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New approach to payor performance saves lives and cuts costs

Service transformation improves health outcomes and identifies big opportunities to boost productivity.


The health system of a large European capital city faced many performance challenges. Leaders of the system were concerned by highly variable and at times below-standard clinical care, wide variability in health status among the population, low patient satisfaction, and overuse of hospitals for non-urgent care.

There had already been failed attempts to address these challenges, and a new managing organization had recently been created from multiple separate health authorities, creating an environment potentially resistant to change.

Health system leaders needed help rallying both employees and patients; laying out a clear and compelling rationale for change, a vision of the future, and a transformation approach; and, critically, identifying clinical champions to drive the change and ensure commitment.


A critical first step was to demonstrate the need for transformation. The McKinsey team analyzed key healthcare performance metrics, establishing a comprehensive evidence base, and communicated the findings to underline the seriousness of the situation. Examples of the need for change could be quite stark. For example, for every stop along a line of the city’s metro system, residents lost 1 year of life expectancy.

To determine the most important reforms, the team developed a holistic approach, working closely with the client to review the entire healthcare system. This included working with clinical groups to determine how patient care should ideally be given, understand how this could be achieved in the existing context, and describe the steps required to implement optimal care. They also considered clinical research, economic analysis, and examples from successful healthcare organizations from around the world.

The team then worked with planners from the client organization to develop a model for activity forecasting and capacity planning. They modeled the capacity and financial implications of new delivery systems and care pathways, and tested the impact of different service configurations.

The team also investigated why efforts to change the system had failed in the past and developed a toolbox of prerequisites that needed to be in place before any changes were rolled out. These included:

  • Incentives. For healthcare organizations, staff, and patients to support changes
  • Information sharing. To facilitate treatment across different healthcare settings
  • Metrics. To enable tracking of costs and outcomes
  • Communication leadership. Including helping clinicians understand how to show their support for system-wide acceptance
  • Encouraging competition. Among providers to drive improvements in quality and productivity


The reconfigured program has already saved lives. More than 200 patients have been saved by changes to stroke care across the city; 50 lives have been saved by changes in major trauma care; and infrastructure was put in place to drive improvements in out-of-hospital care, particularly for long-term conditions such as diabetes. The team also identified $1.5 billion of potential productivity gains through the elimination of unused capacity. The client leader who drove the reconfigured program later took on a high-profile national role and used the McKinsey approach as the basis for a country-wide review.