July 9, 2025
How can your organization incentivize the shift to value-based care?
Quality can only improve when clinicians are compensated based on the right goals and metrics.
The goals of value-based care are clear as organizations strive to reduce rates of readmission, proactively manage chronic illness, improve patient access and satisfaction, reduce spending, and implement more effective preventative health measures. For many health systems, however, this strategy can often fall apart at the contract, compensation, and incentive levels.
In his recent article for Forbes, SullivanCotter’s President and CEO, Ted Chien, highlights three key considerations organizations must take into account as they transition clinicians from traditional production-based pay structures to those tied to the quality of care and patient outcomes:
- New Models for Compensation Design– The legacy ‘one-size-fits-all’ approach no longer suit today’s evolving health care landscape. To better support recruitment, retention, and value-based care delivery, health systems are shifting toward more tailored compensation strategies. Larger systems, in particular, are adopting varied, personalized pay plans designed to incentivize specific roles rather than entire groups or specialties. As care delivery models change, clinicians may now have different pay structures even if they have similar skills and tenure, reflecting differences in responsibilities and time commitments.
- Evolving Comp. Models Requires Different Contracts – As health care business models and compensation approaches change, employment contracts must also adapt. Beyond outlining base pay and benefits, contracts now need to address flexible work arrangements, including hybrid and telehealth options. Ensuring that contract terms align with actual program administration is critical to avoid operational risks and maintain clinician trust. Additionally, incorporating retention-focused clauses can help strengthen clinician commitment and reduce turnover.
- Clarifying Incentives in Value-Based Contracts – In value-based care, clear contract language around shared savings incentives—such as those in the Medicare Shared Savings Program—is crucial to align physician compensation with care quality and efficiency goals. For nurses, factors like job stability and predictable schedules often outweigh pay in driving retention, emphasizing the need to set clear scheduling expectations in contracts. As health care organizations focus more on patient outcomes, thoughtfully designed contracts that define incentives, outline expectations, and reflect what clinicians value most are essential to retaining talent and achieving long-term success.