Risk-based contracts popular for digital health purchasing

Digital health purchasers, including healthcare providers, payers and employers, are leaning into performance- or risk-based contracts, with nearly half currently using these contracts and most planning to shift to them next year, a new survey reveals.

Conducted by the Peterson Health Technology Institute between Aug. 4 and 22, 2025, the survey polled 309 digital health decision-makers responsible for purchasing decisions in provider, payer and employer organizations.

The survey shows that purchasers remain interested in digital health, with a majority increasing or maintaining their spending on digital health solutions from 2024 to 2025. The primary reasons for this increased expenditure are expanding digital health portfolios (81%) and greater user engagement (77%).

Among the three types of purchasers included in the survey, more payers (84%) and providers (79%) reported increasing their digital health spending in 2025, compared with employers (32%). Providers and payers are also more likely than employers to report improvements in health outcomes and cost reductions as a result of using digital health solutions.

Further, the survey reveals that cost is a critical factor in vendor selection, with 66% of employers, 42% of providers and 23% of payers citing the cost of the solution as an important factor. However, more important to providers and payers than cost is a proven track record, with 57% of payers and 51% of providers citing this factor as essential in vendor selection.

A majority of digital health purchasers use short-term contracts of two years or less (73%), and most employers (75%) and providers (52%) report reviewing their digital health portfolios once a year. Only 47% of payers report doing the same.

While nearly half of all purchasers have implemented performance- or risk-based contracts, payers (75%) and providers (61%) lead the adoption of these contracts, with only 14% of employers following suit. Among those using performance-based contracts, 32% place more than half of their digital health contract value at-risk for vendor performance. Additionally, 39% place more than a quarter of their digital health contract value at risk.

Still, there is room for improvement in these performance-based contracts. More than half of digital health purchasers (62%) want to change outcomes performance thresholds that dictate the population change necessary to receive performance payments.

Another 57% want to change payment models from claw back to alternative payment models, and 42% said they would want to change the attribution methodology that defines who is eligible to use the solution.

Despite these problem areas, most healthcare providers (84%) and payers (76%) who are not using performance-based contracts want to shift to this model. Around 53% of employers also want to shift to this model, but they remain concerned about the administrative burden, the report stated.

"The digital health market is maturing and purchasers remain committed to continued investment in health technologies, but they want more than just engagement metrics about how many of their members are using a product," said Meg Barron, managing director of engagement and outreach at PHTI, in the press release. "Purchasers are seeking performance-based contracts that ensure that these solutions deliver measurable outcomes."

Looking ahead, a vast majority of digital health purchasers (87%) plan to maintain or increase spending in the coming year. Improving access to care (69%), reducing spending on specific conditions or areas of care (57%) and improving user/patient experience (55%) are the primary goals purchasers aim to achieve with digital healthcare in the next year.

Anuja Vaidya has covered the healthcare industry since 2012. She currently covers the virtual healthcare landscape, including telehealth, remote patient monitoring and digital therapeutics.