(The Center Square) – As the cost of health care continues to climb, state governments including North Carolina are turning to private companies for solutions.
North Carolina has contracted with a company called Lantern to get lower costs for surgeries from medical providers in exchange for the high-volume of patients that a state health plan can offer.
Members of the state health plan choosing a provider in the Lantern network will have no out-of pocket costs such as deductible or copays and may also be eligible for in-state travel expenses.
The state had tried a similar approach earlier, but was not successful, Thomas Friedman, executive director of the North Carolina State Health Plan, told TCS.
“But we learned that our members were willing to switch their provider behavior for a lower out of pocket cost on their end,” Friedman said.
When Friedman took over as director of the State Health Plan in early 2025, it was facing a $570 million deficit in 2026 as health care costs exceeded premiums paid by members. Without action, the deficit would have grown to $1.4 billion in 2027, Friedman said.
There wasn’t enough time for the state to develop a system of steering patients to providers that would provide lower charges in exchange for a higher volume of patients, Friedman said. Lantern was one of the private companies that was already established and could move much faster, he said.
“We found Lantern to be best fit for the problem we were trying to solve,” Friedman said. “They had the technology to do what we wanted to align incentives.”
Lantern specializes in surgery, cancer treatment and infusions, CEO John Zutter told TCS. It has developed a national network of high-performance medical providers over the last decade, he said.
Its clients are self-funded health benefit plans, including states such as Florida and Alaska and most recently North Carolina. The partnership allows North Carolina to steer patients to providers that offer both high quality services and lower cost, Zutter said.
Employers are looking for solutions to the “financial toxicity” that hits patients when they encounter a major health problem, the CEO said.
There are huge variables in the amount medical providers charge for procedures, Zutter said.
“You can often see the low-cost provider being a third of the high cost provider,” he said.
For example, a knee replacement surgery in an out-patient setting compared to a hospital setting can result in a “massive” savings, Zutter said.
Employers who partner with Lantern typically save around 50% on the costs of procedures, Zutter said. Lantern, a private for-profit company, is paid by the employers not the providers based on the amount it saves through lower health care costs.
For now, North Carolina is using Lantern only for patients who need surgery but plans to expand to cancer treatment and pharmacy as well, Friedman said.
The savings from the partnership with Lantern will save the state tens of millions of dollars each year, Friedman said.
“We are trying to make market-driven decisions on price across a plethora of services and make it easier for folks to get to Lantern providers,” he said.
