Administrative friction between hospitals and insurers remains a costly reality across US healthcare. According to the Assured Payer Enrollment Benchmark Report, 90% of healthcare organizations reported having at least one provider temporarily unable to bill because of payer enrollment issues during the previous year, with a median of more than $100,000 in revenue delayed for each enrollment-related bottleneck.

Against that backdrop, a recent JAMA research letter suggests a growing number of health systems are attempting to solve those inefficiencies by bringing insurers inside the organization rather than continuing to work across organizational boundaries. The study found that the percentage of US hospitals owning or jointly owning a health plan increased from 18.3% in 2018 to 27.2% in 2023, reflecting the rapid growth of provider-sponsored health plans, often referred to as the “payvider” model because health systems function as both care providers and insurers.

Growth was especially pronounced among academic medical centers. According to the JAMA research letter, by 2023, 35.2% of hospitals affiliated with medical schools operated a provider-sponsored health plan compared with 22.4% of hospitals without a medical school affiliation.

The implications extend well beyond hospital finance. As health systems increasingly assume financial responsibility for the populations they serve, hospitalists — already responsible for coordinating inpatient care, discharge planning, and resource utilization — are finding themselves at the intersection of clinical medicine, operations, and value-based care.

Whether that shift ultimately improves patient care or creates new tensions between financial stewardship and clinical autonomy remains an open question.

A Different Kind of Alignment

“In a setting where a health system accepts risk for insurance coverage, there is often an increased emphasis on length of stay, efficient discharge processes, and reduction of avoidable utilization,” said Michael O. McKinney, MD, physician and medical advisor for Pure Frequencies in Jacksonville, Florida.

Although the degree varies by organization, McKinney said those priorities can influence how hospitalists think about resource allocation throughout a patient’s hospitalization.

Nick Merkin, CEO of Compliagent and a longtime hospital consultant, said the changes often become apparent in everyday workflow.

“When a health system is also the insurer, the incentives flip,” he said. “Days in the hospital that used to generate revenue now cost the organization money.”

As a result, discharge planning frequently begins earlier, care managers become more involved, and physicians often receive more timely information about how their patients’ lengths of stay compare with organizational benchmarks, Merkin said.

Experts said, however, that the shift is not simply about reducing costs. Rather, they said it reflects a broader emphasis on managing the entire episode of care — from admission through discharge and beyond — in organizations that increasingly bear financial risk for patient outcomes.

Better Data — or Better Decisions?

One of the most significant advantages of the payvider model may be improved access to information.

Historically, providers and insurers have maintained separate data systems, making it difficult for each side to understand the other’s decision-making process. Chris Hutchins, founder and CEO of Hutchins Data Strategy Consultants and a former hospital system chief data and analytics officer, said that separation has long created blind spots in care delivery.

“For most of healthcare’s history, the payer and the provider directed their data against each other and couldn't see each other's reasoning,” Hutchins said. “A payvider eliminates that data blind spot.”

McKinney said access to payer data can give clinicians a wider picture of a patient’s healthcare journey, potentially improving care coordination and transitions after discharge.

The authors of the JAMA research letter suggest that greater alignment between payer and provider could improve care coordination and reduce some of the administrative barriers that often frustrate clinicians. However, experts said integrating payer and provider functions does not automatically eliminate those challenges.

“Removing the structural cause of friction is not the same as proving the friction goes away in practice,” said Rahul Shivkumar, co-founder of Assured, an AI-powered provider network management platform. Assured’s benchmark report did not specifically evaluate provider-sponsored health plans.

Hutchins said integrating payer and provider data also creates new governance challenges.

“When the payer and provider operate under one roof, the external check goes with it,” he said. “The control will have to come from within.”

He said health systems will need strong internal oversight to ensure financial considerations do not outweigh appropriate clinical judgment.

Balancing Cost and Clinical Judgment

One question raised by the payvider model is whether physicians experience greater pressure to balance financial stewardship with clinical autonomy.

The authors of the JAMA research letter said that provider-sponsored health plans may create what they describe as “dual-agency” conflicts, in which physicians must balance individual patient care with broader organizational responsibility for healthcare spending. In practice, those tensions may surface in decisions about discharge timing, postacute placement, observation vs inpatient status, and other choices that affect both patient outcomes and healthcare spending.

McKinney said tension is inherent to the model.

“The pressure to balance cost management with the independence to manage a patient is perhaps the fundamental ‘trade-off’ to the payvider model,” he said.

He said physicians navigate that balance by relying on evidence-based guidelines, interdisciplinary collaboration, and robust patient education rather than allowing financial considerations to override appropriate clinical care.

Merkin said the source of that pressure changes under the payvider model.

“It feels different because the pressure is coming from inside your own organization instead of from an external payer you can push back against,” he said.

New Skills for a New Practice Environment

Experts agree that as provider-sponsored health plans and value-based care become more common, hospitalists will need a broader skill set than traditional inpatient medicine alone. Where they differ is on who should be responsible for teaching those skills.

“The skill set is widening,” said Heather Bassett, MD, chief medical officer at Xsolis, an AI healthcare technology company that provides decision-support solutions for payers and providers. Before joining the company, Bassett was a hospitalist for nearly a decade. “Data literacy, a working grasp of risk and value-based contracts, and comfort with AI tools that are moving from novelty to infrastructure.”

Health systems, she said, should educate physicians about how organizational finances and clinical care intersect.

“The detailed training belongs to the organization,” she said. “Teaching physicians how the financial model works, and where their decisions fit in it, aligns them with both the mission and the business goals.”

She said greater transparency can also improve physician engagement.

“Most hospitalists’ frustrations aren’t about the work,” Bassett said. “It’s about opacity, feeling like a cog rather than a participant. Show physicians how they help the organization stay fiscally responsible while delivering excellent care, and you’ve turned a source of friction into engagement.”

McKinney sees physician education somewhat differently.

“It would seem that additional skills will be required to address management of population-level care, care coordination and transfer management, understanding cost drivers and the implications of care choices, health-system communication, and population health strategies,” he said.

McKinney said many of today’s residency programs do not emphasize sufficient preparation in these areas as a complement to their focus on clinical care.

Bassett reported having an employment relationship with Xsolis and being compensated by Xsolis as such. Hutchins, McKinney, and Merkin reported having no disclosures. Shivkumar reported having an employment relationship with Assured and being compensated by Assured as such.