Why most health plans overspend, underdeliver, and can’t clearly explain why

Every health plan executive today is under the same pressure: do more with less, improve outcomes, modernize platforms, stay compliant, and protect margin. The problem isn’t ambition. The problem is that most of these decisions are being made without a true understanding of delivery capacity.

Not budget.
Not headcount.
Actual, usable capacity.

Capacity is the organization’s ability to turn strategy into execution. It is how much work can realistically be delivered, at what pace, with what quality, and at what cost. When executives don’t have a clear view of this, they operate in a state we refer to as capacity blindness. It’s subtle, but expensive. And it’s one of the main reasons transformation initiatives stall or miss their financial targets.

Most organizations believe they understand capacity because they track staffing levels and budgets. In reality, those only describe potential, not productivity. Two teams with the same headcount can produce radically different outcomes. The difference lies in everything that consumes time without producing delivery: meetings, administrative work, training, platform inefficiencies, rework, data quality issues, and simple organizational friction. Over time, these invisible drains erode execution power without ever showing up on a financial statement.

In practice, we see that only about 55–65% of paid hours convert into productive delivery time. The rest disappears into necessary, but unmanaged, overhead. When this isn’t measured, it isn’t planned for. And when it isn’t planned for, strategy becomes aspirational rather than executable.

This is where many executive teams begin to feel the disconnect between investment and outcome. Budgets increase. Headcount grows. Vendor spend expands. Yet performance barely improves. The conclusion is often that the organization needs “more people.” In reality, what it needs is more clarity.

Capacity blindness creates three predictable failures.

First, organizations hire when the real issue is workflow or platform design. Second, they outsource without understanding which work should remain core versus commoditized. Third, they approve transformation roadmaps that cannot realistically be delivered by the operating model that exists today. Each decision feels logical in isolation. Together, they quietly compound financial and operational risk.

A more disciplined approach begins by reversing the traditional planning sequence. Instead of starting with budget, progressive organizations start with capacity. They ask a different question: What delivery capability is required to execute our strategy, and where should that capability live?

This shift changes everything. It forces leadership teams to articulate which work truly matters, which work must be internal, what can be outsourced, what can be automated, and what is simply unrealistic under current constraints. Staffing decisions stop being emotional or reactive and start becoming structural.

A true capacity model doesn’t just count people. It makes delivery visible. It separates:

• Time spent on direct delivery work
• Time lost to meetings, administration, training, and friction
• Total usable capacity
• The gap between strategy and execution reality

Want to See What This Looks Like in Practice?

We created a practical executive framework that shows how to:

• Quantify real delivery capacity
• Compare internal vs outsourced models
• Identify structural inefficiencies
• Understand the true cost of closing execution gaps

It’s the same model we use with health plan leadership teams to bring clarity to staffing, outsourcing, and transformation decisions.

[Download the Executive Guide to Capacity-Driven Planning in Healthcare]

When these components are clearly defined, financial decisions become grounded. Leaders can see whether it is more rational to hire, outsource, redesign workflows, or sequence initiatives differently. Cost stops being an abstract number and becomes a function of execution design.

This matters more now than ever. Health plans are being asked to modernize care management platforms, improve clinical throughput, support regulatory change, and reduce medical and administrative waste at the same time. These are delivery-heavy initiatives. None succeed without honest capacity alignment. At this point, capacity planning is no longer an operational exercise. It is a board-level discipline.

At Impresiv Health, we built our Capacity & Cost Planning framework to bring this clarity to executive teams. It was designed to answer questions most organizations struggle to quantify:

• How much delivery capacity do we truly have today?
• How much does our strategy actually require?
• Where are we structurally underbuilt?
• What is the financial impact of closing that gap?
• Which delivery model gives us the best balance of cost, speed, and control?

This model is not a budgeting spreadsheet. It is a decision-making framework. It allows leaders to align operations, finance, and strategy around a shared view of reality. When that happens, conversations change. Staffing becomes intentional. Vendor relationships become strategic. Transformation becomes executable.

This approach is especially valuable for organizations navigating care management optimization, platform modernization, operational outsourcing, MLR improvement initiatives, or growth strategies that cannot rely on linear headcount expansion. In all of those cases, capacity is the limiting factor long before budget is.

The uncomfortable truth is that most organizations do not lack effort or talent. They lack visibility. They are trying to manage execution without a clear picture of how execution actually works.

And you can’t manage what you can’t see.

Download: The Executive Guide to Capacity-Driven Planning in Healthcare