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Purchasers are increasingly seeking performance-based contracts – where payment is tied to outcomes – with digital health solutions. However, implementing these contracts can be challenging, especially for employers with limited resources.
To address this, teh Peterson Health Technology Institute (PHTI) released a playbook on January 22, 2026, for purchasers on how to effectively execute performance-based contracts. The playbook was developed in collaboration with health plans, vendors, brokers, consultants, data warehouses, and other stakeholders.
“We have consistently heard from both health plans and employers that negotiating performance-based contracts remains very arduous. We want to see purchasers come to the table as customers with high standards, raising the bar on purchasing,” said Caroline Pearson, executive director of PHTI, in an interview. “Every payer should be holding their partners accountable for outcomes that truly matter.”
The playbook provides best practices and toolkits for creating performance-based contracts for digital diabetes management, virtual musculoskeletal solutions, digital hypertension management, and virtual solutions for depression and anxiety.
Five Key Insights for Purchasers
Here are five key takeaways from the PHTI report:
1. Aligning Contracts with Goals
Purchasers have diverse goals when adopting digital health solutions, including improving member satisfaction, expanding access to care, improving health outcomes, and reducing costs. performance-based contracts should directly tie payments to these goals while mitigating risk, especially for new or unproven solutions that rely on long-term member engagement. this approach fosters confidence in investing in innovative solutions.
2. Varying Capabilities and the Need for Standardization
Purchasers’ ability to design and manage effective performance-based contracts varies considerably, with most still in the early stages of adoption. Initial contracts have often been experimental, limited by data availability and resources, leading to challenges in measuring outcomes and ensuring accountability.Larger organizations, with in-house actuaries and dedicated benefits teams, generally have more leverage. Smaller organizations often rely on consultants due to limited internal resources.
The report emphasizes the need for alignment on standard definitions and streamlined performance adjudication processes to broaden the use of performance-based contracts (PBCs).
3. shifting Towards Data-Driven Contracts
Purchasers are moving beyond experimentation towards consistent, data-driven performance-based contracts. Leading organizations are utilizing structured pilots, scorecards for renewals, and verification of access expansion before scaling digital tools. Investments in centralized data infrastructure and audit rights are also increasing to verify results and refine contracts over time.
4. Rethinking Performance Guarantees
While many performance-based contracts include performance guarantees, such as clawback
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