November 22, 2022 3 min read

Healthcare has a well-deserved reputation for being slow to embrace change. This resistance is one of the major barriers to the adoption of value-based care (VBC) and alternative payment models. Fee-for-service (FFS) and pay-for-performance (P4P) have been widely in use for decades, along with the business processes and legacy systems that support them.

Fully realizing VBC’s value, however, requires healthcare organizations to overcome inertia by transforming their data infrastructures and processes. Unfortunately, “sunk” investments in business processes and internal systems create a commitment to the status quo.

That’s a problem because legacy healthcare IT systems are relatively linear, architected to enable FFS and/or P4P payment models in a one-to-one exchange of data. A simple example would be when a primary care physician (PCP) sees a patient, generates a claim, and submits it to the insurer for reimbursement.

A VBC ecosystem is anything but linear: It must enable hierarchical and far more complex relationships among providers, payers, community-based organizations (CBOs), social service networks and other stakeholders in the VBC network. This includes supporting social determinants of health (SDoH) data, quality reporting, and other use cases. 

VBC networks are comprised of many-to-many relationships and can involve participants who may be contractually engaged with entities across multiple networks. A mental health services organization, for example, may have contracts with healthcare providers in different VBC networks. Without an infrastructure that supports the hierarchies between these entities, this type of “network of networks” is unable to function. 

The inability of legacy systems and infrastructure to onboard and manage a complex multistakeholder care network, while supporting the event-driven and episodic requirements of reimbursement models that no longer are claim-centric, is a major obstacle to the effectiveness of a VBC network. Additionally, provider risk-bearing entities need to obtain timely data reporting in order to accurately forecast contract performance.

VBC network hierarchies are structured with sources of funding sitting at the top. In the middle are risk-bearing entities such as hospitals, accountable care organizations (ACOs), independent practice associations (IPAs), direct primary care (DPC), and specialty carve-out organizations. Participating providers reside at the bottom.


The many-to-many nature of relationships that govern movement of funds, data exchange and patient episode tracking in VBC networks allow providers tremendous flexibility. Providers can participate in VBC programs as individuals, as part of groups, across multiple locations, and across different payer programs and networks. The lack of flexibility and interoperability inherent in healthcare organization legacy infrastructures, in contrast, prohibits the implementation and ability to scale VBC programs.

There is a way to provide the capabilities to support VBC networks without a “rip and replace” of legacy infrastructure, thus serving existing technical debt. By deploying a purpose-built, cloud-based VBC platform that can be implemented as SaaS (Software as a Service), PaaS (Platform as a Service) or DaaS (Data as a Service), healthcare organizations can help fill performance gaps and ease the transition to VBC from the other models.


An incremental implementation approach facilitated by such a platform enables organizations to build out value-based programs step by step and lay the groundwork for generating the clear insights and quality measures needed for VBC success.

Concerns about complexity

Trepidation among healthcare IT leaders about managing the type of complex, hierarchical “many-to-many” networks necessary to support VBC is another major obstacle to the implementation of value-based models. Their concerns are understandable given that attempts to accommodate the complexity of value-based contracts through a legacy infrastructure won’t scale. Further, they will require lots of manual processing and manpower, which is time consuming, costly and error prone.

Traditional approaches and legacy systems also lack the capacity to scale the orchestration of cascading payment models, under which payer-provider collaborations incorporate risk-bearing entities and downstream participating providers. This reduces the ability of providers to accelerate adoption of varied alternative payment models.

A cloud-based microservices platform avoids these legacy limitations by facilitating easy onboarding of stakeholders and providing mechanisms to financially reward them for their roles. Such mechanisms make the administration of funding pools and data exchange to participating partners among the most important functions of a value-based network.


VBC adoption continues to be held back by concerns that 1) such a change must involve an expensive rip and replace of legacy infrastructure and 2) the complexities of VBC would overwhelm IT staff and resources. But running a cloud-based microservices platform on top of legacy systems allows provider organizations to create a data architecture that will help them participate in VBC networks that result in improved patient outcomes and reduced costs.