Severance + Value Sharing: A New Model for Responsible Automation in Healthcare

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Problem: Severance in the Age of Automation Falls Short

In traditional workforce reductions, severance functions as a transactional bridge: a one-time payout designed to soften the blow of job loss. While useful in the short term, it offers little long-term security and disconnects displaced workers from the productivity gains that rendered them redundant.

This model is increasingly out of step with healthcare, where automation and artificial intelligence are transforming the administrative backbone of the industry. Tasks such as claims processing, prior authorization, and revenue cycle management are ripe for automation. McKinsey estimates that nearly 30% of healthcare administrative tasks could be automated by 2030, while administrative costs already account for ~60% of payer and provider overhead.

The result is a paradox. On one hand, automation promises significant cost containment—critical for payers, providers, and government entities. On the other, it displaces workers whose knowledge often trained these very systems. The moral tension is clear: should workers who built institutional processes be excluded from the long-term value that replaces them?

Solution: The Severance + Value Sharing Model

The Severance + Value Sharing Model redefines severance not as an exit fee, but as a mechanism for shared value creation. Instead of only paying employees a lump sum at termination, organizations share a portion of the ongoing cost savings generated by automation or restructuring.

How it works:

• Royalty-style payouts: Employees receive a share (e.g., 5–10%) of annual savings for 2–3 years.

• Profit-sharing pools: Value is tied to automation performance metrics, with displaced employees participating in gains.

• Equity or options: In cases where automation relies on vendor platforms, employees could receive equity stakes, aligning them with future upside.

• Retraining + cash benefits: Pairing multi-year payouts with funded retraining creates a stronger bridge to new opportunities.

This model reframes layoffs as shared value transitions rather than unilateral cost-cutting.

Startup Examples and Market Implications

Healthcare startups can differentiate themselves by embedding this approach into their automation offerings. For example:

• AI Claims Automation Firms: Instead of selling cost savings as pure efficiency, startups can partner with payers to design shared value structures, strengthening adoption.

• Workforce Transition Platforms: Emerging startups could build “Automation Impact Trusts” that administer value-sharing pools transparently, making savings distribution credible.

• Reskilling Ventures: EdTech and digital health reskilling platforms can bundle their services with automation initiatives, funded directly from value-sharing proceeds.

In this way, startups don’t just sell efficiency—they sell responsible modernization.

Government + Payer Tie-In

Payers and providers face increasing scrutiny from unions, regulators, and the public. By adopting Severance + Value Sharing, they demonstrate fairness, mitigate resistance, and align with ESG objectives.

For government, the opportunity is even greater. CMS or CMMI could pilot this model as part of modernization programs, just as Trade Adjustment Assistance (TAA) softened the impact of manufacturing offshoring. Tax credits could incentivize adoption, ensuring displaced healthcare workers are not left behind as AI adoption accelerates.

This model also aligns with federal workforce priorities around equity, transparency, and sustainable employment—values that are central to agencies like HHS, VA, and CMS.

Case Example: Claims Processing

Take a health plan with 200 claims processors earning $50,000 annually—$10 million in total labor costs. Deploying AI adjudication reduces headcount by 50%, generating $5 million in savings per year.

In a traditional severance model, workers might each receive $20,000 upon departure. Under Severance + Value Sharing, the organization could commit 10% of savings ($500,000 annually) into a three-year pool. Each displaced employee receives ~$25,000 annually, plus retraining support. The organization still retains 90% of savings while preserving goodwill and social license.

Recommendations

| For Startups: Market automation not just as cost savings, but as ethical transformation. Embedding workforce fairness into your business model will resonate with payers, providers, and government buyers.

| For Payers + Providers: Pilot Severance + Value Sharing in highly automatable areas like claims, billing, and call centers. Use results to demonstrate ESG leadership and reduce union or employee resistance.

| For Government: Incentivize adoption through tax credits or pilot programs. Position value-sharing as a modernization guardrail, ensuring automation aligns with federal workforce priorities.

| For Consultants + Investors: Frame this as a Future of Work in Healthcare offering. Responsible automation is not only a workforce issue—it is a reputational and strategic differentiator.

Conclusion

The Severance + Value Sharing Model is more than a compensation mechanism—it is a new paradigm for responsible automation. By linking displaced workers to the value created by automation, healthcare organizations can reduce costs, strengthen trust, and set a new standard for ESG-forward modernization.

Healthcare, with its combination of high automation potential and deep moral obligations, is uniquely positioned to pioneer this model. Done right, it could shift the narrative from “AI is stealing jobs” to “AI is creating shared value.”