Tammy Hawes is CEO and Founder of Virsys12, a technology company focused on Provider Lifecycle Network Management automation/AI.
Healthcare is facing a pivotal moment in provider data management. As revealed in recent research from the American Journal of Managed Care, 40% of provider directory inaccuracies persist for an average of 540 days—an alarming statistic that highlights the industry’s continued reliance on outdated manual processes. With the 2026 REAL Health Providers Act looming and mounting pressure for digital transformation, the industry stands at a crossroads.
The Cost Of Inaction
For healthcare organizations, the financial implications of maintaining the status quo are staggering. Manual directory management for a small payer with just 10,000 providers can cost over $300,000 annually in verification processes alone.
For larger payers, these costs can balloon to over $22 million yearly. But the real cost isn’t just financial—it’s in reduced patient access to care, administrative burden on providers and potential regulatory non-compliance.
The Technology Imperative
The solution lies in automated provider data management systems that can handle the complexity of modern healthcare networks. As recognized in Gartner’s 2024 Hype Cycle for U.S. Healthcare Payers, provider network management platforms are becoming essential infrastructure rather than optional tools. These systems must address several critical challenges:
1. Data Complexity Management: Modern healthcare requires tracking multiple taxonomy levels, intricate hierarchies between provider groups and various address types for different purposes.
2. Real-Time Updates: With regulatory requirements demanding 90-day verification cycles and five-day removal windows for non-participating providers, manual processes are no longer sustainable.
3. Integration And Compliance: Healthcare organizations need systems that can seamlessly integrate with existing infrastructure while maintaining compliance with evolving regulations like CMS FHIR standards.
The Build Vs. Buy Decision
Building a custom provider lifecycle management solution in-house for provider data can seem like the best path forward. After all, who knows your organization’s needs better than you do? But before you jump onto the build bandwagon, consider these questions:
• Do you have a crystal-clear vision of what you want to achieve? A clear understanding of project goals is essential. Organizations must define what the custom build aims to accomplish and align these objectives with business and IT stakeholders’ expectations.
• Are the right technical and business resources available in-house? The technical and business expertise and bandwidth, with a deep understanding of the provider lifecycle management workflow and regulatory requirements required for a custom build, is substantial. Managing resources and project timelines becomes critical.
Healthcare organizations face a critical choice: build custom solutions or invest in specialized provider lifecycle management software. While building in-house might seem appealing, the complexity of provider data management makes this approach risky. Purpose-built software for provider lifecycle workflows offers several advantages:
• Faster implementation timeframes with best practices.
• Built-in regulatory compliance for the use case.
• Continuous updates and improvements as part of the licensing cost.
• Lower total cost of ownership.
• Specialized healthcare and specific use-case expertise.
The Path Forward
As we approach the 2026 deadline for the REAL Health Providers Act, healthcare organizations must act now to modernize their provider data management systems. The technology exists to transform what has historically been a burden into a strategic asset. Those who embrace this transformation will be better positioned to ensure regulatory compliance, improve patient access to care, reduce administrative costs, enhance provider satisfaction and drive better healthcare outcomes.
Looking Ahead
The healthcare industry can no longer afford to rely on manual processes and disparate systems for provider data management. As we’ve seen from recent industry recognition and technological advances, 2025 may mark a turning point in how healthcare organizations approach provider data management. Those who embrace this change now will be best positioned to thrive in an increasingly complex healthcare landscape.
The question isn’t whether to modernize provider data management—it’s how quickly organizations can implement solutions that will meet both current needs and future challenges. The technology is ready; now it’s time for healthcare leaders to take action.
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