December 09, 2024

Centers of Excellence Considerations for Employers

Centers of excellence (COEs) are one strategy for steering employees to health care providers who practice efficiently, at a high quality, for reasonable and predictable prices.

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Quality and cost variation are pervasive and plague health care delivery systems across the globe. Centers of Excellence (COEs) are groups of health care providers who practice high-quality, efficient care for reasonable and predictable prices. Employers and health plans on their behalf have contracted with COE providers for 20 or more years. However, the scope of conditions and procedures offered via COEs has evolved and expanded considerably – from low-volume, high-cost procedures like transplants to far more common conditions like joint replacements and mental health. The promise of higher-quality and lower-cost outcomes appeals to employers who see COEs as having the potential to impact overall cost trend, transforming the experience of patients. With a growing share of costs attributed to fewer patients, employers continue to evaluate their benefit strategy for opportunities to steer employees to high-performing providers through a COE program.

What is a COE?

Generally, COEs are groups of providers who are selected to perform certain specialized services because of their expertise, outcomes and favorable financial arrangements. There is no standardized definition of a COE, putting the onus on employers and their industry partners (e.g., health plans, consultants) to assess the quality and scope of practice of COEs. According to Business Group on Health’s 2025 Employer Health Care Strategy Survey, the vast majority of large employers will offer access to at least one type of COE in 2025 through their health plans, direct contract with COEs or through a specialty COE network (Figure 1).

 

Figure 1: COE Access Points, 2025

Source: 2025 Employer Health Care Strategy Survey

Which Conditions or Procedures are Covered by COEs?

COEs have traditionally covered procedures that are complex, episodic and have a high cost for individual patients and employers. For conditions like transplants or heart surgery, patients are more willing to change providers and/or travel for higher-quality outcomes, whereas more high-volume procedures such as joint replacement and treatments of less complex cancers can often be adequately treated by providers in the community without patient disruption and the additional cost of travel. Time-limited procedures are more easily reimbursed via bundled payments, which are incorporated into many COE contracts to ensure appropriate coordination of all aspects of care and increase predictability of costs.

Emerging and Expanding Conditions or Procedures Covered by COEs

• Cancer: Large employers identify cancer as the top condition driving their health care costs in 2024, likely driving the significant interest in cancer COEs; 49% of employers will offer cancer COEs in 2025, and another 26% are considering implementation in the next 2 years (Figure 2). A growing number of employers contract with and steer employees to cancer COEs to get better patient outcomes and more value-based care arrangements. In fact, the Business Group’s 2025 Employer Health Care Strategy Survey results show that 72% of employers are currently experiencing a higher prevalence of cancers in their population, and another 16% are anticipating this occurrence in coming years, attributed in part to deferred care. These findings are fueling the growth in adoption of COE strategies for cancer.
• Cell and gene therapy: Even though there are strict criteria determining which providers can deliver these hyperspecialized therapies, there is still variation in quality across them. The pipeline for these therapies and the high costs mean that employers will need to proactively look for ways to steer employees toward the highest-quality facilities. Existing COE models will need to be adapted to accommodate specific criteria appropriate for various cell and gene therapies, particularly where needs exist outside the U.S.
• Maternity: With the continued challenge of inappropriately high C-section rates in several hospitals, as well as unacceptable rates of maternal mortality, particularly for Black women, COEs have opportunities to improve outcomes and reduce overall cost.¹ One challenge for this type of COE is that patients may have a well-established relationship with an OB/GYN prior to conception and birth, which may make steering them to COE hospitals or partnering with providers outside their OB/GYN’s normal practice more difficult. Nevertheless, survey findings reveal that the number of large employer respondents offering COEs for maternity is expected to increase from 31% in 2025 to 46% in 2026-2027 (Figure 2).
• Mental health: Given the prevalence and complexity of treating mental health conditions, there is a tremendous opportunity to expand COEs for substance use disorder (SUD) and other high severity mental health issues. But there are still some challenges. For example, quality measurement for mental health care is relatively new compared to physical health. Additionally, most mental health conditions are chronic, so it may take longer to measure outcomes meaningfully than for discrete procedures.² Even so, 43% of surveyed employers are offering or are considering offering mental health COEs in 2025-2027 (Figure 2). COEs for SUD are on the rise as well, with 29% of employers offering them in 2025 and an additional 17% considering doing so in 2026/2027 (Figure 2).
• Long COVID: Understanding and responding to long COVID is becoming increasingly important as the long-term impacts of COVID-19 become more well known. COE offerings for long COVID are increasing: In 2025, 20% of surveyed large employers will offer a long COVID COE, with another 10% considering doing so in 2026/2027 (Figure 2).
• Transgender: Another type of COE is one that provides care and services geared specifically toward meeting the health needs of transgender individuals. From a quality-assurance perspective, COEs treating individuals who are transgender and/or gender nonconforming must have a certain level of cultural competency/congruency to be considered truly effective.

 

Figure 2: Centers of Excellence by Condition, 2025-2027

Source: 2025 Employer Health Care Strategy Survey

Expanding Global COEs Present New Opportunities and Challenges

While value-based care is practiced by health care providers around the globe, employer strategies to steer members to high-quality care are still evolving. This is true for globally based employees seeking care within the country in which they reside, as well as others who may need to travel across countries for high-quality care. A global COE strategy has the potential to improve quality of care, reduce cost and improve access to specialty services such as family-forming care, cell and gene therapy and transgender care, especially where they may be challenging to find locally.

Identifying a credible network of exceptional care centers across borders can be challenging, particularly given the wide variation in the availability and transparency of quality, cost and outcomes data. In response, various organizations such as the Australian Council on Healthcare Standards, the Global Benefits Association, consulting firms and other emerging vendors have begun to curate COE-like networks intended for use by multinational companies.^3,4 With health care costs and regional access challenges growing, driving employees to facilities within a reasonable distance that can deliver high- quality and affordable care, whether locally or internationally, may be the next frontier.

Employers, of course, will need to consider which cases qualify for travel to a global COE vs. a local COE, balancing convenience, cost and quality. Any employer considering a global COE strategy will need to take care to align travel policy with local and regional legal restrictions, as well as ensure that member needs are met throughout their preparatory and recovery periods.

Medical tourism, primarily focused on unit cost savings, is distinct from a travel program for a global COE, which includes a clear focus on improving access to the highest-quality care, often for complex cases. When communicating about the availability of COE options, including those that require travel, employers should make sure to emphasize that patients will receive higher-quality care. Those who partake in medical tourism, while a different phenomenon, should still ensure that lower cost facilities meet minimum quality standards.

For more information on value-based care globally, see Business Group on Health’s resource on Driving Value in Health Care Around the Globe.

Key Questions Employers Should Ask Their Carriers About COE Strategies

• What conditions or procedures are currently part of your COE offerings, if any? How do these COEs (and individual providers affiliated with the COE) perform compared to non-COE providers on outcomes, readmission rates, time back to work, appropriate utilization, patient experience and other metrics of interest?
• Which high-cost conditions appear frequently in your employee population for which the company does not currently offer a COE? Are there significant access, quality, outcomes or cost variations among providers for these conditions that would warrant a COE strategy?
• Which quality metrics are of greatest importance to your company? Will you rely on health plan inclusion criteria or create your own custom COE network? How often will you reevaluate inclusion criteria and provider eligibility?
• Are you willing to create travel programs and benefits if only a handful of provider groups meet your standards? What exception criteria will you implement for those unable to travel to a provider within a given geographic distance?
• How will your travel program address international travel (if appropriate)?
• How will your program ensure that legal obligations are met for employees seeking procedures at Global COEs?

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