Healthcare Delivery Models Have Changed, Why Haven’t Payment Processes?

Change happens slowly at first, and then all at once. Just look at the healthcare system of today, versus that of, say, 2009. There’s been a sea of change.

But as providers move away from traditional fee-for-service models toward value-based care, representing a fundamental shift in how care is delivered and reimbursed, this transformation is not about clinical outcomes alone. The back-end systems that power healthcare organizations, from payments to procurement, are quietly undergoing their own revolution as operational and financial workflows evolve in tandem with care models.

It’s about time. The latest PYMNTS Intelligence reveals that the healthcare industry’s payment technology is outdated compared to other fields. As of 2024, just over 1 in 2 healthcare executives (54%) believe their organizations’ technology is sufficient. As care models change, these legacy technology stacks are unlikely to be able to adapt as nimbly as digital solutions can to the evolving expectations and operational realities of healthcare stakeholders.

After all, the modernization of B2B healthcare transactions is being driven by digital payments, artificial intelligence (AI)-powered procurement systems and automation that reduces administrative complexity. These innovations are streamlining financial operations, helping in optimizing supply chains and allowing providers to focus on patient care rather than paperwork.

Read more: Software, Not Spreadsheets, Solves Healthcare’s Cash Flow Bottlenecks

The Shift Away From Fee-for-Service Healthcare Models

For decades, the fee-for-service (FFS) model dominated U.S. healthcare, with providers being paid for each individual service rendered. While this system ensured steady revenue streams, it also incentivized volume over value, contributing to sector-wide inefficiencies, rising costs and disparities in patient outcomes.

As the landscape evolves, healthcare organizations are increasingly embracing value-based care (VBC), where payments are tied to quality and efficiency rather than sheer volume. This shift demands new operational models — ones that prioritize interoperability, real-time payments and procurement strategies aligned with outcome-driven care.

With care delivery transforming, so too must the mechanisms supporting it. These changes are rippling through the financial and administrative side of healthcare, prompting a reevaluation of how organizations transact with one another.

As PYMNTS Intelligence found in a report done jointly with Citi, “The Impact of Misunderstood Treasurers in Healthcare,” 44% of healthcare treasurers say their cash flows are predictable. That leaves a majority, at 56%, of treasurers who say that their cash flows are unpredictable.

Already, the marketplace is responding. Last week (Feb. 4), healthcare financing firm PayMedix announced it had teamed up with care/benefits platform XO Health to give XO Health’s network of self-insured employers, third-party administrators and value-based providers access to PayMedix’s healthcare financing solution.

Traditionally, healthcare payments have been mired in manual processes, paper invoices, and slow reimbursements. However, the rise of digital and automated payment solutions is reducing administrative burdens and improving cash flow management.

In an interview with PYMNTS last year, Big Data Healthcare (a wholly owned subsidiary of Fifth Third Bank) President and Co-Founder Dean Puzon said, “Automation can significantly transform the payment reconciliation process in healthcare,” adding that the future of healthcare payments is defined by the benefits of automation, artificial intelligence and data-driven innovations.

Read more: Digital Innovation Continues to Shift B2B Healthcare Market

Optimizing Healthcare Supply Chains

Beyond payments, procurement processes in healthcare are also experiencing a technological overhaul. After all, while hospitals and healthcare providers need a steady supply of pharmaceuticals, medical equipment and consumables to operate efficiently, historically, procurement has been fragmented, relying on siloed databases, manual purchase orders and long procurement cycles.

AI and data analytics are promising to change that by introducing tools designed to support predictive demand planning and automated procurement workflows.

The rise of digital procurement marketplaces is also driving efficiency. Instead of relying on legacy distributor relationships, healthcare organizations can now access cloud-based B2B marketplaces where they can compare prices, review supplier ratings and negotiate contracts more effectively.

“When you think about how you can best serve the market, one major thing is honestly just getting the best deals and having the lowest prices,” Jonathan Chen, founder and CEO of Nitra, told PYMNTS CEO Karen Webster last year. “Every single day doctors are buying from the major brands like McKesson, Henry Shine, AbbVie, all these folks, and oftentimes they’re doing it manually through a salesperson who comes to their office and sends them an invoice … it gets very jumbled up and the process is obscure, as is the pricing transparency.”

Ultimately, the future of healthcare B2B transactions will likely be fueled by technological advancements that can build more resilient, efficient and patient-centric financial ecosystems.