All Engines
Healthcare Economics Engine

Direct Contracting Valuation

Value direct provider contracts, model bundled payment economics, and optimize direct-to-employer arrangements with multi-year ROI analysis

The Middleman Tax

You're paying a hospital network $18,000 for a knee replacement while the hospital would accept $12,000 direct. But your broker and carrier need their cut, so you're stuck with the markup. Direct contracting eliminates the middleman—if you can value it correctly.

Network Markup
35-50%
vs. direct contract rates
Direct Contract Savings
25-40%
on targeted services
Implementation Time
3-6mo
per contract

✗ What Fails Without This Engine

  • •Provider quotes $14K bundled rate but you can't verify if that's competitive
  • •No baseline to compare against network rates or alternative providers
  • •Can't model volume guarantees, quality incentives, or shared savings structures
  • •CFO kills deal because ROI analysis is speculative

Precision Contract Valuation

Our Direct Contracting Engine models every economic variable: historical utilization by service line, competitive benchmarking, quality-adjusted pricing, volume commitment economics, and multi-year total cost projections. You negotiate with actuarial precision.

Contract Valuation Model
// Service-line utilization baseline
historical_volume = AGGREGATE(
  last_36_months_claims 
  WHERE service_category = TARGET_service
)

// Competitive rate benchmarking
FOR each service_code:
  network_rate = current_ppo_allowed
  medicare_rate = cms_base × geographic_adj
  direct_quote = provider_proposal
  
  fair_value_range = PERCENTILE(
    [medicare_rate × 1.3, medicare_rate × 1.6],
    market_competitiveness_index
  )
  
  IF direct_quote > fair_value_range[75]:
    FLAG "Overpriced - negotiate down"
  ELSE IF direct_quote < fair_value_range[25]:
    FLAG "Suspiciously low - verify quality"

// Multi-year ROI projection
year_1_savings = (network_rate - direct_rate) × projected_volume
implementation_cost = steerage_program + care_coordination
risk_reserve = savings × 0.15  // Quality/access buffer

net_3yr_roi = CALCULATE(
  cumulative_savings - implementation_cost - risk_reserve,
  ADJUSTED_FOR: volume_variance, quality_outcomes, satisfaction
)

GENERATE board_presentation WITH:
  - Savings waterfall by service line
  - Break-even analysis
  - Risk scenarios (best/base/worst)

Engineering Architecture

Core Components

  • Service-Line Utilization Analyzer: 36-month historical volume trends by CPT/DRG with seasonal adjustment
  • Fair Value Calculator: Medicare benchmarking, market rate surveys, quality-adjusted pricing
  • Volume Commitment Optimizer: Guarantee vs. upside models with risk-sharing structures
  • Multi-Year ROI Forecaster: Implementation costs, steerage success rates, member satisfaction impact

Valuation Outputs

Fair Value Range
$$-$$$
Year 1 ROI
15-35%
Break-Even
6-18mo
Risk Score
Low-High

Real-World Applications

Orthopedic Center Bundle Contract

  • •Provider quotes $13,500 all-in for knee replacement
  • •Engine shows network average: $21,300
  • •Fair value range: $11,800-$15,200 based on Medicare + quality
  • •CFO negotiates down to $12,200 with 12-case volume guarantee
  • •Year 1 savings: $109K on 12 cases, ROI: 340% after steerage costs

Multi-Specialty Employer Direct Contract

  • •Health system offers bundled primary care + specialty at 30% discount
  • •Engine models 3-year utilization across 15 service lines
  • •Identifies $1.8M savings opportunity with quality protections
  • •CFO structures shared savings: 70/30 split above baseline
  • •3-year actual savings: $2.1M vs. $1.8M projection

Value Your Next Direct Contract

Stop guessing if a provider's bundle quote is fair. Upload your claims history and get a complete contract valuation model in under 90 minutes—before you sit down to negotiate.

Request Engine Demo→