For years, digital health vendors sold on promise: better outcomes, lower costs, happier members. Buyers are now asking for proof, and they are putting money behind the request. A new survey from the Peterson Health Technology Institute (PHTI) shows that performance-based contracting has become common across the U.S. market, even as measuring results remains hard.
What the survey covered
PHTI surveyed 321 U.S. decision-makers who purchase digital health tools: 106 health plans, 115 employers and 100 health systems. Overall, 57% said they use performance- or risk-based contracts with vendors.
Adoption varies by buyer type:
- Employers: 68%
- Health plans: 55%
- Health systems: 46%
Employers lead, which makes sense. They pay directly for these programs and are under constant pressure to justify benefits spending.
Real money is on the line
These are not token arrangements. Among organizations using performance-based agreements, 85% put at least a quarter of the contract value at risk, and 31% put more than half at risk. For a vendor, a missed target can mean a large share of expected revenue never arrives.
Verifying results is the hard part
Buyers want accountability, but many struggle to confirm whether vendors hit their targets. Respondents pointed to several obstacles:
- Data integration – 45% had trouble combining vendor data with their own claims or utilization data.
- Proprietary methods – 42% cited measurement approaches vendors do not fully disclose.
- Selective reporting – 40% said vendors sometimes report on highly engaged subgroups rather than the full eligible population.
That last point matters. Results from your most active users can look impressive while saying little about the population the buyer is paying to serve.
Savings were also the metric vendors most often missed. Twenty-seven percent of purchasers said vendors failed to meet financial savings targets, which suggests the cost-reduction claims behind many digital health pitches are hard to deliver.
The engagement gap
Even the best tool delivers nothing if people do not use it. Forty-seven percent of purchasers said fewer than 25% of eligible members enroll in the digital health programs they contract for.
Buyers are responding by changing what they track. Sign-ups alone no longer count as success. Many are shifting toward active platform use and completion of clinical milestones, which show whether members are getting value.
A more selective approach to buying
The survey also points to a more disciplined market. Most purchasers (56%) expect digital health spending to stay flat over the next 12 months. At the same time, portfolios are getting leaner: only 9% now offer 11 or more individual digital health solutions, down from 23% in 2025.
In other words, buyers are consolidating around fewer vendors they can trust and measure. Diabetes, primary and chronic care, and mental health remain the main contracting areas.
What PHTI says needs to change
Caroline Pearson, PHTI’s executive director, argued that payment for technology-driven chronic care management should be tied to clinical outcomes in both Medicare and the commercial market. She noted that the industry broadly agrees, but that employers and health plans still find these contracts difficult to negotiate and adjudicate, largely because they depend on vendors to report their own clinical and financial data.
Her view is that easing those administrative burdens is key to wider adoption. She also suggested the contracts can help over time, since they generate more data on vendor performance and build confidence in digital health.
Conclusion
Performance-based contracting is now mainstream in digital health purchasing, and the stakes are high. The main barrier is no longer willingness to link payment to outcomes but the practical work of measuring and verifying them. Vendors that make results transparent and easy to audit will be best placed as buyers become more selective.
