Value-based care is still treading water, with Dan D'Orazio of Sage Growth Partners

Nearly two decades into the push toward value-based care, Dan D'Orazio says the industry isn't much further along than it was when the effort began. He says value-based programs are still pegged to fee-for-service, and the fee-for-service revenue hospitals collect routinely outweighs the penalties meant to move them off it.

Medical Economics Managing Editor Todd Shryock sat down with D'Orazio, CEO of Sage Growth Partners, a Baltimore-based health care strategy and marketing firm.

D'Orazio explains why remote monitoring of implantable cardiac devices stalled long after the technology was ready. He also explains why he doesn't expect artificial intelligence (AI) to fix incentives that were never a technology problem, and what capitation and Maryland's global hospital budgets can and can't do outside an integrated system. He makes the case that physician-led accountable care organizations are one of the few places value-based care is working, and explains why he expects incremental gains at best from here.

Music Credits:
Sleepy Sunday by Buurd - stock.adobe.com
A Textbook Example by Skip Peck - stock.adobe.com

Editor's note: Episode timestamps and transcript produced using artificial intelligence (AI) tools.

0:00 – 0:12 | Cold open. D'Orazio on where value-based care is headed.

0:12 – 1:12 | Introduction. Austin Littrell introduces the episode and the guest.

1:12 – 2:41 | Where value-based care actually stands. Todd Shryock welcomes D'Orazio, who says the industry isn't much further along than it was in 2008 and 2009, and not for lack of effort. He weighs 10 to 20 years of value-based care against 80 years of fee-for-service.

2:41 – 5:45 | Why the shift stalled. Value-based programs are still pegged to fee-for-service, and the incentives to stay put outweigh the penalties. D'Orazio uses remote monitoring of implantable cardiac devices to show that the barrier was never the technology. It was the workflows, liability, staffing and alert fatigue around it.

5:45 – 9:28 | Penalties vs. revenue. D'Orazio says readmission penalties are small next to what hospitals still collect under fee-for-service, and that most of what drives a patient's health sits outside a physician's control.

9:28 – 14:23 | Why payers and the government keep pushing it. Costs keep rising and employers are bearing them. D'Orazio says even online scheduling runs into directory data, interoperability and physician templates. He adds that short commercial plan tenure undercuts the long-term incentive value-based care depends on.

14:23 – 15:17 | P2 Management Minute. Keith Reynolds shares practice management tips and invites listeners to submit their own workflow ideas.

15:17 – 18:32 | Can AI solve it? AI is only as strong as the data beneath it. D'Orazio sees real gains in administrative automation but says AI won't change fee-for-service, incentives or patient behavior.

18:32 – 21:41 | Capitation's comeback. Integrated systems like Kaiser Permanente and Geisinger can make it work. D'Orazio walks through the underwriting, data and care coordination capitation demands, and why several health systems have exited the health plan business.

21:41 – 23:55 | The Maryland model. Maryland pays its hospitals through global budgets, an approach D'Orazio says is returning through a CMS model. He explains how it changed hospital behavior and why commercial insurers and employers can't easily replicate it.

23:55 – 27:45 | Where health care is headed. D'Orazio expects incremental gains at best. He points to physician-led accountable care organizations outperforming hospital-led ones and calls for a rebirth of independent physician leadership. He names end-of-life spending and prior authorization as problems that won't unwind easily.

27:45 – End | Closing thoughts and outro. Shryock thanks D'Orazio, and Littrell wraps the episode.