Tammy Hawes is VP, Payer Credentialing and Compliancy at HealthStream, following the acquisition of Virsys12 in October 2025.
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Administrative efficiency is a perennial focus for payer chief financial officers (CFOs) and for good reason. Administrative costs represent roughly 15% to 25% of total U.S. healthcare expenditure, as reported in the medical journal JAMA. These estimates have drawn sustained attention from regulators, employers and policymakers alike. Yet within that broad category, one cost driver consistently evades precise quantification: the cascading financial impact of fragmented provider data.
This is not because the costs are small. It is because they are distributed, spread across credentialing operations, compliance functions, IT infrastructure and network management in ways that make them difficult to aggregate on a single budget line. That diffusion makes the costs easy to underestimate. It also makes them easy to tolerate longer than is financially rational.
The most expensive administrative costs are often the ones that look like normal operations until you build the infrastructure to see them clearly.
For health plans operating with fragmented provider data environments, the costs accumulate across several distinct domains.
When provider data is maintained independently across credentialing, claims, directory and network management systems, each system's data will diverge over time. License updates, address changes, specialty additions and affiliation changes are captured inconsistently across platforms. The result is a persistent, ongoing requirement for manual data reconciliation: staff hours spent identifying discrepancies, determining which record is authoritative and propagating corrections across systems.
This is not a one-time cleanup cost. It is a structural tax on operational capacity that recurs continuously for as long as the fragmented architecture persists. In organizations with large provider networks, this labor cost is substantial, and because it is embedded in normal operations, it rarely appears as a discrete line item subject to scrutiny.
Every day that a credentialed provider is unable to see plan members due to onboarding delays represents a claim that will not be processed, a member who may seek care out-of-network and a provider relationship that starts with friction rather than confidence. In aggregate, credentialing backlogs—often the direct result of data inconsistencies requiring manual resolution—translate into measurable revenue impact.
The financial modeling here is straightforward: Provider volume, average claims value and average onboarding delay length determine the revenue at stake. For health plans with large provider networks and meaningful specialty mix, even modest reductions in average credentialing cycle time can produce material financial returns.
Provider directory accuracy has become a focal point for the Centers for Medicare and Medicaid Services (CMS) and state regulators. Research has consistently found high rates of directory inaccuracy. In some studies, more than half of directory entries contain outdated or incorrect information. For payer organizations, inaccurate directories create both regulatory exposure and member experience risk.
The cost of a failed directory audit extends beyond any immediate fine. Remediation efforts are resource-intensive. Regulatory relationships are damaged. And in markets where network adequacy is a competitive or contractual requirement, directory inaccuracies can trigger consequences that ripple through employer contracts and member retention.
Many organizations that have invested in unified provider data infrastructure report a meaningful shift in their compliance posture, from reactive remediation after audits to proactive monitoring that surfaces issues before they become findings.
Fragmented provider data environments also impose a less visible but significant IT cost. Maintaining integrations between disconnected systems, managing the technical debt of point solutions that have accumulated over years of incremental investment and supporting the custom workflows required to compensate for the absence of a unified data layer—these represent ongoing infrastructure costs that compound over time.
For payer chief information officers (CIOs) evaluating their technology portfolio, this is a relevant consideration. The cost of maintaining a fragmented architecture is not static. It grows as provider networks scale, as regulatory requirements increase and as the gap between current-state infrastructure and modern data architecture standards widens.
Quantifying the full cost of a fragmented provider data environment requires a cross-functional analysis that most health plans have not formally conducted. The inputs are available—credentialing cycle time data, staff hours allocated to manual data reconciliation, directory audit history, IT maintenance costs and revenue impact modeling for onboarding delays—but assembling them into a unified picture requires deliberate effort.
That analysis, when conducted rigorously, typically reveals a total cost of ownership for fragmented provider data architecture that is substantially higher than the line-item costs of any individual system. It also reveals a compelling return on investment (ROI) case for unified provider data infrastructure, one that holds up under CFO scrutiny because it is grounded in operational data rather than vendor projections.
The organizations best positioned to reduce administrative overhead in the coming years are those investing now in the data foundation that makes every subsequent efficiency initiative more likely to succeed. The economics of getting this right are not complicated. The work of getting there is, but it is both finite and tractable.
For payer leadership teams weighing where to direct their operational investment, provider data consolidation deserves a position near the top of the priority list. Not because it is the most visible initiative, but because it is the one that makes every other initiative work better.
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