• Multi-specialty groups suffer from a fundamental contradiction that must be strategically addressed to succeed at value-based contracting.
  • Top down cost control measures are ineffective and counter-productive, leading to clinician disengagement and more, not less overall costs.
  • Aligning clinician interests with the goals of your value-baed plan through:
    • net financial performance gain-shares (for primes) and
    • pool-based bonuses using best practice metric qualifications (for specialists) are under-utilized yet highly effective tools.

Multi-specialty groups have a fundamental conflict when it comes to value-based care that must be addressed to succeed. The single greatest expense in value-based contracts come from specialty-driven care. And most groups depend on specialty-driven care to pay for overhead.

Yet to succeed at value-based care, to be able to control costs and present competitive contracts to local businesses, specialty-driven care costs are exactly what needs to be controlled.

It’s a delicate balance. Push too much and your specialists will squawk and head for greener pastures. Too little and you will lose your Medicare Advantage gain-share and your position in the insurance market.

Don’t deal with it at all, and you will fail.

What is an organization too do?

Fortunately, the one resource that is your biggest weakness, your medical staff, can also be your biggest strength….once all incentives are aligned.


I can tell you what NOT to do. Do not try to do cost control from the top down, such as using mandatory algorithms or internal controls of procedures. It’s tempting, but if this sort of thing actually worked, health insurance companies would still be offering actual health insurance, instead of offering themselves up to be glorified utilities with statutory maximum profit margins.

Your clinicians have had it with top down behavior controls, they are drowning in an ocean of them. Adding more will only increase disengagement, burnout and turnover…costing you way more than you can ever make on your low-margin direct contracts.

Instead, try something the insurers haven’t and can’t try…get everyone’s boat sailing in the same direction.

Control costs from the bottom up.

For Medicare Advantage, divert a percentage of the gain-share to a specialty-clinician compensation pool. Allow the specialties with the highest impact on costs to be eligible for payouts. The amount of the pool must be a percentage of the overall gain-share, not a fixed payment…that way everyone, specialist and primes, will have an incentive to make sure the overall product performs well.

Make participation dependent on meeting one, and only one single specialty-specific applicable care metric, such as beta blocker prescribing after MI or anti-coagulation after coronary artery stenting. Have specialty-specific medical staff committees choose the metric. Publicly commit to keeping that specific metric for at least three years.

Pay out quarterly dividends to your specialists by paper check, preferably presented personally by one of your administrators as part of a brief, very brief, performance review. This performance review would include explanation of the accounting used to arrive at the bonus number and encouragement on meeting the requirements for participation.

As your specialist’s fee-for-service rates get MACRA’d into nothingness, this pool is going to look better and better.

Educate your primes that this system is an essential cost control feature, one that will dramatically boost their own gain-share. Let them know that everyone’s compensation is tied to the overall performance of the product… that the amount of compensation will depend on every one working together. Use that carrot to encourage engagement in clinical care committees. Those committees will develop organic, bottom up systems that will benefit patient care across the spectrum. The results will astound you.

Sounds out of the box? That’s because no-one ever asks the primes—not your administrator-primes—but your actual, working, patient-seeing, in-the-trenches primes-how to make these types of contracts succeed.

If you did, compensation ideas like these wouldn’t sound so strange.

And the performance of your contracts would excel.