Value-Based Care: Great Philosophy, Complex Reality (Part 1 of 2)

by Pallav Sharda , Chief Product Officer at Carrum Health

Value-based care (VBC) ties provider payments to patient outcomes, often using bundled payments for entire episodes of care. My first real understanding of VBC came in 2010 during an informal chat with a physician friend who revealed that his annual bonus now depended on how few MRIs he ordered. Less tests meant more compensation. That seemed so counterintuitive at that time that it stuck with me for years. It highlights how policy can shape financial incentives that ultimately influence clinical decisions and patient care.

This article is the first in a two-part series exploring Value-Based Care. This article is about how special VBC philosophy is—profound, multifaceted, and notoriously difficult to implement. The next article will highlight how technology, particularly Carrum Health's unique approach, is critical for effectively delivering on VBC’s promise.

At its heart, healthcare is characterized by unpredictability—uncertain costs, inconsistent outcomes, and variable quality. No stakeholder is winning. Patients often ‘drive blind,’ relying primarily on anecdotal advice from friends, neighbors, or online sources. They have little or no visibility into what it will cost, leading to unexpected bills and financial distress. Meanwhile, providers navigate a system filled with incentives that reward volume over appropriateness or quality. Employers, particularly self-insured ones, don’t always understand what really dominates their escalating healthcare spend. 

The fundamental promise of VBC is predictability and appropriateness. Predictability can convert healthcare’s opaque, anxiety-filled journeys into transparent, repeatable, and trusted experiences. VBC fosters confidence in quality and ensures predictable costs. Appropriateness of care—whether a treatment or procedure is truly necessary—is often overlooked in traditional healthcare models, but not in VBC. Even the best surgeon is irrelevant if the procedure itself isn't needed. 

Executing on VBC might seem straightforward in theory: just tie provider reimbursement to patient outcomes by using bundled payments for complete care episodes rather than paying for each service. Yet, in practice, implementing this shift successfully has proven incredibly elusive. Even governments, equipped with vast resources and influence, have encountered significant hurdles.

The CMS Innovation Center, for instance, has launched over 50 alternative payment models in the past decade—yet only six have generated meaningful savings. Still, CMS maintains the goal that most Medicaid beneficiaries will participate in VBC by 2030. That tells you how great the VBC concept is, and how hard it is to actually implement it. If lower cost and higher quality is the VBC target, we can’t be launching paper airplanes, hoping to land some on target. VBC is about precision—about consistently throwing darts toward clearly defined goals, with confidence in their care trajectories.

The crux of the issue lies in healthcare's traditionally supply-side mindset, focusing predominantly on hospitals, providers, and networks. My critical realization, now central to Carrum Health’s approach, is that a truly successful VBC implementation must emphasize demand-side thinking—deeply understanding patients and their healthcare needs. Matching patients’ needs with providers' skills and monitoring the care pathway enough to be able to guarantee the outcome.

Technology is essential to this level of disciplined, precise execution—and exploring that deserves its own dedicated conversation. We’ll do that in the upcoming article.