Every week, I have the privilege of advising managed care executives at health systems and other healthcare providers. Everyone is dealing with some version of the same problem — how to improve their rates and yields to offset escalating costs driven by the inflationary environment and nightmare contract administration issues with the big payors. It’s a tough season for health systems, even those with strong market share and operating discipline.
At our twice-yearly managed care advisory group meeting last week in Boston, the big topic that dominated the early part of the agenda was AI and its deployment in the context of payor/provider relations. While some health systems are using AI in their RCM operations, others are using AI for specific projects or deliverables. However, it was loud and clear that every managed care executive is very focused on, and concerned about, the payors’ use of AI in the very near future.
Why?
1. Managed care executives believe that payors are already far ahead of health systems in terms of AI sophistication.
They believe, or can prove, the payors are using AI to facilitate prior authorization obstacles, denials, and many other contract administration and payment mechanisms that radically reduce the yield on their contracts. Essentially the payors use AI to enable their business strategy in a way that reduces the labor cost and enables faster prior auth and payment denials. Said differently, payors can get to “no” faster and cheaper than ever before.
2. Payors are making HUGE investments in AI, and there is clearly the expectation that those AI investments will yield substantial ROI.
UnitedHealthcare revealed in its January 2026 earnings announcement that it will invest $1.5 billion in 2026 and an equal or greater amount in 2027. So in the next 20 months, United will have invested more than $3 billion in AI alone — and other payors are doing the same. Keep in mind that United is investing at this level at the same time earnings are under tremendous pressure. In fact, OptumCare will show an operating loss this year for the first time. That should tell us something important, and quite ominous, about the payors’ commitments to AI.
Payor investments in AI are creating real concern
No one believes that United is investing $3 billion or more in AI to make managed care contract administration easier for healthcare providers. Everyone believes these AI implementations will make it harder — and slower — to get paid, and more challenging to resolve issues. The ROI for a payor’s AI deployment will come from reducing yield at the expense of healthcare providers. Meanwhile, the payors’ more efficient, faster process, healthcare providers will not be able to keep up with a tactical plan across multiple areas of the organization.
Now what will your plan be? Are you leaving it up to others in your organization, or are you an active part of planning how you’ll drive the change, advocacy, and messaging to the community?
