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Value-Based Care Challenges for Providers and Implications for Future Adoption

Value-Based Care Challenges for Providers and Implications for Future Adoption

Providers face significant challenges in adopting value-based care arrangements from payers.  Despite financial incentives, most providers choose to stay in the fee-for-service world.

This is my latest article in a series dedicated to the inherent challenges payers and providers face with value-based care arrangements.  If you have not seen my other two articles, they can be found here and here.  Today’s installment focuses on obstacles providers face when evaluating a value-based care relationship with a payer.

A fragmented primary care market.

The first obstacle to wide-spread value-based care adoption is the size of the primary care practice.  The majority of primary care physicians work in small, physician-owned practices.  The National Ambulatory Medical Care Survey showed the following:

  • 44 percent of PCP visits are conducted by solo practitioners.  This is the largest group accounting for over 457,000 PCP visits annually of the 1 million plus total visits per year.
  • 21 percent of PCP visits are conducted in 3 to 5 person practices.  This is the second largest group accounting for 220,000 PCP visits annually.
  • 18 percent of PCP visits are conducted in 6 to 10 person practices.  The 6+ person practice category begins to encompass practices who may have multi-specialty capabilities and resources to manage value-based contracts.  This subgroup accounts for 189,000 visits annually.
  • Only 8 percent of PCP visits are conducted in 11 or more person practices. – The largest PCP groups in the U.S. account for just 85,000 PCP annually.

Note that the study calculated 2 person practices but the number of visits were not outside the standard error for statistical reliability.  

Before we discuss obstacles preventing PCPs from entering one-sided and two-sided risk contracts, we need to acknowledge that most primary care practices are small, encompassing 65% of all PCP visits annually.  An equally revealing statistic pegs 66% of PCPs either solely own or partially own their practice.  

Additionally, if we consider a PCP salary range of between $150,000 to $350,000 per year, the picture emerges of a highly fragmented market with not a lot of inherent experience or resources to devote to value-based care contracting.  While there may be advantages to small practices such as personalized provider to patient relationships, this market fragmentation is a major impediment to advanced value-based care adoption.   

Primary care physician obstacles to value-based care adoption.

In our market survey, we interviewed a broad selection of solo and smaller groups to understand what they thought of value-based care arrangements and what prevented them from participating in these contracts. 

While a majority of our smaller practice subgroup were interested in learning more about VBC, they listed the following obstacles for adoption of contracts:

  • Payer requirements for VBC are too complex.
  • Being penalized financially for non-compliant patients.
  • The administrative burden in office staff and time required to administer the contracts.
  • Lack of sufficient technology, data, and Electronic Health Record (EHR) capabilities to identify, code, and report on performance targets.
  • Recruiting and retaining experienced office support staff to manage VBC contracts.
  • Capital to invest in care coordination and population health capabilities.

Characteristics of PCPs that adopt value-based care arrangements.

Payers surveyed indicated that there are regional exceptions to small practice VBC adoption in markets such as Miami, Los Angeles, and San Francisco.  We also asked them to define what characteristics medium and larger practices have that helps them more easily enter and administer VBC contracts.  The following characteristics were discussed:

  1. Large Independent Provider Associations (IPAs) and Health Systems – The larger groups have internal capabilities such as contract negotiation teams, actuary expertise, underwriters, and population health administrators who can design contracts with the right risk profile.  
  2. National Primary Care Practice Groups – These practices operate in multiple states and are not affiliated with health systems but may be affiliated or owned by health plans.  These models work best in urban areas where there are large concentrations of physicians, and typically have corporate resources for data analysis, contracting, and care delivery processes.
  3. Large Independent Primary Care Practices – Scattered throughout the country are larger independent practices who have consolidated throughout the years to create sophisticated operating models that include many of the capabilities of the national groups, IPAs, and health systems.

There has been a recent trend to consolidate smaller primary care practices into health systems, national brands, and large independent practices.  However, the rate of spending in the U.S. healthcare system is outpacing the rate of these acquisitions.  Additionally, as national groups try to expand through non-organic growth, they are confronted with regional competitive barriers and high acquisition costs in desirable markets. 

With all these practice size and capability issues, broad-based VBC adoption will continue to be a long journey.

At Arkos, we are focused on making value-based care more accessible for health plans and their provider networks.

Guided by our mission to be the trusted platform for payers, physicians, and patients in the evolution to value-based care, we help payers and providers extend and enhance their services to unlock the benefits of these emerging models and improve patient outcomes while reducing costs. Our platform approach allows health plans to convert entire provider networks into value-based care arrangements while keeping important operational functions with the plan. 

Without the right infrastructure – the right people, processes, cloud services, secure networking, and data-intensive approach – Two-Sided Risk Models are very difficult to implement and scale.

We make value-based care easier.

BY Aaron Duerksen
Published May 23, 2023 9:40PM

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About the author

Aaron Duerksen

Aaron Duerksen is Chief Growth and Business Officer at Arkos Health. A strategic business executive with 30 years of leadership experience in Medical Device, Health Information Technology, and Pharmaceutical industries, Aaron’s expertise is in growing health care businesses and transitioning them into Value-Based Care leaders. A health tech entrepreneur and Fortune 50 corporate executive, Aaron has worked across the U.S., Europe, and Asia, at the intersection of technology, care management, and patient engagement.


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