capital leader, health advisor and actuarial consultant Aurora Chen as its Vice President of Advisory Services. Chen will be responsible for expanding and scaling PBGH's advisory services, solutions, and products for members and non-member employers responsible for health benefits.  “ PBGH Advisory Services is powering innovation in health care purchasing, creating industry best practices and a data platform for purchasers and bringing employers together to collectively influence the way health care is procured to deliver high value, affordable care for employees and their families,” said Elizabeth Mitchell, President and CEO of PBGH. “We are excited to welcome Aurora as demand for unconflicted and employer focused support continues to increase.”  Chen has more than 20 years of experience in the health care and employee benefits industry and has held key positions at some of the largest consulting and brokerage firms including Mercer, Towers Perrin/Towers Watson, and Lockton Insurance Brokers, LLC. She also co-founded an HR-tech and consulting start-up, overseeing operations, and serving as chief consultant.  Chen has actuarial expertise and a deep understanding of employers' health and welfare consulting lifecycle, carrier and point-solutions, and the consulting and brokerage landscape. She excels at delivering innovative, out-of-the-box strategies and solutions that drive measurable results, which aligns with PBGH's approach to creating value and opportunity even amid the growing challenges of the U.S. health care system.  Read Chen's full biography: https://www.pbgh.org/staff/aurora-chen  About Purchaser Business Group on Health  PBGH is a nonprofit coalition representing nearly 40 private employers and public entities across the U.S. that collectively spend $350 billion annually purchasing healthcare services for more than 21 million Americans and their families. In partnership with its members, PBGH initiatives are designed to test innovative operational programs and scale successful approaches that lower healthcare costs and increase quality across the U.S.  CONTACT: Janet Cabibbo  Purchaser Business Group on Health  jcabibbo@pbgh.org

PBGH Announces Aurora Chen as Vice President of Advisory Services

MedCity News
PBGH Offers Advisory Services to Support Employers’ Fiduciary Responsibilities
PBGH is now offering its advisory services to any purchaser. These services help employers fulfill their fiduciary responsibility, understand their data and more. By Marissa Plescia on March 24, 2025 6:04 pm
Share
Copy LinkCopy Link
The Purchaser Business Group on Health (PBGH) is expanding its advisory services to all large employers to help them meet their fiduciary responsibilities, the organization announced last week. PBGH is a nonprofit representing 40 private employers and public entities in the U.S. These advisory services were previously only available to PBGH’s members. However, the organization felt it was important to expand to any self-funded employer given the challenges they’re facing with rising healthcare costs and a lack of transparency from the healthcare industry. “We want to have the broadest impact and share our knowledge and learning,” said Won Andersen, PBGH chief operating officer and leader of PBGH Advisory Services, in an interview. “So we really decided that it was time to open up our services to any purchaser.”
presented by
Self-insured employers have a fiduciary responsibility to make sure they’re offering employees the best medical benefits for the best price. To help employers fulfill this responsibility, PBGH’s advisory services fall under four main buckets, according to Andersen. The first is around helping employers develop a governance structure and providing fiduciary training. The second bucket is focused on helping employers select employee benefits consultants, pharmacy benefit consultants, third party administrators and carriers that will align with their fiduciary responsibilities. Sometimes consultants have a conflict of interest as some PBMs and TPAs will give them financial incentives to direct employers to their companies. The third category is supporting employers with their data to help them benchmark healthcare costs and understand the quality of their healthcare benefits. Lastly, PBGH helps employers with the strategy and design of their health benefits, including finding opportunities for direct contracting with providers. These services are available to employers at an hourly rate, depending on the scope of the project, Andersen said. presented by
This kind of support is needed given the pressure that self-funded employers are under right now. Many are struggling to access their data from TPAs and PBMs, making it challenging to understand if they’re fulfilling fiduciary responsibilities. Employees are also starting to sue employers for not meeting their fiduciary duties. This was seen in a recent class action lawsuit , in which employees alleged that JPMorgan Chase mismanaged its employee health and prescription benefits program, leading to employees overpaying for premiums and out-of-pocket costs. By opening up these advisory services to more employers, PBGH aims to “amplify that there are new ways to think about purchasing and new best practices that [employers] could be working towards,” Andersen stated. “We want to certainly have a next-generation procurement and fiduciary platform that really helps employers understand how to vet providers, carriers [and] doctors they’re contracting with … and aligning that with purchaser goals, whether it is more affordability [or] high-quality care,” she said. Picture: Feodora Chiosea, Getty Images
Topics

PBGH Offers Advisory Services to Support Employers’ Fiduciary Responsibilities

Editor, First Opinion
When it comes to what’s happening in the life sciences, STAT readers are the experts. So earlier this month, I asked readers of the First Opinion newsletter to answer two questions: What story do you think went underdiscussed in 2024? What should we all be paying attention to in 2025? Many responded, sharing thoughts about policies, the high cost of health care, and much more. Below, you can find a selection of answers. advertisement
As a semi-retired RN working as a private nurse advocate, I am concerned for the army of independent and agency caregivers who are in homes on the front line of health care. Mostly foreign born and underpaid, they are doing most all the heavy lifting at the bedside. Though not entirely unrepresented, their needs should be more comprehensively addressed. — Sue Trupin
advertisement
Our obsession with AI this year led to underdiscussion about how nothing we do in medicine, research and health care innovation — including digital health — is going to matter or improve outcomes and reduce costs if we don’t focus on building trust with people through humanism and better, more approachable, relatable communication. Right after the election I was out in an underserved community, helping a gentleman insured by Medicaid. He told me he voted for Donald Trump because “even though he lies,” he trusted him more because he used simple, understandable language and didn’t talk down to people. I asked if he knew Trump and Republicans tried to eliminate the Affordable Care Act. Over the past 10 years, he’d heard nothing about it and is now concerned. Who is talking about this communication disconnect that continues to erode trust in health care? Ultimately, humans have to engage in their own well-being and willingly participate for anything to significantly change the trajectory we are on at scale — for example, unstable costs, increasing or stubbornly high chronic disease rates everywhere, and a largely unsupported aging population. None of this change will happen without more emphasis on building connection and trust, as humans. — Lisa Fitzpatrick
One major underdiscussed issue this year was the Biden administration’s failure to enforce a 2023 U.S. District Court for the District of Columbia ruling that struck down a Trump-era rule allowing insurers to implement “copay accumulator” programs. Copay accumulator programs permit insurers to exclude drug manufacturer copay assistance from being applied toward a patient’s deductible or out-of-pocket maximum — effectively, leaving patients on the hook for a bill that the manufacturer coupon should have partially or fully covered. The Biden administration has repeatedly stated a commitment to prescription drug affordability, so the admin’s inaction on this issue is a glaring contradiction. And as a result, many Americans are left struggling to afford their medications. advertisement
There’s still time to issue a new rule or announce that insurers must require compliance with the court ruling before President-elect Trump takes office next January. The administration must take action. — Carl Schmid, executive director of the HIV + Hepatitis Policy Institute
2024 lacked an honest conversation about accountability for AI errors in health care, as vendors rushed to deploy immature models without transparency around their reliability or limitations. While HTI-2 may provide some guardrails for generative AI in 2025, we’re witnessing companies recklessly positioning AI chatbots between patients and clinicians without addressing fundamental questions about medical liability when these black box algorithms inevitably make mistakes. The industry’s obsession with AI’s potential has overshadowed critical discussions about who bears responsibility when AI systems — which can inexplicably change their outputs from one day to the next — contribute to patient harm. — Jay Anders, M.D., chief medical officer, Medicomp Systems
I think the long Covid crisis will be big in 2025. How will long COVID be addressed in the new administration, with the expected changes with HHS, NIH, FDA and CDC? There will need to be a new infusion of funding — but will it be caught in political warfare and will the new leadership be able to meet the moment that is needed for millions of Americans struggling? That’s a big worry on millions of minds right now considering the bipartisan divide with so much, especially this disease. — Billy Hanlon
The 2024 presidential election hinged on affordability and costs, but much of the discussion centered on the price of eggs, bread, and housing. The skyrocketing cost of health care and its impact on the overall economy did not receive nearly the attention it deserves in 2024, and yet it has a greater and more pervasive impact on employers, employees, and their families. With 150 million Americans relying on employer-sponsored insurance (ESI), the unsustainable cost of health care is baked into the price of nearly everything we buy, from cars and computers to groceries. These rising costs act as a hidden tax, ultimately affecting every corner of our economy. advertisement
If Congress and the new administration are serious about strengthening the economy, they must first and foremost address the broken commercial health care marketplace and its massive impact on the future of ESI. Continued attention is needed on health care pricing transparency for PBMs, health plans, and providers, as well as enforcing antitrust laws, improving data accessibility, investing in primary care, and transitioning the U.S. health system from fee-for-service to outcomes-based payment models. For ESI to remain viable, a functional and fair health care market is essential. — Elizabeth Mitchell, president and CEO, Purchaser Business Group on Health
In 2024, the AI hype obscured a critical reality: We’re building sophisticated algorithms on data that is often flawed, collected through outdated manual processes that place unnecessary burden on highly skilled clinicians. While the industry celebrated AI’s theoretical capabilities for prediction and analysis, it largely ignored how reliance on human data entry creates inconsistent, incomplete, and often inaccurate datasets. The uncomfortable truth is that without widespread adoption of Internet of Things sensors and automated data collection systems, health care’s AI dreams are being built on a shaky foundation of unreliable data — yet few are willing to confront this truth. We must fundamentally rethink data collection in health care, leveraging ambient sensors, computer vision, and automated systems to capture clinical data in real time. Only by removing the documentation burden from clinicians and implementing intelligent automation at the point of care can we build the reliable, comprehensive datasets needed for AI to deliver on its promises in health care. — Stephanie Lahr, M.D., president of Artisight
In 2024, chief information security officers (CISOs) in the health care sector faced an unprecedented cyber crisis. Stripped of the resources and leadership support needed to defend against relentless cyberattacks and prepare effective incident response plans, many were left holding the bag for their organizations’ cyber risks. The result? Burnout, staff turnover, and glaring security gaps that leave health care systems dangerously exposed. advertisement
As if that weren’t enough, health care CISOs are being personally thrown under the bus. Often excluded from Directors and Officers liability insurance, they face legal and financial risks simply for doing their jobs. For those in public organizations, new SEC regulations mandating cybersecurity attestations pile on even more pressure, forcing CISOs to shoulder personal accountability in an environment already fraught with danger. The fallout of a hospital cyberattack is catastrophic — patient safety at risk, operations disrupted, and lawsuits looming over stolen data. It’s time for health care organizations to step up: Invest in robust cybersecurity resources, empower CISOs with leadership backing, and shield them from undue liability. Anything less is a gamble the industry can’t afford to take. — George Pappas, CEO, Intraprise Health
Clinical research is one of the few industries where the regulator (FDA) is actively pushing the industry to adopt new technology and approaches, not the other way around! We have seen the FDA release fairly strident guidance documents admonishing the industry for not adopting approaches like decentralized trials, remote monitoring, and risk-based monitoring. These approaches are also more cost-effective, and preferred by patients. So why are sponsors and clinical research organizations so reluctant to change? — Meri Beckwith, co-founder, Lindus Health
We didn’t talk enough this past year about the 9 million seniors who declined toward dementia unnecessarily. 2024 was a year of great advancement in technology needed to give consumers and patients greater control over their cognitive health. New digital cognitive assessments and blood-based biomarkers offer the promise of early detection and intervention, but these approaches need to be adopted quickly to help millions stave off dementia. — John Showalter, chief strategy officer, Linus Health
In the U.S., 1 in 5 people are living with a neuropsychiatric disorder, with an estimated $280 billion spent on neuropsychiatric services . This has been a big year for much needed innovation in the neuropsychiatric treatment landscape yet, despite a few notable approvals, the year has increasingly been marked by the immense challenges associated with treatment development in this space. This is true in the case of major depressive disorder, one of the most prevalent and complex neuropsychiatric conditions affecting an estimated 21 million adults in the U.S. However, these trial “failures” are not just setbacks, they are opportunities to uncover novel insights about patient subgroups and improve trial design. These moments of reflection bring us closer to understanding the intricate biology of depression and tailoring treatments to individual patient needs. advertisement
Even when topline results do not align with expectations, these outcomes should be recognized as valuable data points rather than dead ends. This perspective has the potential to fuel smarter, data-driven, and more personalized approaches to drug development. Failure isn’t final; it’s a chance to dig deeper and build on our learnings. Looking ahead, 2025 could be a transformational year for the neuropsych space. — Amit Etkin, M.D., Ph.D., CEO of Alto Neuroscience
It’s worth recognizing that the industry has made progress in digital health reimbursement over the past year. We have seen evidence that links digital health tools to improvements in patient outcomes, enhanced patient engagement, and extend access to care. These new developments have continued to fuel usage and growth. For example, the Centers for Medicare & Medicaid Services expanded coverage for remote therapeutic monitoring and digital mental health treatment devices, and updated coding for simplified billing and enhanced reimbursement. Patients are reaping the benefits of these expanded, patient-centric treatment options, often achieving better health outcomes that enable them to recover and thrive beyond the hospital setting. I predict we will continue to see the growth of digital health in 2025, but for the industry to feel its full impact, we must make stronger strides as an industry to help patients navigate digital health options more easily. This will require collaboration across medtech, consumer tech, and private and public stakeholders to address challenges in regulatory and reimbursement pathways, particularly the gap between FDA clearance and reimbursement. My hope is that the standard of care, including access to the most cutting-edge tools and innovations, is accessible and available to all, regardless of financial situation, location, or otherwise. — Julia Strandberg, chief business leader, connected care and monitoring, Philips

Opinion: Long Covid, AI ‘obsession,’ trust: What STAT readers thought went overlooked in 2024

MedCity News
PBGH CEO: Transparency is “Table Stakes” and an “Expectation”
In a recent interview, Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, discussed employers' challenges in accessing medical data, emphasizing the need for transparency and potential strategies to enhance their fiduciary responsibilities. By Marissa Plescia on November 03, 2024
Share
Copy LinkCopy Link
Employers have a fiduciary duty to ensure they’re providing their employees with the best medical benefits for the best price. However, they’re often struggling to access their data from their third-party administrators in order to do this. Under the Consolidated Appropriations Act of 2021, employers are supposed to have better access to their claims data and can’t enter into an agreement with a third-party administrator that limits their access. For one industry expert, this issue is top of mind. “[Employers] are having more and more accountability placed on them as purchasers, with less and less responsiveness from the industry,” said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health , in a recent interview. “So they will be changing how they think about healthcare procurement. Transparency is table stakes. It is an expectation. It’s clarified in the law that they’re entitled to the data, and they will be looking to really just ensure that they are contracting with high-value providers, high-quality, low-cost providers.”
presented by
An example of this data struggle is the Kraft Heinz/Aetna case , which went into arbitration in December. Kraft Heinz sued Aetna for cherry-picking data and other reasons. Some employees are also beginning to sue their employers for not meeting their fiduciary responsibilities. This was seen in the Johnson & Johnson case , in which an employee alleged that the company overpaid for prescription drugs. Mitchell also shared some ways PBGH is addressing these data challenges. The organization is a nonprofit coalition representing about 40 private employers and public entities in the U.S.
“We work really closely with our employer members on how to be an effective fiduciary. … So one of the things that we are doing is a data initiative with our members to use the newly available [Consolidated Appropriations Act] data to match and marry it with their claims data to really identify who are top performing providers in various regions, and doing it at a really granular level,” she said. “Even taking the step of using their data is protective from a fiduciary standpoint, because they are taking big steps to ensure that they are effectively spending the money.”
She added that PBGH is working with its members to ensure they have the right contracting standards in place and have more accountability from their partners. Looking ahead, Mitchell said she thinks this is just the beginning of the lawsuits against employers for not upholding their fiduciary responsibilities. There are law firms actively seeking for employees to sue to their employers. “There is every indication that they are searching for employees to file more suits,” she said. “So it is expected. It is definitely getting the attention of a lot of employer C-suites because they are at personal risk, personal liability due to the [Consolidated Appropriations Act] changes, and frankly, they have not been getting the support and advice from their trusted partners like the consultants and brokers and the health plans. I don’t know if they will start suing any of them, but it is definitely going to change the relationship. It has to, because the status quo isn’t being tolerated.”
She’s also seeing more interest in employers implementing direct contracting, in which employers contract directly with a physician or physician group. This can provide cost savings, better outcomes and better access to care. In addition, PBGH is actively working with Congress on ways “to enable successful fiduciary roles,” Mitchell said. “There needs to be much more clarity on what we can and should expect from plans and TPAs and all the middlemen like PBMs and some accountability and transparency there,” she argued. Photo: brazzo, Getty Images

PBGH CEO: Transparency is “Table Stakes” and an “Expectation”

PeopleOne Health is a provider of primary care in the healthcare industry. The company offers preventive and treatment services for both physical and mental health needs, aimed at reducing healthcare costs for employers and addressing health outcomes for employees. PeopleOne Health primarily serves the employer-funded healthcare sector, providing care that includes wellness visits, chronic condition management, diagnostics, imaging, dietary and nutrition, mental health, and pharmacy services. It was founded in 2018 and is based in Pittsburgh, Pennsylvania.

PeopleOne Health

PBGH and PeopleOne Health are excited to announce a strategic agreement to provide area residents with an alternative primary care option , which gives employers the ability to offer subscription-based care delivery model that eliminates the traditional fee-for-service system .

PBGH Announces Strategic Partnership with PeopleOne Health - PeopleOne Health

DermatologistOnCall provides online dermatology services within the healthcare sector, connecting patients with board-certified dermatologists for asynchronous consultations. The service offers diagnoses and treatment plans for skin, hair, and nail conditions. DermatologistOnCall serves individuals seeking dermatological care without geographical constraints. It was founded in 2010 and is based in Pittsburgh, Pennsylvania.

DermatologistOnCall

Blue Shield of California

MaineHealth

London School of Economics and Political Science

Loan

Pacific Business Group on Health is a nonprofit coalition focused on improving health care for private employers and public purchasers through various programs and practices. The organization offers services including advisory, direct contracting, health care provider support, and policy advocacy aimed at enhancing care quality and managing costs. PBGH primarily serves sectors such as large private employers and public entities looking to impact the health care market and support employee health care outcomes. It is based in San Francisco, California.

Date	Round	Amount	Investors	Valuation Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.	Revenue	Sources
5/3/2020	Loan	$0.68M	Paycheck Protection Program	$XXM	0 FY undefined
5/1/2020	Grant - II	$XXM	Subscribe to see more	$XXM	0 FY undefined	10
10/1/2015	Grant	$XXM	Subscribe to see more	$XXM	0 FY undefined	10

Date	5/3/2020	5/1/2020	10/1/2015
Round	Loan	Grant - II	Grant
Amount	$0.68M	$XXM	$XXM
Investors	Paycheck Protection Program	Subscribe to see more	Subscribe to see more
Valuation	$XXM	$XXM	$XXM
Revenue	0 FY undefined	0 FY undefined	0 FY undefined
Sources		10	10

First funding	Last Funding	Investor	Rounds	Type	Location
5/3/2020	5/3/2020	Paycheck Protection Program	1 Loan	Government	DC
00/00/0000	00/00/0000	CVS Health	Subscribe to see more	Corporation	Rhode Island
00/00/0000	00/00/0000	U.S. Department of Health and Human Services	Subscribe to see more	Government	DC

First funding	5/3/2020	00/00/0000	00/00/0000
Last Funding	5/3/2020	00/00/0000	00/00/0000
Investor	Paycheck Protection Program	CVS Health	U.S. Department of Health and Human Services
Rounds	1 Loan	Subscribe to see more	Subscribe to see more
Board Seats
Type	Government	Corporation	Government
Location	DC	Rhode Island	DC

How VCs Use CB Insights

Professional Services

Platform Overview

Pacific Business Group on Health

Total Raised

Investors Count

Funding, Valuation & Revenue

Pacific Business Group on Health Investors