Five Challenges Make Health Plans Need Service Orchestration More Than Ever

Health plans are under pressure from every direction. Rising administrative costs, growing member expectations, increasing regulatory demands, provider dissatisfaction, and the rapid adoption of AI have created a level of operational complexity that traditional organizational structures were never designed to manage.

Most plans already have the technology they need. The challenge is that critical work still moves through disconnected systems, siloed departments, multiple vendors, and fragmented workflows. This is why service orchestration is emerging as a strategic priority for leading payers.

Service orchestration creates a coordinated operating layer that aligns people, processes, technology, vendors, data, and AI around measurable outcomes. As health plans look to improve efficiency, customer experience, and operational performance, five challenges stand out.

1. Operational Complexity Is Growing Faster Than Organizations Can Manage

Every member interaction can involve multiple departments, systems, and external partners. A single prior authorization request, claim dispute, or care management issue may touch customer service, utilization management, provider operations, claims, compliance, and third-party vendors before resolution.

As plans add new technologies and point solutions, complexity often increases rather than decreases. Each new tool can create additional handoffs, integration requirements, and workflow gaps.

Service orchestration addresses this challenge by coordinating work across the enterprise rather than optimizing isolated functions. Instead of managing individual processes, health plans can manage end-to-end outcomes. Insights from Oeight's 2026 Service Orchestration Readiness Report for Health Plans emphasize that the organizations achieving sustainable transformation are those that orchestrate the entire service ecosystem rather than individual technologies.

2. Administrative Waste Continues to Drain Resources

Many of healthcare's most expensive inefficiencies are hidden within everyday operations:

• Repeat calls

• Manual case routing

• Duplicate data entry

• Escalations

• Rework

• Vendor coordination failures

• Delayed issue resolution

According to the Council for Affordable Quality Healthcare (CAQH), the healthcare industry has an opportunity to eliminate roughly $20 billion in annual administrative waste through modernization and automation initiatives.

However, automation alone does not solve fragmentation. Automating a broken process simply allows inefficiencies to happen faster.

Service orchestration reduces waste by removing unnecessary handoffs, creating accountability across workflows, and ensuring that the right information reaches the right person or system at the right time.

3. AI Investments Need Orchestration to Deliver Results

Health plans are investing heavily in artificial intelligence, from customer service copilots and intelligent automation to predictive analytics and care management tools.

The opportunity is significant. Research cited in the 2026 Service Orchestration Readiness Report for Health Plans references estimates from McKinsey & Company suggesting that, for every $10 billion in payer revenue, AI could generate:

• $150 million to $300 million in administrative savings

• $380 million to $970 million in medical cost savings

• $260 million to $1.24 billion in revenue improvement

But AI cannot fix disconnected operating models.

If data, workflows, and decision-making processes remain fragmented, AI simply accelerates existing inefficiencies. Service orchestration enables health plans to embed AI into coordinated business processes where automation, employees, and vendors work together toward a common outcome.

In this sense, orchestration becomes the foundation that allows AI investments to produce enterprise-wide value.

4. Regulatory Requirements Are Driving Operational Change

The pace of healthcare regulation is accelerating. Requirements related to interoperability, transparency, prior authorization modernization, and data sharing continue to expand.

For many organizations, compliance failures are not caused by a lack of effort. They occur because critical processes span multiple systems, teams, and partners, making end-to-end visibility difficult.

At the same time, enrollment in Medicare Advantage continues to grow, with more than half of eligible Medicare beneficiaries now enrolled in MA plans. As quality measures, member satisfaction, and operational performance become increasingly connected, plans need a coordinated approach to managing compliance and service delivery.

Service orchestration provides the visibility and governance needed to align operational execution with regulatory expectations.

5. Members and Providers Expect Better Experiences

Today's healthcare consumers compare every interaction against digital experiences they receive from leading consumer brands. They expect:

• Personalized service

• Proactive communication

• Self-service options

• Faster resolutions

• Seamless experiences across channels

Providers have similar expectations. Yet many still face significant administrative burdens related to authorizations, claims questions, eligibility verification, and appeals processing.

Research and operational assessments show that many provider frustrations stem from information being trapped in disconnected workflows rather than from a lack of information itself.

Service orchestration can streamline these interactions by connecting systems, automating routine transactions, and enabling intelligent self-service. Many organizations are already exploring orchestration-enabled AI capabilities that can significantly reduce avoidable call volume while improving member and provider satisfaction.

The Bottom Line for Health Plans

Healthcare does not have a technology problem. It has a coordination problem.

As health plans navigate rising costs, regulatory pressure, AI transformation, and increasing expectations from members and providers, success will depend on their ability to connect people, processes, systems, vendors, and data into a unified operating model.

Service orchestration is no longer simply an operational improvement initiative. It is becoming a strategic capability that enables health plans to reduce waste, scale AI effectively, improve compliance, strengthen provider relationships, and deliver the seamless experiences that modern healthcare demands.

The organizations that master orchestration will be better positioned to thrive in the next era of healthcare transformation.

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