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Healthcare Innovation

Improving quality and efficiency of healthcare through care delivery, network, and payment model innovation

What we do

Payment innovation and transparency

We help payers, providers, integrated health systems, and state and federal governments design and manage value-based payment models and care programs. These include total cost-of-care and episode-based programs designed for the general population as well as more focused programs designed around target populations, specific episodes of care, and care journeys. Our team of healthcare experts, statisticians, data scientists/engineers, and actuaries employ industry-leading approaches to help clients evaluate and manage their portfolio of care management and value-based payment programs, measuring quality improvement, return on investment (ROI), and stakeholder satisfaction.

Behavioral health

We develop solutions for payers, government agencies, and providers to improve treatment, care delivery, and payment systems for people with behavioral health conditions, including mental illness and/or substance use disorder. This includes better serving populations with serious mental illnesses as well as integration of behavioral and physical health care for broader patient populations.

Long-term services and supports

We work with payers and providers to improve access, quality, and efficiency of long-term services and supports delivered to persons who need support with activities of daily living. This includes people who are eligible for Medicaid (including Medicare/Medicaid dual eligible) based on physical, intellectual, and/or developmental disabilities, and who receive long-term services and supports through nursing homes or other residential settings, day habilitation, or home and community-based services.

Next-generation care management and care models

We transform care-model strategies, design, and operations for both payers and providers to deliver measurable return on investment across care delivery, outcomes improvement, and financial performance. We help clients design end-to-end care models for high-value patient segments and conditions using advanced analytics, digital tools, clinical expertise, consumer-engagement approaches, and operational excellence.

Network design, optimization, and contracting

We help payers improve performance on quality, efficiency, and access to care through network portfolio strategy, network and contract design and optimization, contracting, and management of member incentives. We optimize the intersection value network and payment innovation. And, we deploy our approaches to the full range of providers, products and lines of business. We leverage advanced analytic methods and proprietary data sets and tools to help our clients improve measurement of provider performance and the design and management of their networks and contracts.

Social determinants of health

We push beyond clinical and claims-based data and analytics by integrating data related to individual and community needs and behaviors.  These analyses help to inform the design and delivery of healthcare solutions that address the full range of clinical and non-clinical drivers of healthcare outcomes and utilization. We help clients understand the value of these solutions, develop comprehensive strategies drawing from market intelligence on trends and best practices, assess gaps and opportunities using a range of quantitative and qualitative approaches, and support with capability-building, governance, and establishing cross-sector partnerships.

0.6 to 1.9

percentage points

lower medical cost trend


cost savings

for select clinical episodes of care


lower premiums

based on network optimization

Examples of work

Large-scale payment-innovation initiative

We partnered with a large payer to design, implement, and evaluate one of the nation’s largest payment-innovation initiatives. This covered more than $7 billion of spend, more than two million members, and 15,000 providers through episodes of care and a patient-centered medical-home model—including integration of data related to social determinants of health.  To support the effort, we deployed a build, operate, and transfer model, including development of analytics and reporting tools for providers.  In the first year in which both programs were launched, total cost avoidance achieved was $120 to 180 million.

Enterprise network transformation

We applied strategic insights, proprietary tools, and co-designed analytics to help a national payer transform networks in dozens of markets and multiple lines of business. This enabled over 200-basis-point (bps) of medical cost savings in some markets, improved member access to higher-value, high-quality providers, and strengthened competitive market positions. We co-developed market-specific, multi-line network strategies and tailored portfolios of initiatives, including broad and value network optimization; traditional and value-based contracting with systems, facilities, specialists, primary care physicians, and ancillary providers; and high-value provider and member referral programs. We helped the payer build an operating model and capabilities to sustain network innovation and performance management on its own going forward.

Episode design and launch at scale

We supported a large, public sector payer on the design and launch of one of the most significant episode-based payment models.  To date, the program includes more than 45 episodes launched.  We worked closely with payer to help facilitate more than 750 stakeholder interactions to incorporate clinical feedback into episode design as well as the overarching model.  Results reported to date show improved performance on more than 65 percent of quality measures linked to payment and estimated savings more than tripled by year 4 of the program as the episode model continued to scale.

Comprehensive, data-driven strategy for social determinants of health

We partnered with a major national payer to develop a strategy around SDoH driven by analytics, focusing on using claims paired with SDoH data to identify the areas of greatest addressable spend, set goals, and create a roadmap for implementation. This has positioned the payer to lead in SDoH capabilities, and to impact the health and well-being of ~40M members—especially the most vulnerable.


Center for US Health System Reform

Our in-house source on health policies, the Center undertakes original research and develops tools to help navigate an ever-changing policy and healthcare landscape.

McKinsey Health Institute

The McKinsey Health Institute (MHI) is an enduring, non-profit-generating entity within the firm. It was founded on the conviction that, over the next decade, humanity could add as much as 45 billion extra years of higher-quality life (roughly 6 years per person on average—and substantially more in some countries and populations).

Featured insights


Addressing the social determinants of health: Capturing improved health outcomes and ROI for state Medicaid programs

– The social determinants of health (SDoH) strongly contribute to variations in health status. Addressing SDoH can help ensure access... to high-quality care, improve outcomes, and manage costs.

Maximizing the “value” in value networks and value-based payment

– Value networks and value-based payment are usually implemented independently, limiting their effectiveness. Greater alignment... of these strategies can allow payers to unlock their transformative potential.
Executive Briefing

The productivity imperative for healthcare delivery in the United States

– Healthcare is a key component of the US economy, but healthcare spending increases consistently outstrip GDP growth. Improving... productivity in healthcare delivery could change this dynamic without harming patient care.
Executive Briefing

The seven characteristics of successful alternative payment models

– To aid APM (re)design and support providers and payers in their value-based contracting strategy, this paper highlights seven... characteristics that distinguish well-performing APMs from poorly performing models.

Why we need bolder action to combat the opioid epidemic

– Although the opioid crisis in the US is gaining increased attention, the steps taken to date to combat it are insufficient. Our... research suggests that much broader—and bolder—action is required.

Ten insights on the US opioid crisis from claims data analysis

– Careful analysis of health insurers’ claims data can provide important insights into the opioid crisis by identifying patterns... that could help shape strategies to combat opioid dependence and abuse.

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