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Charting The Path Forward To Value-Based Care
The U.S. healthcare system is undergoing a critical transformation in how care is financed. For decades, the fee-for-service (FFS) model has driven service volume with little accountability for efficacy or costs. According to the Commonwealth Fund, this model perpetuates poor healthcare access, lower care quality and lack of care continuity, contributing to staggering per-capita healthcare costs in the U.S., which are the highest globally. Furthermore, FFS contributes to economic instability and vulnerability for healthcare systems and providers.
The Covid-19 pandemic exposed these vulnerabilities as doctors and hospitals saw volume (and income) fall dramatically within days and took months to recover. Reliant primarily on care volume for revenue will continue to leave our healthcare system vulnerable.
In recent years, we’ve witnessed a shift away from the FFS model towards progressive value-based care (VBC) models that link provider payments to patient outcomes, care quality and cost efficiency. This is a fundamental overhaul of healthcare economics, and although it may be challenging and disruptive, I believe it’s essential.
Value-Based Care Requires a Significant Shift
VBC requires a significant shift in mindset, from simply providing care to proactively managing the health of patient populations. Advanced analytics tools can help reframe an FFS mindset with appropriate incentives, building competency in VBC models that necessitate taking on more clinical and financial risk.
To successfully transition, organizations should progressively build competencies. This involves investing in modern data management and advanced analytics technologies that work seamlessly together and improve the efficacy of change management strategies. Additionally, pairing data management and analytics with care technology allows providers to understand when and how to take decisive, targeted actions that help control costs and enhance patient outcomes.
Organizations also need payment technologies designed specifically for the administrative complexities of VBC to maintain operational efficiency.
Success Stories Abound
There are numerous success stories from innovative organizations engaging in alternative payment models that provide valuable insights and best practices:
• Vanderbilt University Medical Center implemented an advanced VBC bundled payments model, which improved outcomes, reduced costs and increased patient satisfaction with maternity care. (Disclosure: Vanderbilt Health is a client of Cedar Gate Technologies.)
• Large health plans are investing in tools that facilitate collaboration with their provider partners, delivering person-centric insights to enhance performance in VBC.
• Performance results from one of the newest Medicare VBC programs—ACO REACH—achieved significant savings for both the government and participating health systems.
The Time For Value-Based Care Is Now
Taking the leap from FFS to VBC can be daunting. In my work with thousands of payers, providers and self-funded employers, I’ve seen the challenges firsthand. I often think of it like crossing a chasm—on one side lies the FFS model, driven by incentives for volume, and on the other side is VBC, which rewards cost efficiency and outcomes. Attempting to operate both models simultaneously is unsustainable, as their incentives fundamentally conflict.
Organizations in transition find that the most uncertainty and vulnerability lie at the halfway point, where retreating to the perceived safety and comfort of a fee-for-service model seems easier than forging ahead to fully embrace VBC. However, hesitation to move forward can bring even greater long-term challenges.
I firmly believe that the path forward is clear. Organizations that begin their VBC journey today have options, including low-risk arrangements that provide a pathway to greater rewards when they proactively manage patient care and patient health. The new VBC mandate from CMS signals a future where organizations will no longer have a choice, so those who build their competencies now stand to gain a significant advantage as VBC firmly establishes itself as the standard model for care and payment in the U.S.
As the CEO of Cedar Gate Technologies, I’ve witnessed firsthand the transformative power of value-based care. By embracing this shift, organizations can revolutionize healthcare delivery, enhance patient outcomes and create sustainable financial models.
Source: https://www.forbes.com/councils/forbestechcouncil/2025/03/25/charting-the-path-forward-to-value-based-care/
