2. The challenge to delivering VBC is execution, not a lack of solutions.
   The clinical and financial models exist. But actually shifting to and delivering VBC is hard — it requires resources, capital, and alignment. This leaves many stakeholders searching for the metaphorical silver bullet to VBC. There is no easy button.
   
   Surprisingly, organizations that make the shift to VBC often find the resources and capital are more accessible than many people realize. The bigger challenge that must be overcome is the ability for executive teams to get and stay aligned. Leaders who are successful in VBC embrace patience, focus, and creativity. They understand results take time, VBC can’t be treated as a side project, and they need to think differently about contracting. The reality is success in VBC relies on the organization’s ability to align and execute with the resources available — not having a special secret ingredient or silver bullet.

3. The spotlight is on procedural risk — and this is an opportunity for interested health systems.
   In both Medicare and commercial lines of business, a lot of eyes are on procedural VBC. While there’s long been debate about whether bundles and Centers of Excellence are truly VBC, these models often have greater appeal and greater popularity with hospitals and health systems than many realize. In Advisory Board’s latest VBC survey, 68% of provider executives said their organization participates in episode-based payment arrangements.² And now with the mandatory Transforming Episode Accountability Model (TEAM) launching in 2026, many health system leaders are asking themselves: What could we accomplish in this arena? While questions abound about whether TEAM will stay mandatory under a new administration, the opportunity in procedural risk is there for the taking.

What’s next

1. All eyes are on Medicare Advantage (MA) as leaders reset their strategy.
   Whether you’re a plan or provider, MA faced significant headwinds in 2024. Plans dealt with margin pressure from CMS rate cuts,³ increased utilization by seniors,⁴ and significant policy changes. Providers were then burdened by increased utilization management and administrative costs.⁵ This tension led to “breakups” and strain between payer and provider networks.⁶
   
   2025 brings a new year, a new administration, a new Congress — and a proposed increase for MA payments in 2026.⁷ For now, every plan and provider organization should examine the future opportunities and challenges in MA. For some, a reset or even retreat is the best option until things are clearer. But for others — especially those able to deliver on MA’s promise of higher quality, lower costs, and better access — the current headwinds are an opportunity to accelerate and differentiate themselves. This could be an important moment for plans and providers to improve care models, modernize utilization management, and enhance partnership.

2. Despite its difficulty, commercial shared savings is seeing renewed interest.
   Especially in ACO-style contracts, commercial risk is harder than Medicare risk because of churn. But many leaders — especially employers — are evaluating their options to control cost growth. This emphasis on managing costs is driving growth in specialty and procedural models in the commercial insurance segment, like Centers of Excellence. Employers are also exploring primary care-led models, like advanced primary care, in greater depth than ever. For health plans (and providers pursuing direct-to-employer strategies), this means offering employers a range of VBC options that fit the needs and goals of their employee population.

3. Value-based care is coming for specialists.
   Some have argued that VBC is a primary care issue. But specialty and procedural care have gone from being the next generation of VBC to some of the most widespread examples of VBC arrangements. This is apparent in CMS’ latest priorities. The five procedures in TEAM engage cardiovascular, gastroenterology, general surgery, and orthopedics. CMS’ other new models involve neurology, oncology, and behavioral health.
   
   VBC can no longer be thought of as affecting only PCPs or proceduralists but all specialists. Specialty care drives the bulk of healthcare spending, and we can’t improve population health without specialists. Is 2025 the year we start to meaningfully engage them in VBC? And if so, how does it look different for different specialties like those that focus more on chronic disease or those that are more procedural in nature?

What’s clear for 2025 and beyond

VBC is here to stay. But so is fee-for-service. Having a “foot in two boats” — balancing both fee-for-service (FFS) and value-based care agreements — was originally thought to be a temporary financial state for healthcare organizations shifting to value-based payment models. But FFS payments have been holding steady over the past decade, with roughly 40% of healthcare payments in FFS across lines of business (higher in commercial and Medicaid).¹ The reality is that our current hybrid financial model is likely to be the norm for a long time to come.