In our annual report on VC-backed healthtech innovation, The Future of Healthtech 2024, we looked at the burgeoning value-based care (VBC) space and the emergence of specialty care startups creating new, more integrated models of care that use AI for essential data analysis and outreach. As our earlier blog, The State of Value-Based Care, noted, VBC is very much a work in progress, yet still experiencing impressive momentum. 

Defining Value-Based Care

It’s difficult to provide a comprehensive definition of VBC given its various forms, but we consider it to include risk-bearing entities (whether full or partial) and the growing variety of services and technologies enabling the ongoing shift away from fee-for-service (FFS) payment. The variety and types of VBC contracting have continued to grow and shift. Some vendors participate fully in shared savings contracts while others receive per-member payments from payers, employers, or subscribers. Many contract for various combinations of FFS payments, quality incentives and shared savings.

The New Wave of Value-Based Care

Primary care was the first phase of VBC. That’s not surprising, as primary care providers (PCPs) play key roles in preventive care, chronic condition management and care coordination with specialists. Some players offer primary care to broad populations (such as Aledade and Wellvana) or for specific age groups (Imagine Pediatrics for children and Curana Health for seniors), while others focus on particular settings (CareBridge for home care and Homeward for rural care). As these primary care VBC companies compete for covered lives and profitability, there is a growing recognition that more coordination and collaboration with specialty care providers is essential to effectively reduce medical costs and achieve better health outcomes.

Value-Based Care Needs Integrated Care

Patients with chronic conditions are both complex and expensive, which is why payers (e.g., Medicare, Medicaid, commercial and risk-bearing primary care providers) are looking to specialty care to help care for these populations. In some instances, the specialists actually take over the role of the PCP in leading care plans for patients, but careful coordination is required to ensure all chronic conditions (e.g., heart disease, diabetes) are addressed. The best outcomes frequently require care that some specialists may not be accustomed to monitoring, like behavioral health or social determinants of health. This overlap between the responsibilities of the PCP and specialist results in some unique challenges, such as the difficulty in attributing responsibility and credit for positive (or negative) health outcomes. Recognition of each other’s strengths and limitations and leveraging tools to help share information promise to lead us to the holy grail of VBC: better outcomes and lower costs.

Specialty VBC first focused on kidney care as a high-priority specialty because it involves a well-defined patient group that incurs extremely high medical costs. Other specialty areas, like oncology (Thyme Care) or cardiology (Chamber Cardio), are less mature when it comes to VBC but are gaining significant traction. 

What’s Next for Value-Based Care?

As we saw in primary care VBC, companies are taking on different levels of risk. Most start with FFS payments and gradually convert to risk-bearing contracts over several years. It will likely take time to ensure the right patients are in the right risk pool. Will there be comorbidity pools?

All risk-based reimbursement models, regardless of primary or specialty care, take time to achieve profitability. AI tools to help analyze patient risk and create better segmentation can help cut down on that time. By getting patients the full scope of services and care they need, costs go down and quality improves. To learn more about value-based care, AI in healthtech and the state of healthtech investment, visit The Future of Healthtech 2024 to preview the report.

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