American Association for Physician Leadership

What Value-Based Care Means for Physician Leaders

Lola Butcher

Sept 7, 2023

Volume 10, Issue 5, Pages 33-35


Value-based contracts have spread unevenly across the country but are becoming increasingly common. Although they require chief medical officers and other physician leaders in health systems to adopt new thinking and master skills well beyond clinical expertise, value-based contracts offer a strategy for improving healthcare overall.

As value-based care continues to gain traction, physician leaders are playing an ever-increasing role in the financial success of their health systems.

Chief medical officers and other physician leaders are negotiating contracts and developing new care models to succeed in value-based arrangements. They are monitoring contract performance and coaching clinicians to see the connection between high-quality care and the concept of value in healthcare.

How times have changed! When value-based contracts — payer arrangements that financially penalize or reward a health system for its performance on quality, patient experience, or cost — first emerged nearly two decades ago, they typically were negotiated by a health system’s financial leaders, and clinicians were told what they needed to do to meet the terms of the contract.

Experience proved that physician leaders need to be more closely involved.

“Our payer partners sometimes don’t understand the full spectrum of care that impacts outcomes,” says Mark Gwynne, DO, president and executive medical director for UNC Health Alliance, University of North Carolina’s clinically integrated network, Medicare ACO, and population health services organization. “That’s what physicians can bring to the table, and it’s impossible to do this work without really good physician champions.”

Of course, all physicians want to provide the safest, most high-quality care to their patients at an affordable cost, but value-based care forces new ways of thinking. Hospital admissions used to mean a patient got the highest level of care, and health system administrators loved the revenue that came with it. Now a patient’s hospitalization poses quality risks or safety problems, potentially hurting a health system’s performance scores, and a costly hospital stay clashes with the need to keep costs low.

It takes a physician leader to translate what high-quality care means in this new paradigm. “The chief medical officer has to be an educator, be a coach, and, most of all, be a bridge builder” between clinicians and administrators, says Mark Olszyk, MD, vice president for medical affairs and chief medical officer of Carroll Hospital Center in Westminster, Maryland.

The penetration of value-based care contracts varies dramatically from one area of the country to the next, and even among practices in the same market. In some markets, physician leaders are finetuning care models that have been developed to support a health system taking full financial risk for patient care. In other markets, by contrast, physician leaders are convincing their colleagues that value-based care is the future rather than a much-discussed fad that has never taken off.

“We’re at an inflection point that, for the docs who are still used to fee-for-service, we need to help them understand that this is happening,” says Eugene Kim, MD, chief medical officer for the Providence Clinical Network in Southern California. “It’s not just something we have been talking about for the past 20 years. It’s really happening now.”


To succeed in value-based arrangements, provider organizations must consistently deliver high-quality care, earn excellent patient experience ratings, continually ratchet down the costs of care, and prove it with metrics that their payers agree to use.

UNC Health Alliance comprises nearly 7,000 providers, including about 1,500 primary care physicians, connected to 16 hospitals, and supported by a preferred network of skilled nursing facilities and home health agencies.

About 35% of the Alliance’s primary care patients are attributed to value-based contracts, most of which have both upside and downside risk, which is where Gwynne’s expertise comes in.

It takes a physician leader’s experience to recognize which quality measures and benchmarking strategies are appropriate for evaluating UNC Health Alliance’s performance in value-based arrangements, so Gwynne is deeply involved in contract negotiations. He decides whether the Alliance will accept downside financial risk in a contract and in which Medicare ACO and other alternative payment models to participate.

After the contracts are signed, to succeed under each contract, Gwynne and other Alliance physician leaders must execute the plan. That means excelling at a wide range of skills that go well beyond clinical medicine but require a physician’s full understanding of medical practice to deliver value-based care.

When the Alliance was created in 2015, Gwynne spearheaded the culture change necessary for its physicians to transition from strictly fee-for-service payments to a mix of fee-for-service and value-based pay.

Gwynne oversees a data and analytics unit that supports value-based care delivery. “A typical analyst doesn’t understand this work,” he explains. “It takes time and effort to have the deep understanding of risk stratification, patient segmentation, and all aspects of population health analytics that identifies which patients we need to reach out to based on their risk level.”

Gwynne is responsible for teams of provider-facing and patient-facing care managers, including nurses, dieticians, social workers, community health workers, and a transportation program to provide patients with the support they need.

Efficiency and standardized operations are success factors for value-based care. Gwynne and other Alliance leaders have considerable authority over the electronic medical record system, including point-of-care decision support. Also, they collaborate with hospital leaders, including emergency department leaders, to facilitate discharge planning along with inpatient leaders who need to redesign care for routine surgeries, low-risk births, and other conditions.

“We are working to reduce cost but also ensure that we are providing the highest quality care, while also meeting the quality outcomes outlined in our value contracts,” Gwynne says. “So we are concerned with the care that we deliver ourselves, but deep partnerships across the network are also super important.”


Hsieng Su, MD, chief medical executive at Allina Health, serving Minnesota and western Wisconsin, sees value-based care as an opportunity to be paid for helping people to be healthier.

“If you look at what our patients need, value-based care is really the natural journey,” she says. “The role of CMOs is to really frame it correctly — not a financial framing, because it really shouldn’t be. When it is framed in the right way, clinicians embrace it.”

A value-based contract is a tool in which payers and providers agree on what is valuable and how it should be paid for, she explains. For example, all Allina Health primary care clinics survey patients regarding their social determinants of health. Providers use the information to refer patients to care managers who help patients access support that they need; however, the health system also analyzes the data to identify the top-priority determinants of poor health. “Then we go to our payers to say, ‘Hey, we’re seeing these issues. Help us work on them through the terms of our value-based contracts,’ ” Su says.

Indeed, when a physician on her team met with Allina’s payer contracting team recently, Su saw an opportunity. “We are telling the payer, ‘You need to reimburse us for our surveys — our time and the people who are doing the social determinants of health surveys of our patients — because this does impact their health,’ ” she says.

For example, high rates of colon cancer among Allina’s patient population prompted Su to require the colon cancer screening rate to be a quality measure in its value-based contract. Allina tracks that and other measures in its population health scorecard, which informs quality improvement initiatives. Because Blacks are at a particularly high risk for colon cancer, increasing screening rates in that population is a high priority.

“When we saw that our performance was not meeting the target, especially when COVID was so prevalent, we realized that email reminders and pamphlets were not getting the job done,” Su remembers.

The clinical team decided that a community outreach strategy, including information sessions in churches and community centers, was needed to convince people about the importance of scheduling a screening. “As of February, we are meeting our target,” Su says.


In Maryland, where Olszyk works, hospitals have been performing in a value-based care environment for more than three decades, thanks to a series of Medicare waivers that dictate terms for all payers. The waivers have evolved over time; currently, a hospital’s pay is influenced by readmission rates, hospital-acquired conditions, and a mix of safety, quality, and patient experience measures.

Meanwhile, outpatient care is subject to various value-based contracts, depending on the payer. Referring to the “bewildering bevy” of value-based programs, each with different benchmarks, baselines, and documentation requirements, Olszyk questions whether the term “value” is being applied appropriately. One bit of evidence: A medical group that performed the best in the state for one program’s metrics came in last in another measurement scheme.

“We all think value-based care is a good idea, but it’s probably overcomplicated,” he warns.

Like most leaders, Olszyk believes that physician incentives should be aligned with an organization’s value-based contracts, but he does not think physicians are particularly motivated by those incentives. More effective, in his opinion, is a system in which physician leaders remind their colleagues about the importance of colonoscopies, hypertension checks, and other good practices.

“I don’t think that just the promise of money alone is a solution; it’s not about an extra thousand dollars,” he says. “Having a team of people who really believe in improving the outcomes of their patients and who are holding each other accountable is a far stronger motivator than whatever sliver of the shared savings falls their way.”

That’s why he thinks one of the CMO’s most important roles in value-based care is bridge-building between payers, health system financial executives, and front-line clinicians.

“I have to, with my team, help translate a firehose of information, requirements, mandates for the actual providers who are taking care of our patients hour by hour,” he says. “Our messaging has to be very explicit, it has to be rather simple, and we have to explain why we’re doing this. And I have to take the concerns of the providers back to the administrators and the IT team, the quality team, and others to explain what is practical and what is possible.”


Value-based contracts are prevalent in southern California where private payers want provider payment tied to quality, patient experience, and cost, even in preferred provider organization (PPO) plans that do not restrict their members’ choice of providers. Medicare Advantage (MA) plans are also popular, and Providence Health Plan covers more than 100,000 seniors in an MA plan, giving the Providence system full financial risk for the cost of their care.

To succeed in those arrangements, Kim, the Providence CMO in Southern California, has responsibility for about 550 staff members working on care management and disease management in addition to ambulatory care management, research, behavioral health, risk, safety, quality, and medical coding.

“It’s important for us to have coding [responsibility] because we need a good understanding of our patient population so we can target initiatives to care for, say, our congestive heart failure patients,” he says.

Kim likes value-based care because it has the potential to improve patients’ health while improving provider well-being. “When you’re in a pure fee-for-service model, there’s not much room for creativity in how you can address provider well-being,” he says. “But in value-based care, we are incentivized to keep patients healthier, and you can do that without the physician shouldering all the responsibility. You can have a team help you care for the patient.”

Many of the physician groups in the Providence network have adopted a team-based model for ambulatory care. Teams include physicians, nurse practitioners, registered nurses, medical assistants, pharmacists, and behavioral health therapists.

“We use the team model with everybody working at the top of their license, and we have seen that when the quality scores get better, the utilization scores get better,” Kim says.

Kim also has found that when team care is fully deployed, physician well-being, as measured by the Mayo Clinic Well Being Index, improves dramatically. “As an organization, we’re taking care of more patients, we’re doing it well, and we’re able to improve the lives of physicians,” he says.

Lola Butcher

Lola Butcher is a freelance healthcare journalist based in Missouri.

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