5 Examples of a Health Insurance Value Chain

There many links in the health insurance value chain and all of them play a part in the amount that health care costs individuals and businesses. The links of the chain are interconnected and cost increases in one link will usually affect the other links of the value chain as well. To make the chain easier to understand, take a look at the various parts.


Patients are the people that pay for medical services. Patients pay for services by making copayments or premium payments. The patient pays both service intermediaries and medical service providers.

Service Intermediaries

Service intermediaries are the insurance companies, health maintenance organizations and preferred provider organizations that administer health care plans and determine copayments, deductibles and premium rates for individual and group health care plans. They receive payments from the patient, and make payments to medical service providers and suppliers.

Medical Service Providers

Medical service providers are the doctors, hospitals, pharmacies and other health care professionals that provide services to patients. The medical service provider may a member of a larger service intermediary or not. Medical service providers are paid by patients and service intermediaries. They make payments to suppliers and manufacturers.


Suppliers (also known as purchasers) are the link in the chain that includes wholesalers, mail order supply companies or other bulk product buyers. Suppliers purchase equipment and medicines from manufactures and then sell them to medical service providers, patients and service intermediaries. Suppliers are paid by medical service providers, patients and service intermediaries and usually only make payments to manufacturers.


The manufacturers are the companies that produce drugs, devices and equipment used by medical service providers and patients. Manufacturers are paid by medical service providers, suppliers, service intermediaries and on occasion patients. Manufacturers typically don’t pay any other group in the chain.

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