Tech transformation in healthcare payers: From FOMO to fundamentals

Over the past several years, the healthcare industry has made bold digital investments, accelerated by the pandemic and a growing need to modernize. Yet today, many organizations are reflecting on a critical question: Are we truly realizing the value we envisioned?

This blog explores the evolution of tech transformation in healthcare payers, highlights the challenges encountered and provides a framework for value-driven execution to guide the next phase of digital maturity.

The challenges of tech transformation

Despite significant investments, many payer organizations still face issues, including:

• Trend-chasing over strategy: Technology initiatives often prioritize keeping up with trends rather than aligning with core business priorities.
• Organizational silos: Disconnects between IT and business hinder collaboration.
• Legacy resistance: Outdated systems and entrenched cultures resist change.

These challenges have resulted in a high cost of change, hindering innovation. We often see digital programs prioritize trendy tools and low-code platforms, with limited focus on solving core business problems like customer experience or cost efficiency. Frontline users and business teams disengage when they don't see direct benefits. Projects often stall or get derailed due to unclear ownership or turf wars. It has also become difficult to measure which tools drive true value, resulting in poor ROI tracking.

A decade of digital disruption: How healthcare payer transformation evolved (2014–2024)

If we step back a decade from now and unravel the sequence of events, we can understand what might have triggered the existential anxiety in the traditional consumer services firms, especially healthcare payers.

2014

Apple introduced HealthKit and Apple Watch health features, positioning itself at the center of consumer health data. 

Google deepened investments in Google Health, AI diagnostics (via DeepMind) and data-driven wellness initiatives.

Amazon launched Amazon Care and later acquired PillPack (2018), signaling direct entry into healthcare delivery and pharmacy. This could have sent chills to healthcare payers, who might have wondered, “If Amazon can do one-click healthcare or diagnostics, what’s stopping them from replacing us?” 

2015

By 2015, people had gotten used to instant service from companies like Uber and Netflix, mobile-first experiences and personalized recommendations from companies like Amazon. That meant customers were slowly running out of patience while their claims took weeks to process. 

Tech giants blurring the lines between tech and traditional sectors wasn't the only reason healthcare payers grew concerned. Venture capital heavily backed digital-first startups across industries, especially in fintech, insurtech and healthtech. Oscar Health, Clover Health and Devoted Health offered simpler digital insurance models with more intuitive UX. 

By adopting mature cloud computing solutions and AI/ML tools, startups and tech firms could scale fast, experiment rapidly and personalize services with data. Payers saw startups with slick apps and panicked if their legacy systems couldn't compete. Outcome – Healthcare payer executives rushed into transformation programs, often without a cohesive roadmap, to show progress to the market.

This marked the beginning of the hiring wave.

2019

The majority of consumer services companies, let alone healthcare payers, started hiring Chief Digital Officers and Chief Transformation Officers and building digital teams. The build-versus-buy approach tilted toward ‘build,’ pushing traditional firms to realize the need for an internal engineering culture. Internal Engineering teams were built that could compete with tech companies in agile delivery, cloud-native development and customer experience design. 

New roles emerged and were in demand: head of AI/ML, cloud architect, DevOps engineer, product managers/owners, CX designers, data scientists and multiple others. The result was large–scale tech hiring mandates, from software engineers and product managers to data scientists and UX designers.

2020

During the COVID-19 pandemic, physical interactions (doctors’ offices, customer service centers) shut down, triggering an industry-wide digital scramble. Health insurance companies had to go digital – telehealth, member apps, home pharmacy and personalized care – just to survive. Telehealth utilization rose by over 3,800% between February and April 2020 at the pandemic's peak. Executives approved huge budgets for digital transformation and IT hiring. This often led to fragmented digital teams, confused roadmaps and mixed ROI on early investments. 

2023

After two to three years of heavy spending, companies realized they had bloated IT departments, built numerous unfinished and disconnected products and saw costs have skyrocketed without much ROI. Many cloud migration and data platform programs ran over time and over budget, which led to platform sprawl without clear product ownership. Gartner estimated that through 2024, 80% of cloud migration projects cost more than budgeted due to poor governance and scope creep. These setbacks, coupled with rising interest rates, inflation and pressure for profitability, changed the narrative from "grow at all costs" to "optimize for value"

2024 and beyond: The shift to value-driven healthcare payer transformation

Today, some healthcare payers have started realizing the pressure on operating margins, while still carrying the weight of costly cloud contracts and large digital teams. This is where the payer industry enters the retrenchment phase. We can already see layoffs, role consolidation and merging "digital" and "IT" organizations to reduce silos and costs. There is a subtle shift toward value-focused execution by prioritizing foundational enablers like real-time eligibility and benefit tools, streamlined provider onboarding and prior authorization automation with ROI guardrails. 

Transformation is no longer about “acting like a tech company” – it’s about fixing the basics with discipline. For healthcare payers, this means shifting focus from experimentation to execution, from silos to platform thinking and from buzzwords to business outcomes. The next wave of success will not come from launching new digital tools, but from integrating and operationalizing them with measurable value. In the next phase of digital transformation, winners will be defined by their ability to simplify, integrate and deliver with intent.

A framework for value-driven execution

To move forward with focus and discipline, healthcare payers must transition from reactive transformation to value-driven execution. This shift demands a clear framework for prioritizing initiatives that deliver measurable outcomes. Based on our experience working with healthcare payers, we recommend a structured approach that brings much-needed discipline to evaluating what to build, how to deliver and most importantly, why it matters to the business. The following framework can help organizations realign digital programs with what truly matters:

• Business outcomes first: Anchor every technology initiative to tangible KPIs such as faster claims processing, improved member satisfaction and reduced administrative costs.
• Embedded healthcare expertise: Build cross-functional teams that combine tech fluency with deep payer domain knowledge to ensure solutions address real business pain points.
• Product model, not project model: Shift from one-off projects to long-term product thinking, organizing teams around sustained outcomes and member experiences.
• Pragmatic modernization: Modernize legacy platforms incrementally to reduce technical debt while minimizing operational disruption.
• Capability building: Develop internal capabilities that allow payer organizations to continuously evolve and self-sustain transformation over time.
• Fit-for-purpose technology: Avoid overengineering. Focus on building scalable, usable solutions that solve core problems, not just adopting trends.

This value framework shifts the focus from how much technology is deployed to how effectively it drives outcomes. For healthcare payers, success in the next phase won’t come from chasing the next big thing – it will come from integrating what exists, executing with intent and aligning every initiative to measurable value.

Leaders who simplify architecture, eliminate silos and embed cross-functional accountability will shape a future where transformation isn’t just ongoing – it’s owned. In this new era, digital maturity is not about acting like a tech company – it’s about delivering like a value-first enterprise. 

Are you ready to explore how CGI partners with healthcare payers to drive transformation? Connect with our team to learn more about our health solutions and services for payers and discover how we help transform operations to meet rapidly changing demands while improving performance, efficiency and product offerings.