Post-Mortem: What to Do When a Direct Contract Fails

No one likes to talk about failed direct contracts.

Deals wind down quietly. Steerage stalls. Renewal conversations fade.

That silence is expensive.

A failed contract can either:

• Poison the well for years (“we tried that once, it didn’t work”), or
• Give you a clear playbook for what to do differently next time.

The difference is whether you run a real post-mortem.

Start with the original thesis

Before you autopsy the results, revisit what you were trying to do.

Pull your original:

• Business case
• Steerage assumptions
• Partner selection rationale

Write down, in one paragraph:

“We signed this contract to accomplish X with Y partner by doing Z.”

You cannot judge success or failure without remembering what success meant.

Separate design from execution

A simple matrix helps:

• Good design, good execution → keep and expand.
• Good design, bad execution → fix ops and try again.
• Bad design, good execution → wrong target or partner.
• Bad design, bad execution → start over.

Ask bluntly:

• Did we pick the right service line and market?
• Was the provider partner a real fit?
• Did we design benefits and incentives that made sense?
• Did we give the implementation team what they needed?

You will almost always find issues in both design and execution. Name them explicitly.

Look at the data, not just the anecdotes

Three basic cuts:

• Steerage: Did eligible cases actually use the path?
• Unit cost: Were program cases cheaper than baseline?
• Experience and operations: How many escalations and complaints did we see?

Patterns to look for:

• Low steerage but strong unit cost → communication and incentives problem.
• Good steerage but weak unit cost → pricing or scope problem.
• Savings on paper but member anger → experience and access problem.

Your goal is not to assign blame.

It is to understand which failure mode you’re in.

Talk to the people who lived it

Have structured conversations with:

• Members who used the program (and some who chose not to).
• HR business partners in affected regions.
• Provider and TPA teams who handled day-to-day operations.

Ask:

• “What surprised you, good or bad?”
• “Where did we make this harder than it had to be?”
• “If we did this again, what would you change first?”

Listen for recurring themes rather than single horror stories.

Decide the fate of the contract

After you have data and stories, force a decision:

• Terminate and capture lessons. Sometimes the answer is simply “this is not the right fit for us.”
• Renegotiate with clear changes. If the relationship is solid but the structure is wrong, come back with a sharper ask.
• Scale back or narrow the scope. Keep the parts that work; drop the rest.

Whatever you choose, document the reasoning.

Future you—and future executives—will need it when the topic comes up again.

Keep the credibility you earned

Even a failed contract can build credibility if you:

• Were honest about goals and results.
• Closed the loop with members and providers respectfully.
• Showed that you learned something concrete.

Direct contracting is a portfolio of experiments over time, not a single make-or-break bet.

Treating failures as data, not as embarrassments, is how you get to a portfolio that actually bends your trend instead of your reputation.