Chronic disease has quietly become one of the largest controllable line items in employer health spending, and a growing number of employers are concluding they cannot manage it alone. That is the core message of a Mercer analysis examining how health systems and employers can team up to tackle chronic conditions directly, rather than through the traditional intermediary-heavy benefits stack.

The framing matters for HR and benefits leaders. For decades, the default employer posture toward chronic disease was indirect: buy insurance, add a disease management vendor, offer wellness incentives and hope utilization patterns improved. Mercer's argument is that this posture leaves value on the table. Health systems — the organizations that actually deliver care, employ specialists and hold patient data at the point of treatment — represent an underused partner for employers seeking better outcomes for the same or lower cost.

What does partnership look like in practice? The analysis points to several structural options employers can explore with provider organizations in their labor markets. One is direct contracting, where a self-insured employer steers members to a specific health system for chronic condition management in exchange for pricing and quality commitments. Another is care coordination built around the system's existing infrastructure — primary care networks, specialty clinics and navigation services — rather than parallel vendor programs that duplicate effort and fragment data.

The logic is straightforward. Employees with diabetes, cardiovascular disease, musculoskeletal conditions and behavioral health needs typically touch multiple parts of the care system. When employers and health systems align on those patients, care gaps close faster than when a third-party vendor tries to influence behavior from outside the delivery system. The provider already has the clinical relationship. The employer has the financial stake and the population concentration. Neither can achieve much alone that they could achieve together.

For people-process decisions, the implications reach beyond benefits administration. HR leaders evaluating this path face a set of capability and adoption questions rather than a simple purchasing decision. Which health systems in your market have the scale, quality data and appetite to negotiate directly with an employer? Can your health plan or third-party administrator support direct contracting arrangements, or does the current contract lock you into network structures that make partnership impossible? Do you have the claims and condition prevalence data to identify which chronic conditions drive your spend and which patient populations would benefit most from coordinated care?

Then there is the measurement question. Any employer entering a system-level partnership needs baseline metrics — condition-specific costs, emergency department utilization, medication adherence, avoidable admissions — and a contractual mechanism to track whether the arrangement actually moves them. Without that, a partnership risks becoming a marketing relationship rather than an accountability structure.

Employee experience deserves equal weight. Redirecting employees toward a partner health system changes how they access care, and poorly communicated changes generate friction that undermines clinical goals. HR teams will need to coordinate communications, enrollment logistics and support channels alongside the benefits strategy work, and plan for transition periods when employees with established provider relationships need help, not mandates.

Mercer's analysis positions this as a practical playbook rather than a theoretical case: employers and health systems share an interest in keeping working populations healthy, and the mechanisms for collaboration — direct contracts, coordinated care programs, data-sharing agreements — already exist in many markets. The constraint is rarely clinical capability. It is the willingness of both sides to negotiate arrangements that tie payment to outcomes.

For benefits leaders planning 2025 and beyond, the takeaway is to treat local health systems as strategic counterparties, not just network vendors. Employers that begin those conversations now — with data in hand and measurable goals defined — will be better positioned as care delivery partnerships move from experiment to expectation.