The U.S. healthcare system is facing mounting pressure to improve outcomes while controlling spending.
Healthcare spending reached $5.3 trillion in 2024, accounting for 18% of the nation’s gross domestic product, and federal projections show health spending’s share of GDP rising to 20.6% by 2034.
At the same time, healthcare organizations, physician practices, health plans and employers are increasingly looking to value-based care to improve quality and patient experiences while addressing the rising cost of care.
An AMA commentary—written by Christopher Botts and Carol Vargo, MHS—published in The Permanente Journal identifies three persistent barriers to broader, sustainable adoption of value-based care: infrastructure and data limitations, financial and contractual complexity, and cultural and organizational readiness. The work draws on advisory work groups convened by the AMA, AHIP and the National Association of Accountable Care Organizations, as well as literature reviews, environmental scans and interviews with subject-matter experts.
The study also outlines key opportunities for organizations to overcome those barriers, including stronger data infrastructure, clearer financial models and targeted education and coaching, all bolstered by meaningful physician leadership.
For Wyatt Decker, MD, executive director of the Health Care Transformation Hub and executive vice president and chief physician for value-based care and innovation at UnitedHealth Group, those changes require more than a new payment arrangement. They require a fundamental shift in how healthcare is organized and delivered.
UnitedHealth Group is part of the AMA Health System Member Program, which provides enterprise solutions to equip leadership, physicians and care teams with resources to help drive the future of medicine.
Value-based care requires a shift toward keeping people healthy
At Optum Health—part of UnitedHealth Group—that transformation involves nearly 10,000 employed physicians and working with about 70,000 physicians nationwide, many of whom are in independent practices, Dr. Decker noted.
“Value-based care means a lot of different things to different physicians in different places and parts of the healthcare delivery value chain,” he said. “When I think about and speak about value-based care, I'll generally be referring to care delivery where the physicians and clinics, as well as maybe a payer behind them or the government, is fully responsible for the healthcare spend of that individual.”
It is important to recognize, however, that healthcare organizations and physician practices have varying levels of readiness for and ability to take on such levels of responsibility, including differing factors pertaining to the patients they serve and experience managing such levels of accountability, among other considerations.
When appropriate, taking on full accountability for patients’ health can fundamentally change the way physicians and care teams are able to approach caring for them, Dr. Decker said. “When it's all at risk, it really requires a massive transformation.”
That transformation begins with a cultural shift from primarily treating illness to actively working to keep people healthy and well.
“Most doctors went into healthcare because they like the idea of keeping people healthy,” he said. “But the truth is, in medical school, most of us spent very little, if any, time on how to keep people healthy and well.”
Medical education has traditionally emphasized diagnosing problems and determining what is wrong with a patient, Dr. Decker said. Value-based care adds a stronger emphasis on prevention and managing existing conditions before they result in more serious, and potentially more costly, health problems.
“There actually is a significant mind shift and culture shift in moving towards preventative and secondarily preventative,” he said. “Meaning, OK, you've got heart disease, but how do we keep you from getting a heart attack?”
Optum Health currently has about 4.7 million patients in a care delivery model focused on that approach, Dr. Decker said.
Payment, team-based care and data can change day-to-day practice
Moving from purely fee-for-service to value-based care also requires changes in incentives—both in terms of payment as well as potential non-financial benefits—clinical models and the way care teams gather and use information.
“Perhaps the first one is just putting incentive, including payment, systems in place that reward physicians for what they ultimately care about most: keeping people healthy and well,” Dr. Decker said.
In a fully accountable model, physicians and organizations can take responsibility for a defined population and its healthcare spending. That shifts the incentives from paying for individual services to supporting ongoing, high-value care.
“The change is in the financial incentives from solely volume-based fee-for-service, which is more transactional, to a more longitudinal prospective payments for keeping people healthy and well,” he said.
But payment alone is not enough. Organizations also need care models that give physicians the resources, expertise and information needed to proactively manage a population.
“You need clinical models,” Dr. Decker said. “So, you need to actually have teams, team-based care, which we're all familiar with now. But on those teams, you need experts in various pieces and parts.”
That can include behavioral health professionals, case managers and pharmacists. A case manager might monitor whether a patient missed an appointment, filled a prescription or needs assistance navigating the healthcare system. A pharmacist can help patients taking multiple medications make sure those medications are appropriate and do not have negative interactions.
Data analytics can then help identify patients with conditions such as depression, heart failure, diabetes or kidney disease who may benefit from additional support.
“And then we need the specific programs for those more serious chronic diseases such as kidney disease or heart failure,” Dr. Decker said. “They're complex enough that it's really good and very powerful to have a program in place to say, ‘Here's how we manage various stages of heart failure,’ as an example.”
The AMA commentary similarly points to the importance of integrating actionable information into clinical workflows rather than creating additional administrative work for physicians.
One example both the AMA commentary and Dr. Decker offered are admissions, discharges and transfers (ADT) feeds. When a patient enters an emergency department or is admitted to a hospital, the patient's accountable care team can receive a proactive notification.
“If your care or case manager becomes aware of that when they're still in the ER, that's the admission, the A, you get that little ping,” he said.
That information can make a difference in how an emergency physician approaches a patient's discharge.
“If you have a case manager who reaches out to you while that patient's with you and says, ‘Well, Mrs. Gonzalez is part of our network and we can send a home healthcare worker in twice a day and a nurse every other day or whatever seems appropriate,’ then as an ER physician, I feel like I'm actually not just dismissing her into the wilderness,” Dr. Decker said. “I'm actually sending Mrs. Gonzalez to a team that's going to keep a close eye on her.”
Creating that kind of connectivity across hospitals and physician practices takes significant work.
“Everybody who practices these kinds of value-based care models, including us at Optum Health, had to work individually with every hospital to say, ‘How do you know if it's a patient in our program? And then how can we get a ping that isn't onerous?’” Dr. Decker said.
Sharing clinical records when patients receive care in different locations is another important piece of the infrastructure.
“There's a huge need for this, and it is happening, but I'll just be frank, it's been slow, and it's a lot of work to put it in place,” he said.
Clear expectations and physician leadership help build trust
Financial and contractual complexity is another challenge identified in the AMA study. Dr. Decker said Optum works with independent practices to help care teams better understand what to expect in a particular arrangement and how to clearly connect their participation with an aligned goal of better patient care.
“We often send subject matter experts to independent clinics to work with doctors and the whole care team around, ‘Here's what our goals are and how we can succeed together,’” he said.
That might involve identifying patients who are due for mammograms, vaccinations or colorectal cancer screening, making sure those services occur and are appropriately documented to support the overall goals of improving patient outcomes and avoiding unnecessary costs in the future.
“What's really great about these value-based care designs is that then you take what's good for patients, keeping them healthy,” Dr. Decker said.
Any documentation, he added, should be made as easy and less burdensome as possible.
Where feasible, you can use AI systems to help automate some of these kinds of processes, he noted.
Technology can also help make preventive care a more normal part of the workflow rather than yet another task physicians and other health professionals have to remember.
“We put infrastructure in, we put technology to ping you and remind you, and then we ask that you make sure it happens and it gets appropriately documented,” Dr. Decker said. “We have to make sure the team knows what is expected of them and how to do it. It’s a sort of a learning curve. It's just a little different than if you've been a busy practice that has had a lot of fee for service.”
Physician leadership is also central to making the transition work and ultimately sustainable.
“Building trust is fundamental to being successful in care delivery,” Dr. Decker said. “It's really important that you have physician leadership at all levels of any organization that delivers care, whether it be a private practice, hospital, Optum Health, UnitedHealth Group.”
Physicians should be involved not only in delivering care directly but also in overseeing care strategies and participating in leadership decisions, he said.
The patient must remain at the center of those decisions as well.
“When I was a busy practicing physician and trained residents at the Mayo Clinic, we would always remind them, ‘OK, what if this patient was your sister, brother, mother, or father?’” Dr. Decker said. “And really, you should be treating every patient that way. Some might say it sounds a little Pollyannaish, but it's a powerful metaphor for young doctors to think about.”
At the organizational level, he said, healthcare processes should also be understandable and navigable for patients.
“Let's make sure that our processes are navigable to average people who don't have degrees in healthcare,” he said. “Because as you know, often the healthcare experience is too fragmented and too complex.”
Measuring value means looking beyond spending
For organizations implementing value-based care, success cannot be measured by financial performance alone.
Dr. Decker noted that Optum uses a range of metrics that reflect the quadruple aim, including patient experience, clinical outcomes and quality, care team experience and cost.
“What are your patients experiencing?” he said. “Then, of course, you've got patient outcomes, quality, and safety.”
Organizations also need to pay attention to the experience of physicians and other health professionals.
It is important to think about our physicians and other members of the care team, “the clinicians themselves, and are they frustrated, burning out, or do they love their work, or something in between, which, frankly, it often is,” Dr. Decker said.
Reducing administrative burden must therefore be a central component to any successful and sustainable value-based care arrangement. Dr. Decker pointed to Optum Health's early adoption of ambulatory voice recognition technology that can populate the EHR.
Dr. Decker also emphasized the importance of research and peer-reviewed evidence in evaluating value-based care. The Health Care Transformation Hub, led by Dr. Decker and an independent advisory board, compiles and shares peer-reviewed research examining outcomes such as emergency department use, hospitalizations, end-of-life care and total cost of care.
For organizations considering value-based care but struggling with resources, data or workforce capacity, Dr. Decker recommends starting with education and finding appropriate expertise.
“My advice is to educate yourselves,” he said. There are sources out there that can help, such as those provided by the AMA, “but one of the best ways to do this is actually begin looking for a partner that could potentially provide you with some of the expertise and technology.”
He also cautioned organizations against taking on inappropriate levels of risk or doing so too quickly.
“You may not want to jump in with both feet,” Dr. Decker said. “You may want to study a population and imagine that you're caring for them, responsible for their healthcare spend before you are, and determine how the math looks.”
That preparation can help organizations identify gaps in preventive care and understand the potential financial implications before considering whether assuming full responsibility for a population is right for them.
“Working with a team, whether it's internal staff, or an outside partner or a consultancy, working with somebody who can help you navigate, that's really important,” he said.
Ultimately, Dr. Decker said the transition to value-based care should be grounded in physician leadership and a focus on the reasons many physicians entered medicine in the first place.
“When we look at the complexity and the cost of U.S. healthcare—even though it has been slow to be adopted—thoughtful physician-led adoption of value-based care represents the best way forward for U.S. healthcare to make it more patient-centered, more affordable, more accessible,” he said. “It creates a model that does not burn physicians out, but actually represents why they went into medical school—to help keep people healthy and well.”
Learn more with the AMA about value-based care, including ways to improve data sharing and best practices for payment methods.
