5 Questions Every CFO Should Ask Before Signing a Direct Contract

A direct contract should make a finance leader more confident, not less.

If the economics are hard to explain, if the savings depend on vague behavior change, or if the operating model lives entirely inside a vendor slide deck, the CFO should slow the room down.

These are the five questions worth asking before anything gets signed.

1. Where exactly do the savings come from?

“Lower total cost of care” is not an answer.

Ask whether the savings come from lower unit rates, faster payment terms, narrower referrals, reduced complications, fewer out-of-network claims, or tighter episode management.

You want the mechanism, not the slogan.

If the model depends on steerage, ask how much steerage is already happening in the assumptions. If the model depends on lower prices, ask whether those prices are locked contractually or just projected.

2. What has to change operationally for this to work?

A direct contract is not self-executing.

Who owns the member communications? Who handles exceptions? Who updates plan documents? Who makes sure people actually use the contracted provider? Who monitors access issues after launch?

If nobody can answer those questions cleanly, the contract is not ready.

3. What does the provider have to deliver besides a lower rate?

Price matters, but direct contracting only becomes strategic when the provider commits to more than a fee schedule.

Ask about:

• Access standards
• Scheduling turnaround time
• Reporting cadence
• Quality metrics
• Escalation paths for member issues
• Payment timing and clean claims rules

A weaker direct contract often looks like a traditional network deal with better branding. The stronger one behaves like an operating partnership.

4. How much concentration risk are we taking?

Narrower networks can create leverage. They can also create dependence.

If a large share of employee utilization is moving toward one system or one platform, the CFO needs to understand the downside.

What happens if performance slips? What happens if access gets tight? What happens at renewal? What happens if the provider learns the employer has no viable alternative?

The right answer is not “avoid concentration.” The right answer is “price it, understand it, and contract for it.”

5. How will we know in 12 months whether this worked?

Define the scoreboard before go-live.

At minimum, that should include:

• Unit cost movement
• Total cost of care for the targeted population
• Referral leakage
• Utilization change
• Access metrics
• Member experience issues
• Actual versus modeled savings

If the contract launches without a scorecard, the post-launch narrative will be driven by anecdotes.

That is bad finance discipline.

The bottom line

Direct contracting can absolutely be worth it. But the value does not come from the word “direct.” It comes from better economics, cleaner execution, and tighter accountability.

A CFO does not need to become a benefits strategist to evaluate that.

They just need to keep asking one question until they get a straight answer:

What exactly changes if we sign this?