Some eye-popping numbers come from an insightful article by McKinsey on their recent analysis by Florian Niedermann, Karl Kellner, Mathis Friesdorf, and Rob Levin in "Rewiring healthcare payers: A guide to digital and AI transformation.” Applying McKinsey’s findings, the nearly $1 trillion payer market can collectively garner over $200 billion in costs savings and revenue gains through digital and AI transformation.
Unfortunately, many payers, if not most, struggle to achieve meaningful digital transformation and reap these cost savings and revenue gains. The team from McKinsey shared their findings, and their frustrations with the lack of progress by payers. Too often, I see this lack of progress in my work in the healthcare payer sector. I agree with much of what the McKinsey team puts forth in their “rewiring” article.
In my opinion, it’s not that payers fail to recognize the opportunity. Rather, their challenge is in overcoming distinctive barriers – such as fragmented legacy systems, siloed data, and complex regulatory requirements – that set healthcare apart from other industries. For instance, while banks have streamlined digital integration across unified platforms, payers often wrestle with outdated infrastructures that make even simple data sharing a significant hurdle.
Key healthcare transformation challenges:
- Siloed data across fragmented systems that resist integration
- Stakeholder resistance from employees accustomed to complex, manual processes
- Organizational models with conflicting motivations that impede coordinated change
- Limited digital marketing capabilities compared to other industries
- Regulatory complexity that requires specialized navigation expertise
The McKinsey team shared that while digital leaders in banking increased their use of digital sales channels by 30% and boosted total shareholder return by 8.2% from 2018 to 2022, healthcare payers continue to be constrained by fragmented systems and organizational resistance to change. And, dare I say it, from an all-too-often, complacent, wait-and-see attitude regarding new technologies. Crossing the chasm often comes quite late for healthcare.
What's holding payers back
The “rewired approach”
McKinsey's "rewired approach" provides a structured framework focusing on six enterprise capabilities:
- Business-led digital roadmaps
- Talent development
- Operating models
- Technology modernization
- Data integration
- Adoption scaling
I love it! In fact, my colleagues and I have had the same conversations with healthcare leaders looking to transform their business. The authors from McKinsey go on to recommend starting with domains like marketing, sales, and enrollment to build momentum before tackling more complex areas like care management and network contracting. While I’m much more of an “operations guy,” I cannot argue with them. It’s sound advice to start at the beginning of the customer journey – marketing, sales, and enrollment.
Here's where the McKinsey framework aligns perfectly with what we're seeing in the market. The “rewired approach” focusing on business-led digital roadmaps, talent development, and technology modernization maps directly to the capabilities healthcare payers need most. And this is precisely where Pega demonstrates its strategic value.
Essentials for digital and AI transformation
What we've consistently seen is that our platform, and particularly its strengths in AI orchestration, enables the rapid development and deployment that McKinsey identifies as essential for digital transformation success. The platform's AI-powered workflow automation addresses the core challenge of breaking down organizational silos while maintaining regulatory compliance – a critical balance that healthcare payers know all too well.
Pega’s digital and AI transformation capabilities:
- Comprehensive case management that unifies member services, provider services, and care coordination, leveraging AI orchestration
- Smart Claims Engine™ with end-to-end processing automation and AI-driven fraud detection leveraging AI
- Real-time AI decisioning for personalized member engagement and next-best-action recommendations
- Integration capabilities that connect legacy systems without requiring complete replacement
- And our new super power, Pega GenAI Blueprint™, an AI-powered designer that jumpstarts transformation by analyzing the client’s data and systems in minutes to create cloud-ready versions of apps – bypassing long discovery steps.
Real results from healthcare leaders
The real-world impact speaks volumes, and frankly, the results are impressive. As if reading from McKinsey’s guide, Cigna shared their marketing, sales, and enrollment digital transformation at PegaWorld 2024. Broker sales are up, and not surprisingly, new business sales are up as well. They shared a quote from a presale manager that sums up Cigna’s success, “The presale operation has never run better than right now, turnaround times are phenomenal, quality’s up… We have never been as well positioned for success as we are right now!”
Excellus, a major payer in the state of New York, presented their success transforming customer experience at PegaWorld 2025. Now they have a single, unified system for automated, end-to-end customer journeys. It includes real-time AI, automation, and integration for personalized service and proactive outreach.
Also, at PegaWorld 2025, Prime Therapeutics (Prime) presented their achievements moving to the cloud as well as accelerating clinical reviews of medically necessary therapies for patients. Prime, collectively owned by 19 Blue Cross and Blue Shield plans, is a pharmacy benefit management company that provides services to health plans, employers, and government programs. As the McKinsey team noted in their article, Prime’s digital transformation of clinical reviews is directly on-point with “tackling more complex areas like care management.” The telling success of Prime’s efforts? They eliminated 100% of all manual tasks in their clinical reviews. That’s digital transformation!
Molina Healthcare is another payer tackling one of the more complex areas: appeals and grievances. Their digital transformation of this critical service function is delivering $3 million in annual savings and has decreased case resolution times by 30%.
It’s time to act
The evidence is clear: Healthcare payers who embrace a structured transformation approach, like that which McKinsey advises, supported by platforms like Pega that address the industry's unique challenges, can achieve the enormous financial benefits and operational excellence that seemed elusive just years ago. As McKinsey notes, successful payer leaders approach digital transformation incrementally, with each wave delivering substantial business value while building toward comprehensive organizational change.
It's not a question of whether healthcare payers should pursue digital transformation – it's whether they can afford not to. And, to be blunt, waiting is not a viable option. Given the competitive advantages and cost savings now within reach, payers already on the digital transformation journey are reaping the benefits. There will be winners and losers based on who transforms early and who lags.
Take a look at what Cigna, Excellus, and Prime are doing with Pega to “rewire” for digital and AI transformation.