These are Critical Access Hospitals, and they are some of the most financially fragile organizations in American healthcare.

What It Is

A CAH is a specially designated rural hospital with 25 or fewer acute-care beds, located more than 35 miles from the nearest hospital (15 miles in mountainous terrain), that provides 24/7 emergency services. There are about 1,360 CAHs across 45 states.

The critical feature: CAHs receive cost-based Medicare reimbursement — Medicare pays 101% of the hospital’s costs rather than the standard fixed-price DRG payment. This is the financial lifeline that keeps them open.

Why It Exists

In the late 1980s and early 1990s, rural hospitals were closing at an alarming rate. The standard Medicare payment system — which pays a fixed amount per diagnosis regardless of the hospital’s actual costs — was designed for hospitals with enough volume to spread fixed costs. A hospital doing 300 admissions a year can’t survive on the same per-case payment as one doing 30,000.

Congress created the CAH designation in 1997 specifically to stop the bleeding. By paying actual costs plus 1%, Medicare ensured these hospitals could cover their expenses even at low volume.

How It’s Organized

Most CAHs are standalone — independently governed by local boards. Some are loosely affiliated with larger systems. Many maintain network agreements with regional hospitals for transfers and specialist consultations.

The CAH’s clinical capability is deliberately limited. With 25 beds, one or two operating rooms, and a small medical staff, these hospitals handle emergencies, basic medical admissions, and simple surgeries. Anything complex — major cardiac events, serious trauma, premature births — gets stabilized and transferred.

Many CAHs use swing beds — the same bed functions as an acute-care bed one day and a skilled nursing bed the next, depending on the patient’s needs. This flexibility is essential for low-volume facilities.

The Tradeoffs

The upside: Preserves local access to emergency and basic hospital services. Cost-based reimbursement provides financial stability. Anchor institution for rural health infrastructure. Hub for telehealth and specialist connectivity.

The downside: The 25-bed cap limits growth. Workforce shortages in rural areas are severe and worsening. Most complex care must transfer. The cost-based reimbursement model is politically vulnerable — any Congressional budget cut could threaten the entire program.

The Bottom Line

CAHs represent a deliberate public policy decision: we will pay more per case to keep these hospitals open because the alternative — no hospital access for rural communities — is unacceptable. It’s healthcare’s version of the rural post office: economically inefficient, socially essential.

What It Is

A community hospital provides core inpatient and outpatient services: emergency care, general surgery, obstetrics, internal medicine, and basic specialty care. It doesn’t train large numbers of residents (though some have small programs). It doesn’t run major research labs. It’s built to handle the bread and butter of hospital care.

Why It Exists

Not every community needs a quaternary academic center. What they need is a place to go when there’s a medical emergency, when a baby is coming, when a bone needs setting, or when a pneumonia needs IV antibiotics. Community hospitals exist to provide this close to where people live.

How It’s Organized

Community hospitals used to be mostly independent, governed by local boards. That’s changed dramatically. Over the past two decades, health system consolidation has absorbed thousands of formerly independent community hospitals into larger systems like HCA, CommonSpirit, Ascension, and regional systems.

A community hospital within a system typically reports to a regional or system-level executive. It has less autonomy over capital decisions, service line strategy, and physician recruitment than it would as an independent.

The Tradeoffs

The upside: Accessible, affordable (relative to AMCs), trusted by the community, and capable of handling the vast majority of hospital needs.

The downside: Limited specialty services — complex cases must transfer. Financially vulnerable, especially in rural and safety-net settings. Increasingly losing identity through acquisition. Under competitive pressure from ambulatory alternatives.

The Bottom Line

Community hospitals are the silent majority of American healthcare. They don’t make headlines, but they handle most of the work. Their challenge is staying viable as care migrates to outpatient settings, as systems consolidate around them, and as financial pressures mount.

What It Is

An academic medical center is a hospital directly affiliated with a medical school that combines three missions: delivering the most complex clinical care, training the next generation of physicians, and conducting research. Every AMC runs residency programs (where medical school graduates train for 3–7 years), operates clinical trials, and publishes research.

There are about 400 major teaching hospitals in the U.S. They represent roughly 5% of all hospitals but account for a disproportionate share of complex care, research output, and physician training.

Why It Exists

Medical education can’t happen without patients. Research can’t advance without clinical settings. And the most complex clinical care requires the concentration of specialists and technology that only a teaching hospital can sustain.

Federal funding makes this three-legged model viable: Medicare pays hospitals extra for training residents (Indirect Medical Education payments and Direct Graduate Medical Education payments). NIH grants fund research. Clinical revenue from specialty care covers the rest.

How It’s Organized

The AMC sits atop a complex governance pyramid. The university owns the medical school. The medical school trains the faculty. The faculty see patients through a faculty practice plan. The hospital (which may or may not be university-owned) provides the facilities. The health system (if there is one) operates community hospitals, ambulatory networks, and other assets around the AMC flagship.

A single physician might report to a department chair (clinical), a research institute director (grants), and a medical school dean (teaching). It’s matrix management at its most complex.

The Tradeoffs

The upside: Access to the most advanced treatments, clinical trials, and specialists. A training pipeline that feeds the entire healthcare system. Brand prestige that serves as a referral magnet.

The downside: High cost — teaching, research, and subspecialty care are expensive. Governance is complex. The research mission can conflict with operational efficiency. And AMCs are concentrated in cities, leaving rural populations underserved.

The Bottom Line

AMCs are healthcare’s R&D labs. They produce the innovations, train the workforce, and handle the cases nobody else can. But they’re expensive, complex, and urban-centric. The tension between their mission and their economics is permanent.

It joins the Mayo Clinic Care Network.

What It Is

An affiliation, franchise, or licensing model is a non-ownership relationship where an independent healthcare organization connects with a brand-name system to access clinical expertise, protocols, educational programs, supply chain benefits, and brand recognition — without being acquired.

The independent entity pays licensing or affiliation fees and adopts certain standards. It keeps its own governance, ownership, and financial independence.

Why It Exists

Not every hospital wants to (or can) sell itself. But many need what only large, brand-name systems can provide: clinical credibility, specialist access via telemedicine, best-practice protocols for complex conditions, and a name that patients and referring physicians trust.

For the brand-name system, affiliation extends reach and referral networks without the capital outlay and integration complexity of an acquisition. Mayo Clinic Care Network has over 40 member organizations globally — 40 relationships it didn’t have to buy.

How It’s Organized

The Wisconsin hospital remains independently governed and owned. Its CEO still reports to a local board. But it now has access to Mayo Clinic’s AskMayoExpert knowledge base, can consult with Mayo specialists via telemedicine, sends staff to Mayo for training, and uses the “Member of Mayo Clinic Care Network” designation in its marketing.

Mayo has no ownership stake. No board seats. No financial integration. It’s a contractual relationship — a franchise in healthcare clothing.

The Tradeoffs

The upside is access without acquisition. Brand halo, clinical protocols, specialist telemedicine, educational partnerships — all without selling the hospital.

The downside is depth. The affiliation may be more marketing than substance. Mayo can’t enforce quality standards the way it would at an owned facility. Patients may be confused about the nature of the relationship. And for many independent hospitals, affiliation is a stepping stone to eventual acquisition, not a permanent model.

The Bottom Line

Affiliation models are healthcare’s version of franchising: access to a proven brand and operating system in exchange for fees and standards compliance, without ownership changing hands. They fill a real gap for independent hospitals that need help but value independence. The question is whether the relationship delivers enough clinical depth to justify the affiliation fee and brand association.

So the PE firm doesn’t buy the medical practice. It buys (or creates) an MSO — a management company — that provides every non-clinical service the practice needs: billing, revenue cycle management, HR, IT, marketing, compliance, lease management, and purchasing. The medical practice remains a separate legal entity, technically physician-owned. But the MSO runs the business.

What It Is

An MSO provides administrative and operational services to physician practices while the physicians retain clinical ownership and decision-making authority. The MSO is the operational backbone; the physicians are the clinical entity.

Why It Exists

CPOM laws exist in most states to prevent corporations from interfering with physician judgment. The MSO model was designed to comply with these laws while allowing outside capital (especially private equity) to invest in the economics of physician practices.

The MSO captures value through management fees — typically 15–25% of the practice’s revenue, sometimes more. Since the MSO provides all the non-clinical infrastructure, it’s where the PE investment lives and where the returns are generated.

How It’s Organized

On paper, it looks like two separate entities. The Medical Practice (physician-owned) makes all clinical decisions: what to prescribe, when to refer, how to treat. The MSO (PE-owned or investor-owned) handles everything else: billing, staffing, technology, compliance, marketing, and lease negotiation.

In practice, the line between “operational” and “clinical” decision-making can blur. When the MSO controls scheduling templates, staffing ratios, supply purchasing, and revenue targets, it shapes the clinical environment even without making direct clinical decisions.

The Tradeoffs

The upside is resources. Independent physicians get capital for technology, marketing, and growth that they couldn’t access alone. Operations are professionalized. The physician is freed from the administrative burden of running a small business.

The downside is control. PE-backed MSOs are in the returns business. Management fees extract significant value. Long-term management agreements (often 20–30 years) can lock physicians into unfavorable arrangements. And when the MSO’s incentive to maximize margin collides with the physician’s obligation to patients, the physician doesn’t always win.

State attorneys general are increasingly scrutinizing aggressive MSO structures. The FTC’s action against US Anesthesia Partners and state investigations into PE-backed healthcare rollups signal growing regulatory risk.

The Bottom Line

The MSO is the legal architecture that allows private equity to participate in physician practice economics. It’s the reason a financial sponsor can “own” a dermatology chain, a dental group, or an emergency medicine company without technically employing a single doctor. Understanding this structure is essential for anyone trying to understand where the money flows in consolidated physician practices.

From an operator’s perspective, LEAD feels less like a new chapter and more like a necessary course correction. For years, those of us on the front lines of value-based care have experienced a disconnect: we have been asked to take on the immense challenge of redesigning care for the frailest populations, yet the financial models often punish the very success we create. The PY2023 REACH evaluation laid this bare. CMMI validated what we were seeing: that even with genuine care improvements, a flawed benchmark could lead to ACOs experiencing unsustainable losses.

LEAD is their acknowledgment of this reality. It’s a signal that the goal isn’t just risk, but workable risk. CMMI is making this correction now because the data from both REACH and MSSP is undeniable. They are shifting the focus from simply testing a thesis to building a sustainable financial chassis that allows clinical innovation to thrive over the long-term, rather than drowning it in unforgiving math. This isn’t a victory lap for CMMI; it’s a pragmatic response to the evidence, and for that, it’s welcome.

We walked through the PY2023 evaluation and landed on an uncomfortable conclusion. REACH validated the high needs thesis dramatically, failed to validate the standard ACO thesis, and produced a financial methodology that made losses inevitable for roughly a quarter of participants. CMMI read the same data and responded in two ways. The first was a set of adjustments to REACH’s final performance year. The second was LEAD.

Understanding LEAD requires separating three things that tend to get collapsed in the trade press: What CMMI is changing on purpose, what CMMI is preserving on purpose, and what CMMI still does not know and is hoping a new model will teach them.

What CMMI is changing

The most important change is financial methodology. The PY2023 evaluation surfaced a specific problem. The benchmark discount applied to REACH Global Option participants, 3% in PY2023 and PY2024 rising to 3.5% in PY2025 and PY2026, was large enough that organizations doing genuine care redesign could still end up in net loss positions simply because the math started against them. CMMI’s own PY2026 REACH adjustments and the framing of LEAD both point to a more nuanced benchmarking approach, one that attempts to distinguish between ACOs failing to manage care and ACOs succeeding at care management but drowning in benchmark mechanics. Whether LEAD actually solves this is an open question, but the intent is clear.

There is a second change nobody is talking about, which is the implicit narrowing of who LEAD is actually for. REACH’s standard track tried to be a big tent. The PY2023 data suggests that approach produced a wide performance distribution that masked what was actually working. LEAD’s design language, at least what has been released as of this writing, points to a narrower invitation. Organizations with genuine complex care management capability, existing capitation experience, and a multiyear commitment horizon. If that narrowing holds in the final rules, LEAD will be a smaller, more selective model than REACH. That is probably the right call on the merits and a political liability for CMMI simultaneously, because it means fewer participants, fewer jobs to announce, and a thinner constituency if the model comes under fire in 2028.

The third change is timing. LEAD starts January 1, 2027. There is no gap between models. That continuous handoff is not an accident. It forces CMMI to finalize LEAD’s methodology while REACH’s final year is still running, which means organizations will be operating under REACH rules through the end of 2026 while simultaneously evaluating and preparing for LEAD rules that are still being shaped. The next REACH evaluation is not expected until late 2026, which means LEAD will launch on rules that are partly informed by preliminary findings and will almost certainly be revised mid-model. Organizations should expect the LEAD rules they read in early 2026 to shift meaningfully before go live, and they should expect further revision after.

What CMMI is preserving

While the financial methodology is the headline change, some of the key components of REACH that CMMI is preserving in the transition to LEAD are just as telling, and the logic is fundamentally clinical. First, by retaining the provider-led governance requirements from REACH, CMMI reaffirms a critical lesson: clinical and financial decisions must be made by those who are directly accountable for achieving patient outcomes. This structure ensures that care design is guided by patient need, not just by a spreadsheet. It keeps the model grounded in the practical realities of care delivery.

Second, the continued commitment to full financial risk is the mechanism that truly empowers providers to break from the fee-for-service mindset. It’s what justifies the long-term investment in the interdisciplinary care teams, data analytics, and upstream interventions needed to manage complex populations effectively. The most innovative aspects of LEAD, like the CMS-Administered Risk Arrangements (CARA) and new capitation options, are only available to ACOs that select the Global, full-risk, track; this is by design. Without full risk, care transformation could remain just a pilot project; with it, it becomes the core business model.

Finally, carrying forward REACH’s benefit enhancements and adding novel incentives like the Substance Access BEI is a crucial nod to the realities of whole-person care. From a clinical perspective, these are not add-ons; they are essential tools that give care teams the flexibility to address the social and behavioral drivers of health that so often dictate outcomes. Additionally, CMMI views these flexibilities as a path to increase beneficiary interest in ACO participation rather than Medicare Advantage. Preserving these elements signals that CMMI understands that to succeed in value-based care, providers need more than just a new payment model; they need the right governance, the right incentives, and the right tools to do the job.

Three scenarios for the next four years

Scenario one, the optimistic case. CMMI’s PY2026 methodology adjustments work. The next REACH evaluation shows the PY2023 preview understated impact once later years are included. LEAD launches with a refined benchmark approach and attracts 150 plus participating entities by PY2028. High needs focused organizations continue to outperform, and a handful of standard track health systems crack the formula by running LEAD as a pure capitation chassis for their MA muscle. By 2030, CMMI points to LEAD as the model that proved full risk works at scale. Probability, roughly 25%.

Scenario two, the base case. LEAD launches on time, attracts 80 to 120 participants, and produces results that look a lot like REACH’s PY2023 evaluation. High needs organizations win. Standard organizations break even or lose modestly. Net Medicare FFS spending reductions remain elusive at the program level. CMMI spends PY2028 and PY2029 tweaking methodology. By 2030, the question of whether LEAD expands or expires becomes a political decision as much as an actuarial one. Probability, roughly 45%.

Scenario three, the one nobody is talking about but should be. A 2026 administration transition produces a CMMI leadership change that reorients accountable care strategy toward mandatory bundled payment models like TEAM and IOTA, direct Medicare Advantage expansion, and site neutral payment reform. LEAD launches on schedule in January 2027 because contracts are already in motion, but receives a fraction of the attention and investment CMMI originally planned. I think this scenario is underpriced in most health system strategic planning conversations I have been part of. The base case is still the base case, but scenario three is closer to 30% than the polite 20% most advisors are using, and it deserves explicit stress testing inside any LEAD investment decision. Probability, roughly 30%.

What this means for health system folks?

The complexity of your Medicare population is the single biggest predictor of whether LEAD economics will work for you. If you have a large frail, dual eligible, or multiple chronic condition cohort, LEAD is worth serious evaluation. If you do not, LEAD is probably not your model and MSSP remains the sensible path.

The 2026 decision window is not dead time. It is when LEAD’s economics are being decided while REACH’s final year is still being operated. Organizations engaging directly with CMMI, NAACOS, and APG during 2026 will have meaningfully more influence on final methodology than organizations that wait.

The political risk in scenario three is not zero and should not be ignored.

One question this series cannot answer and we would like smarter people to push back on. If LEAD’s financial methodology produces a more selective model that works well for high needs operators, does that advance CMMI’s 2030 goal of moving 100% of Medicare beneficiaries into an accountable care relationship, or does it quietly concede that full risk ACO models are a tool for a specific slice of the population rather than the main path? We have a view.

We are genuinely interested in whether people closer to CMMI policy think the goal and the model are still aligned, or whether LEAD is a signal the 2030 goal needs to be revisited.

A PHO is a joint venture between a hospital and its affiliated physicians — typically the medical staff — that negotiates managed-care contracts on behalf of both parties. Instead of the hospital and doctors negotiating separately with insurers, the PHO bundles facility fees and professional fees into one contract.

Why It Exists

In the early 1990s, managed care was growing rapidly. Insurers wanted simplified contracting — one negotiation, one entity, one accountability structure. Hospitals and their physicians realized they could get better terms by presenting a unified front rather than negotiating separately.

The PHO was born as a bridge entity: half hospital, half physician group, designed specifically for managed-care contracting.

How It’s Organized

A typical PHO is structured as an LLC or corporation with 50/50 governance — equal representation from hospital leadership and physician leadership. The hospital contributes its facility and brand; the physicians contribute their patient panels and clinical expertise.

Most PHOs are not publicly branded. You won’t see a “PHO” sign on a building. They exist as legal and contracting vehicles behind the scenes.

Many PHOs from the 1990s have evolved into something more sophisticated — CINs or ACOs — as the requirements for value-based contracting moved beyond simple rate negotiation to genuine clinical integration and quality reporting.

The Tradeoffs

The upside is simplicity and alignment. One entity, one contract, one negotiation. Physicians get a formal governance voice in hospital strategy.

The downside is shallow integration. Many PHOs never moved beyond contracting into actual clinical coordination. They negotiated rates together but didn’t share data, follow common protocols, or manage care collectively. Without that clinical integration, the FTC viewed joint negotiation skeptically.

The Bottom Line

The PHO was the first attempt to bridge the hospital-physician divide for managed-care purposes. It’s the ancestor of the CIN and the ACO. Many still exist, but the model’s relevance depends on whether it has evolved beyond contracting into genuine clinical integration. If it hasn’t, it’s a 1990s artifact.

Three and a half years in, with the Center for Medicare and Medicaid Innovation’s PY2023 Preview of Findings now public, we finally have enough data to say something honest about what REACH did and did not prove. The answer is not tidy.

REACH is neither the breakthrough its advocates want nor the failure its critics assume. It is a stress test that exposed exactly which parts of the value-based care thesis hold up under real world conditions and which parts bend.

What CMS asked REACH to do

Underneath the equity framing, REACH was built to answer three operational questions MSSP and Next Generation ACO had not fully resolved.

1. Could full risk capitation, delivered through either Primary Care Capitation or Total Care Capitation, fund enough upstream care redesign to produce durable savings?

2. Could the model attract and retain organizations that serve genuinely complex populations, the kind of patients MSSP participants have historically been accused of avoiding?

3. Could CMMI impose provider governance and beneficiary vetting rules strict enough to prevent the investor driven gaming that surfaced in GPDC without driving participation to zero?

The design reflected all three bets. Participants chose between the Professional Option, sharing 50% of savings and losses with Primary Care Capitation, and the Global Option, taking 100% of risk with a discount applied to benchmarks. That discount was 3% in PY2023 and PY2024, rising to 3.5% in PY2025 and 4% in PY2026. The tiered ACO types, Standard, New Entrant, and High Needs, were meant to make room for different sizes and missions. High Needs ACOs only needed 1,000 aligned beneficiaries to participate, compared to MSSP’s 5,000 minimum, which was a deliberate accommodation for frail, dual eligible, and chronically ill populations.

What happened

In PY2025, 103 ACOs were participating, serving roughly 2.5 million traditional Medicare beneficiaries through 161,765 providers. Ninety chose the Global Option. Thirteen chose Professional. The composition matters more than the totals. REACH attracted a self-selected pool of operators willing to take full downside risk on a new federal model, and almost all of them came from three clusters.

• Physician enablement companies with Medicare Advantage muscle like agilon health, Aledade, and Privia.

• Dedicated high needs operators in the ChenMed, Oak Street, and Iora lineage.

• And a smaller set of integrated health systems running REACH as a strategic experiment adjacent to their MSSP operations.

Whatever REACH proved, it proved it specifically about these three clusters, not about the median American health system.

The PY2023 evaluation surfaced three findings a health system leader should not gloss over.

• The first is the headline: High Needs ACOs averaged a 13.3% net savings rate. Standard ACOs averaged 2.8%. New Entrant ACOs landed at 4.8%. REACH ACOs overall averaged 4.1% across all tracks, with individual ACOs ranging from negative 15% to positive 25%. A five times gap between tracks inside the same model is the kind of differential that would normally force a conversation about whether the result reflects model design or operator selection. CMMI’s preview report largely attributes it to model design. A skeptical policy reader would note that the fourteen High Needs ACOs in the sample were heavily weighted toward operators with existing Medicare Advantage experience, prior Programs of All Inclusive Care for the Elderly (PACE) exposure, or both. The honest interpretation is that REACH validated the high needs thesis and the experienced high needs operator thesis simultaneously, and the evaluation design cannot fully separate the two. New Entrant ACOs averaged 4.8% net savings, sitting between the two, which suggests the performance gap is a gradient tied to population complexity and operator experience rather than a clean binary between tracks.

• The second finding is that Standard and New Entrant ACOs showed improving gross spending reductions in PY2023 relative to prior years, with statistically significant reductions for New Entrants, but cumulative estimates across all ACO types still show Medicare fee for service net spending increasing under the model once shared savings payouts are netted out. The polite reading is that the model is trending in the right direction and needs more time. The less polite reading is that three years in, CMMI is still paying out more in shared savings than the model is reducing in spending, and the burden of proof for continuation sits squarely with the advocates of the thesis.

• The third finding is the one that gets underreported. Thirty six of the 132 ACOs participating in 2023 took net losses. That is 27%, more than a quarter of participants. The question worth asking is not whether losses are acceptable in a full risk model, because they obviously are, but whether the benchmark discount methodology produced losses that were structural rather than performance based. CMMI’s decision to adjust the PY2026 financial methodology suggests they believe at least some of the losses were structural. If that is right, the model was testing two things simultaneously, care redesign capability and benchmark tolerance, and some participants failed the second test while passing the first.

One methodological note worth holding. The financial settlement numbers cited above come from CMS’s PY2023 financial settlement results. The CMMI evaluation produces separate estimates using a different methodology, and the two sets of numbers do not always match. PY2022 showed $632.2 million in evaluation losses compared to $855.6 million in savings relative to benchmark, which is the kind of gap that forces honest analysts to cite both and let readers judge. I am using the financial settlement numbers here because they are the ones health system leaders are most likely to encounter in trade press coverage, but the full evaluation report expected later in 2026 will give us a second lens.

The question the evaluation does not answer

The PY2023 preview is careful, but it leaves one question hanging any serious policy reader will immediately notice: How much of REACH’s High Needs performance is attributable to the model versus to the operators who chose to participate in it? Sensitivity analyses in the evaluation removed beneficiaries served by other accountable care programs from the comparison group and produced more favorable total gross spending reduction estimates, which is suggestive but not conclusive. Until the full evaluation report resolves this selection question, anyone citing the 13.3% number as proof that LEAD should replicate REACH’s high needs design is running ahead of the data. I think the design bet is still the right one. I also think we should be honest that the evaluation has not closed the case.

What this actually tells us

Three conclusions seem defensible.

• REACH proved provider governance and beneficiary protection rules can coexist with full risk participation. Despite the stricter oversight regime imposed after GPDC, 103 ACOs stayed in the model and most chose the hardest risk track. That is not nothing. It is a counterexample to the view that CMMI cannot run a model without either letting investors run wild or driving participation away.

• REACH proved the high needs thesis is the strongest thesis in value-based care, pending resolution of the selection question. The five times performance gap between High Needs and Standard ACOs is the single most important finding in the evaluation, and if the full report confirms the design attribution, it will shape the next decade of CMMI model architecture

• REACH did not prove aggressive capitation produces net savings for Medicare at the program level. It is possible future performance years will change this. It is also possible they will not. An honest operator must hold both possibilities at once.

The REACH evaluation is the reason LEAD exists in the shape it does. CMMI did not wake up one morning and decide accountable care needed rebranding. The financial methodology adjustments coming in PY2026, the continued investment in the High Needs track concept, the carryover of benefit enhancement incentives like the Substance Access BEI into LEAD, all of these are CMMI responding to specific findings from the evaluation we just walked through.

What It Is

An IPA is an association of independently owned physician practices that band together to collectively negotiate contracts with health plans, share administrative infrastructure, and — critically — accept and distribute capitated payments. Each physician keeps their own practice, staff, and office. The IPA is the contracting entity that sits between the health plan and the individual doctor.

Why It Exists

When managed care exploded in California in the 1970s and 80s, HMOs like Kaiser grew rapidly. Independent physicians needed a counterweight — a way to negotiate with large health plans without merging into a group practice or becoming hospital employees.

The IPA model let them pool their negotiating power while maintaining independence. In California’s “delegated model,” the health plan pays the IPA a capitated amount per member per month. The IPA then manages that budget — paying member physicians, running utilization management, and absorbing the risk of costs exceeding the capitation.

How It’s Organized

Heritage Provider Network in Southern California is one of the most prominent examples. It’s an IPA that contracts with multiple MA plans and commercial insurers, accepting capitation for hundreds of thousands of patients. The IPA maintains a network of independent physicians who see patients in their own offices. Heritage manages care coordination, utilization review, and risk pool distribution.

The individual doctor’s experience: they see patients in their own office, under their own shingle, but their contract flows through the IPA. The IPA sends them patients, manages authorizations, and distributes payments.

The Tradeoffs

The upside is independence plus leverage. Physicians keep ownership and practice autonomy. The IPA provides negotiating scale, capitation management, and care coordination infrastructure.

The downside is fragmentation. Each practice has its own EHR, its own workflows, its own culture. Enforcing clinical protocols across dozens of independent offices is harder than in an employed model. And outside California’s unique delegated market, the IPA model has limited relevance.

The Bottom Line

The IPA is the model that proves you don’t need employment to participate in risk-based care. California’s delegated model — where IPAs accept capitation and manage provider networks — is the most sophisticated independent-practice ecosystem in the country. If value-based care is the future, California’s IPAs are the longest-running experiment.

You’re a Kaiser member. You see your primary care doctor at a Kaiser clinic. She refers you to a Kaiser cardiologist. Your echocardiogram happens at a Kaiser imaging center. If you need surgery, it’s at a Kaiser hospital, performed by a Kaiser surgeon. Your post-surgical rehab is at a Kaiser facility. Your prescriptions are filled at a Kaiser pharmacy. And the insurance plan that pays for all of this? That’s Kaiser too.

One organization. Every step.

What It Is

An Integrated Delivery Network is a single corporate entity that owns and operates the full continuum of care: hospitals, physician groups, ambulatory centers, post-acute facilities, and sometimes a health plan. Everything operates under unified governance, shared financials, and a common electronic health record.

Why It Exists

The fundamental problem in healthcare is fragmentation. Your PCP doesn’t talk to your specialist. Your hospital doesn’t coordinate with your rehab facility. Your insurer and your doctor have opposite incentives.

The IDN eliminates these walls by putting everything under one roof. When the hospital, the doctors, and the insurance plan share the same P&L, there’s no incentive to do unnecessary surgery (the plan pays for it), no incentive to skip follow-up care (the system absorbs the readmission cost), and no information gaps (everyone uses the same EHR).

How It’s Organized

The IDN is the parent entity at the top of the hierarchy. Everything else — hospitals, physician groups, ambulatory networks, post-acute facilities, sometimes the health plan — are subsidiaries or divisions.

Intermountain Health in Utah is a good example. It owns 33 hospitals, employs over 4,000 physicians, operates a health plan (SelectHealth), runs home health and hospice services, and manages a network of clinics. One board of trustees oversees the whole thing.

When the IDN also owns the health plan (Kaiser, Geisinger, UPMC), it becomes fully vertically integrated — controlling both the insurance premium and the care delivery.

The Tradeoffs

The upside is coordination. Seamless care across the continuum. Unified data. Population health management. Maximum alignment under risk contracts.

The downside is weight. IDNs are extremely capital-intensive. Decision-making can be slow and bureaucratic. Physicians are employees, not owners — and some chafe under corporate management. In markets where an IDN dominates, antitrust regulators are paying close attention.

The Bottom Line

The IDN is the most powerful organizational structure in healthcare. It solves the coordination problem by owning everything. But that power comes with the burden of scale — massive capital requirements, bureaucratic decision-making, and the challenge of running a $10-50 billion enterprise without losing the personal touch that patients need.

Dr. Patel could sell her practice to a health system and become an employee. But she doesn’t want to give up ownership.

Enter the CIN.

What It Is

A Clinically Integrated Network is a formal alliance of separately owned providers — hospitals, physician groups, post-acute facilities — that agree to share clinical data, follow common treatment protocols, report quality metrics together, and invest in shared infrastructure (analytics, care management, IT).

The critical legal detail: the FTC and DOJ allow CIN members to negotiate collectively with insurers — which would normally be price-fixing — as long as the network demonstrates genuine clinical integration. Shared protocols, shared quality reporting, and shared financial investment in infrastructure. This is the antitrust safe harbor that makes CINs possible.

Why It Exists

CINs solve a specific dilemma: independent providers need to participate in value-based contracts that require scale and coordination, but they don’t want to merge or be acquired.

Before CINs, the choice was binary. Stay independent and get left out of value-based contracts. Or sell to a health system and lose autonomy. CINs created a third option: keep your ownership, join a network, follow the rules, and negotiate collectively.

How It’s Organized

Take Piedmont Clinic in Georgia. It’s a CIN anchored by Piedmont Healthcare (the health system) with over 3,000 physicians — a mix of Piedmont-employed doctors and independent practices. The CIN is a separate legal entity (an LLC) with its own governance board that includes representatives from both the system and the independent physicians.

Members agree to use a common quality dashboard, follow evidence-based care pathways, and share data through a common analytics platform. In return, the CIN negotiates value-based contracts with payers on behalf of all members.

The CIN doesn’t own any of the practices. It’s a coordination layer, not a corporate parent.

The Tradeoffs

The upside is participation without surrender. Physicians keep their practices. They get access to value-based contracts they couldn’t access alone. Shared data and protocols genuinely improve care quality.

The downside is the free-rider problem. Some members invest heavily in quality improvement; others coast along and benefit from the network’s reputation without contributing equally. Governance across independent entities requires constant negotiation. And the CIN must continuously prove to the FTC that it’s genuinely clinically integrated — not just a vehicle for price-fixing.

The Bottom Line

The CIN is the most important organizational model that most people have never heard of. It’s the structure that allows independent medicine to participate in value-based care without being absorbed into health systems. If you’re building products for healthcare, you’ll encounter CINs everywhere — they’re the connective tissue between independent providers and the value-based payment models that are reshaping the industry.

The entity that manages all of this — collecting the clinical revenue, allocating the research funds, distributing the teaching compensation — is the faculty practice plan.

What It Is

A faculty practice plan is the organized physician group associated with an academic medical center and medical school. Faculty physicians hold joint appointments: they’re both medical school faculty and clinical providers.

The practice plan is the entity through which clinical revenues are collected and distributed. It may be structured as a single multi-specialty group (like Virginia Mason) or as a federation of departmental practice plans (common at large AMCs where each department — surgery, medicine, pediatrics — runs its own practice).

Why It Exists

Academic medicine operates on a three-legged stool: clinical care, education, and research. The faculty practice plan exists to manage the complex economics of paying physicians who split their time across these activities.

Here’s the key mechanism: the “dean’s tax.” A portion of clinical revenue (often 5–15%) is redirected to fund the medical school’s educational and research missions. This means clinical physicians in academic medicine effectively subsidize the institution’s other missions with their patient care earnings.

How It’s Organized

The faculty practice plan sits at the intersection of three power centers: the medical school (university), the hospital/health system, and the clinical departments. It’s typically a separate legal entity — a 501(c)(3) nonprofit or professional corporation.

A cardiologist’s reporting relationships might include: the department chair (clinical), a division chief (academic), a medical school dean (teaching), and a research institute director (grants). This matrix governance is complex by design — it reflects the multiple missions each physician serves.

The Tradeoffs

The upside is prestige and purpose. Access to cutting-edge care, clinical trials, and the intellectual stimulation of academic medicine. A pipeline of trainees who become future colleagues and referral sources.

The downside is economics. Dean’s tax reduces take-home pay. Compensation is often 15–30% below private-practice market rates for the same specialty. Teaching and research time reduces clinical productivity (RVUs). The governance complexity can be frustrating for physicians who just want to see patients.

The Bottom Line

The faculty practice plan is the least understood organizational model in medicine, but it’s the economic engine of academic healthcare. It funds medical education, enables research, and delivers the most complex clinical care. The tradeoff is that physicians in this model accept lower compensation and higher complexity in exchange for the academic mission. That trade has gotten harder as private-practice and employed salaries have risen.

This is what success looks like under the current CMS strategy. And I believe this is the fundamental problem.

I spend my days building products that sit inside this system. I watch smart teams pour themselves into programs that were never going to reach the people they were designed for, and I watch smart executives celebrate attribution numbers that would embarrass them if they ever had to explain what attribution actually means to their own mother. So when I look at the alphabet soup of CMS programs, at ACO REACH and APCM and MSSP and Making Care Primary and Primary Care First and now ACCESS and the just-announced LEAD model, I do not see chaos. I see a fifteen-year bet that was half-right and is about to run out of road.

Fifteen years of rungs. All of them built for the supply side.

Here is the bet CMS made. If we pay provider organizations differently, beneficiaries will experience different care. Take more risk, build more infrastructure, coordinate more care, bill this new code. Every program in that staircase is one instruction repeated in a different dialect: provider, please change. It is a supply-side theory of everything. The goal, stated since 2021, is to have every Medicare beneficiary in an accountable care relationship by 2030. The machinery is aimed at getting providers into those relationships. The beneficiary is downstream of a formula.

The assumption under the whole thing is that if you get the supply side right, the demand side follows. And I am going to tell you, as someone who has spent years building for the supply side and who has skin in whether that assumption holds, that the assumption is starting to crack. ACO REACH will hit its participant targets and still leave most Medicare beneficiaries attributed through claims they never saw, to organizations they never chose, with care teams they never met. APCM will generate billions in new per-member-per-month revenue and most of it will fund existing staff doing existing work under a new code. MSSP’s savings curve has flattened. You cannot squeeze much more behavior change out of a system whose customers do not know they are in it.

The one program that breaks the pattern is ACCESS, the model CMS announced in December 2025. ACCESS is the first CMMI model that lets a beneficiary enroll directly, without an ACO wrapper, by walking into a digital front door. That is not a footnote. That is CMS quietly admitting the supply-side playbook has a ceiling and the only way through it is to let people opt into care models the way they opt into everything else in their lives. Once you see ACCESS that way, the rest of the portfolio starts to look like scaffolding for a building that has not been drawn yet.

Four versions of the future (aka…2032)

I think the honest way to talk about the next decade is to stop pretending there is one future and start drawing the four that are already happening in parallel

Left: how care starts today. Right: how it could start in 2032.

Future 1: The panel dissolves. By 2032, the patient panel is a legacy concept. Accountability is tracked per condition, per quarter, against outcome thresholds a beneficiary can see on their phone. A diabetic in rural Missouri has three condition-specific operators on her care team, none of whom are a primary care practice, all of whom get paid only if her A1c actually moves. The ACO still exists, but it is a back-office entity the way a PBM is. Necessary, invisible, increasingly commoditized. This is where the dual-eligible population goes first, because that is where the cost pressure is loudest and the political cover is thinnest.

Future 2: Beneficiaries choose. By 2032, Medicare beneficiaries pick their care model the way they pick a Medicare Advantage plan, except the choice is about outcomes, not networks. Enrollment happens on a phone, in ten minutes, with no provider referral. The organizations that win are the ones with the lowest cost per outcome improvement, regardless of whether they own a clinic. Attribution, the word that defined ACO policy for twenty years, has quietly disappeared from the vocabulary. This is urban Medicare Advantage racing ahead, the way banking did fifteen years ago when consumer choice finally showed up.

Future 3: AI collapses the cost curve. By 2032, the economics of intensive chronic care have flipped. What used to require a care manager and a nurse and a PCP and three handoffs runs on an AI concierge backed by a thin clinical layer. The downside risk that made outcomes-based models unbearable for operators has been absorbed by software. The winners are not health systems. They are operators who were software companies first and healthcare companies second. This is the thing underneath all the other futures, the reason any of them pencil.

Future 4: The CPT code eats the ACO. By 2032, commoditization is complete. Every care management capability that once required an ACO contract to fund is billable by any Part B provider as a standalone code. The ACO wrapper becomes a strategic choice, not a necessity. Some of the best outcomes in Medicare come from two-person practices in small towns running a stack of CPT codes and an AI layer, with no shared savings contract in sight. This is rural Medicare, held together by whoever is willing to drive the hour and whoever can bill the new codes.

These are not alternatives. They are happening at once, at different speeds, in different places, for different people. Rural goes to Future 4 because that is what rural can afford. Urban Medicare Advantage goes to Future 2 because that is where consumer choice has the oxygen to work. Dual-eligibles are the proving ground for Future 1 because cost pressure forces condition-level accountability there first. And Future 3 is the infrastructure layer underneath all three, silently deciding whether any of them pencil. The real question for the decade is not which future wins. It is which one arrives fastest and pulls the others along behind it.

Where I sit, and why I am telling you

I should stop and tell you something, because this piece is about to get more opinionated and you deserve to know whose opinion you are reading.

I am the VP of Product at Lumeris. When I look at those four futures, I am not a neutral observer. I have a bet, and it is on Future 3. The version of 2032 where AI collapses the cost curve of chronic care delivery enough that outcomes-based payment finally pencils for the operators who have to live inside it. That is the future I wake up trying to pull forward, and I believe in it.

And I want to be straight with you about something else. If I take off the operator hat and ask which of these futures is best for the person at the kitchen table with the pillbox, I do not think it is Future 3. I think it is Future 2. Choice is the only force that has ever meaningfully disciplined any part of American healthcare. Attribution is the opposite of choice. A system where tens of millions of people are assigned to care relationships they did not consent to, by formulas they cannot see, is not going to generate the outcomes we keep promising, no matter how elegant the risk-sharing math gets on the supply side.

So I am in a strange spot. I am building hardest for the future I think will win commercially. I am rooting loudest for a different future I think would be better for patients. And I am watching Futures 1 and 4 happen in the background for populations that neither my bet nor my hope is going to reach on time.

Here is why that is not actually a contradiction. Future 3 is the precondition for Future 2. You cannot offer people a meaningful choice between care models until the economics of those care models are good enough that operators can compete on outcomes instead of volume. Right now they cannot. The unit economics of intensive chronic care are so brutal that any operator who tries to compete on outcomes alone goes out of business before the second performance year. AI is the thing that changes that math, not because it replaces clinicians, but because it absorbs the coordination and documentation and follow-up and outreach costs that currently make outcomes-based contracts unbearable. Once that math flips, and I think we will know by about 2028 whether it has, the supply side is finally ready to be chosen from. That is when Future 2 becomes possible. Not before.

Future 1 and Future 4 are not detours from that path. They are the places where the new economics will prove themselves first, because they have to. Condition-level accountability will emerge in dual-eligibles because the old model is collapsing under cost. CPT-code-driven micro-practices will emerge in rural markets because the old model never really showed up there in the first place. Both will run ahead of the urban, technology-rich experiments everyone writes about, and both will teach Future 3 operators what actually works before Future 2 is ready to be built on top of it.

So the honest version of my bet is this. The boring half has to get built first, because the exciting half does not work without it. If the people doing that work do their jobs right, the best things they build will be invisible inside the care models patients eventually get to choose between. I am okay with that.

I would rather build the plumbing for the future I want to live in than write essays about it.

What has to be true

These are not policy recommendations. Neither you nor me are probably in the mood for another bullet list of everything Washington should do differently. These are the five things I am watching, because they are the ones that will tell me whether the bet I just described is working or quietly falling apart.

1. Direct enrollment has to spread beyond ACCESS. If the 2027 and 2028 CMMI models still route every beneficiary through attribution logic, the demand side never wakes up and Future 2 dies in the crib. ACCESS opened the door. Someone has to walk through it.

2. Outcomes thresholds have to be measured by someone the operator does not pay. The moment CMS lets ACCESS-style models grade their own homework, the model becomes a revenue scheme and nothing changes for the person at the kitchen table. This is the boring detail that decides whether any of it is real.

3. The cost curve has to actually bend, and it has to bend publicly. If AI-native operators cannot show, by 2028, that they are delivering measurably better chronic care at meaningfully lower cost than the status quo, Future 3 was a story and not a strategy. I will know where I stand by then. You will too.

4. At least one tech-native operator has to bill Medicare directly and win on outcomes, without a legacy provider laundering the services on their behalf. One existence proof is enough. Zero is not.

5. The primary care visit has to stop being the center of gravity. Not disappear. Just stop being the thing every care model is forced to route through. If 2032 still looks like a fifteen-minute office visit with AI duct-taped around the edges, we rebuilt the old system in new clothing and I will owe a lot of people an apology.

The close

None of this arrives cleanly. The pragmatic version of 2032 is that all four futures are happening at once, at different speeds, in different places, for different people. Rural Medicare looks like Future 4, held together by CPT codes and small practices and whoever is willing to drive the hour. Urban Medicare Advantage races into Future 2, where direct enrollment and consumer choice finally show up the way they showed up in banking fifteen years ago. Dual-eligibles become the proving ground for Future 1, condition-level accountability, because that is where the cost pressure is loudest. And Future 3 runs underneath all of it, quietly deciding whether any of this pencils at all.

CMS built the supply-side machinery with real skill and real patience, and it got further than a lot of people thought it would. But the bet it made, that fixing the provider side would pull the patient side along behind it, is the half of the machine that is running out of torque. The other half, the half where beneficiaries choose and operators compete on outcomes and AI makes the math work, is being built right now by a mix of policy accidents, tech-native operators, and infrastructure builders who are betting the next decade on it.

The organizations that win the next decade are the ones building for the future that is already arriving in pieces, not the one CMS keeps drawing on the whiteboard. I am betting my career on a specific one of those pieces. Now you know which, and why, and what I am watching for.

That’s the power of a multi-specialty group: the organizational walls between specialties are removed because everyone works for the same entity.

What It Is

A multi-specialty group practice brings multiple clinical specialties under unified governance and shared infrastructure. These range from mid-size practices (20–50 physicians spanning PCP, cardiology, and GI) to massive organizations with thousands of doctors covering every specialty.

The key distinction from a CIN or a health system is that this is one physician organization — one legal entity, one EHR, one compensation system, one P&L.

Why It Exists

When a primary care physician and a cardiologist share the same organization, three things happen:

1. Referrals stay internal. Revenue doesn’t leak to outside specialists.

2. Care coordination improves. Shared records, shared protocols, shared accountability.

3. Value-based contracts become viable. The group can manage total cost of care across specialties — which is the requirement for most serious risk contracts.

A group of PCPs alone can influence referral patterns. A group of cardiologists alone can optimize cardiac care. But only a multi-specialty group can own the whole patient journey.

How It’s Organized

These groups are typically organized as a single professional corporation or LLC. Compensation models are the most contentious governance issue — procedural specialists (surgeons, cardiologists) generate more revenue per hour than primary care physicians, creating ongoing internal debates about fairness.

Large multi-specialty groups are often the physician backbone of a health system. Cleveland Clinic, Mayo Clinic, and the Permanente Medical Groups (Kaiser’s physician entity) are all multi-specialty groups. Some remain independent. Crystal Run Healthcare in New York was independent for decades before being acquired by Optum.

The Tradeoffs

The upside is coordination. Best positioned for total cost of care management. Internal referral network retains revenue. Shared data and EHR enable population health. Attractive to physicians who want colleagues across specialties.

The downside is politics. Balancing compensation between PCPs and proceduralists is a perpetual battle. Governance gets complex as specialty interests diverge. Large groups can become bureaucratic. Primary care is often financially subsidized by surgical specialties, which creates resentment.

The Bottom Line

The multi-specialty group is the organizational model best suited for value-based care. It can do things that single-specialty groups, IPAs, and loose networks can’t: manage a patient across their entire clinical journey within one organization. The tradeoff is internal complexity — and the reality that keeping 20+ specialties aligned under one governance structure requires constant negotiation.

That group doesn’t need the hospital. The hospital needs them.

What It Is

A large single-specialty group is a physician-owned practice with dozens to hundreds of physicians all practicing within the same clinical specialty. Orthopedics, cardiology, gastroenterology, radiology, anesthesiology, emergency medicine — these are the specialties where large groups dominate.

They operate across multiple locations, often spanning a metro area or region. They achieve critical mass within their specialty, creating significant clinical and economic advantages.

Why It Exists

Concentrated volume in one specialty creates a competitive moat.

A 45-surgeon orthopedic group can negotiate reimbursement rates that a solo orthopedist never could. It can invest in subspecialty recruitment (a hand surgeon, a pediatric orthopedist, a spine specialist) that a small group can’t support. It can own its own ASCs and imaging centers, capturing the facility fees and ancillary revenue that would otherwise go to the hospital.

The economics are self-reinforcing: more surgeons attract more referrals, which fund more ancillary services, which generate more revenue per physician.

How It’s Organized

These groups are typically organized as physician-owned partnerships or professional corporations. Decision-making is centralized under an elected board or managing partner.

They negotiate directly with payers — often bypassing IPAs or CINs entirely. Their market position gives them leverage that smaller groups lack.

Their relationship with hospitals is symbiotic and often tense. Hospitals depend on them for surgical volume and call coverage. The group depends on hospitals for operating rooms and ICU backup. But when the group opens its own ASC, it’s directly competing with the hospital for cases.

The Tradeoffs

The upside is power. Significant payer negotiating leverage. Clinical standardization drives quality. Ancillary revenue capture (imaging, PT, ASCs). Ability to recruit subspecialists.

The downside is scrutiny. The FTC sued US Anesthesia Partners in 2023 for anticompetitive consolidation. Private equity has transformed many of these groups into margin-optimization machines. And market dominance can mean supracompetitive pricing — which draws regulatory attention.

The Bottom Line

Large single-specialty groups are among the most powerful entities in local healthcare markets. They prove that you don’t need to own a hospital to have leverage — you just need to be essential. But that power increasingly attracts antitrust scrutiny, especially when PE ownership amplifies the profit motive.

Now picture three family physicians who solve those problems by forming a partnership. They share a lease, split the cost of an EHR, hire a shared billing team, rotate call coverage (each doctor only takes call every third night), and negotiate with insurers as a group.

That’s the small independent group. It’s the most common practice structure in American medicine.

What It Is

A small independent group is a physician-owned practice with 2 to 10 doctors sharing overhead, infrastructure, and payer contracts. It’s typically organized as a partnership, professional corporation (PC), or professional limited liability company (PLLC).

About 30% of all U.S. physicians work in practices of 10 or fewer, according to the AMA’s Physician Practice Benchmark Survey. This includes both solo practitioners and small groups.

Why It Exists

Small groups solve the three biggest pain points of solo practice without requiring physicians to give up ownership.

Call coverage. Three physicians rotating call means two nights off for every one night on. That alone prevents burnout.

Shared overhead. Splitting the cost of office space, staff, EHR, and billing reduces per-physician costs by 20–40%.

Slightly better negotiating position. A three-physician group isn’t going to push UnitedHealthcare around, but it’s a more credible counterparty than a solo doc.

How It’s Organized

Small groups are independently owned entities. The physicians are typically equal (or near-equal) partners who share profits according to some agreed-upon formula — usually based on productivity (RVUs generated) plus some component for shared responsibilities.

Like solo practitioners, they sit at the base of the organizational hierarchy. They may affiliate upward with IPAs, CINs, ACOs, or health system networks. Many participate in MSO arrangements where a management company handles their back-office operations. But the physicians own the clinical entity.

Governance is consensus-based. With 3–5 partners, this works. With 10, it starts to strain.

The Tradeoffs

The upside is balance. Shared overhead, call coverage, and peer support without the bureaucracy of a large organization. Physicians keep ownership and most of their autonomy.

The downside is fragility. Partnership dynamics can turn toxic — compensation disputes are the most common source of conflict. Succession planning is difficult (how do you value a buy-in for a new partner?). Capital constraints limit major investments. And these groups are prime acquisition targets for health systems and PE-backed rollups.

The Bottom Line

The small independent group is the workhorse of American medicine. It solves real problems — isolation, overhead, burnout — through simple partnership. But it also sits in the crosshairs of consolidation. The forces pushing physicians into larger structures haven’t stopped; they’ve accelerated. The small group’s challenge is staying viable in a system that increasingly rewards scale.

When the office computer system needs upgrading, she picks the vendor. When a patient needs extra time, she takes it. When she disagrees with an insurer’s coverage decision, she fights it herself. There’s no corporate compliance department, no regional vice president, no quarterly productivity reviews.

That’s solo practice. It’s the original model of American medicine, and it’s slowly disappearing.

What It Is

A solo practitioner is a single physician who owns and operates their own independent practice. They’re the owner, the clinician, the decision-maker, and the business operator — all rolled into one. They hire their own staff, choose their own EHR, set their own hours, and contract directly with insurance companies.

About 15% of U.S. physicians still practice solo, according to AMA survey data. That number has been declining for decades and continues to fall.

Why It Still Exists

Autonomy. That’s the core of it.

Dr. Chen doesn’t attend committee meetings. She doesn’t need approval to refer a patient to a specialist she trusts. She doesn’t have an employer telling her to see more patients per hour. She controls her clinical environment completely.

For some physicians — particularly in primary care, psychiatry, and certain procedural specialties — this freedom is worth the tradeoffs.

How It’s Organized

A solo practice sits at the very bottom of the healthcare organizational hierarchy. Dr. Chen is an independent business entity — usually a sole proprietorship or single-member LLC.

She contracts with insurance companies directly. She has admitting privileges at the local community hospital but isn’t employed by it. She might join an IPA for slightly better negotiating leverage with payers. She might participate in a CIN or ACO for value-based contracts. But she owns nothing and no one owns her.

The Tradeoffs

The upside is freedom. Complete clinical and business autonomy. Direct, long-term patient relationships. The ability to customize the practice to community needs without corporate approval.

The downside is vulnerability. Dr. Chen has zero negotiating leverage with insurers — she accepts whatever rates they offer. If she gets sick, the practice shuts down. She can’t afford the analytics platforms that larger groups use. And as health systems and PE-backed groups consolidate around her, her competitive position weakens every year.

The Bottom Line

Solo practice is the purest form of physician independence. It’s also the most fragile. The physicians who still choose it are making a deliberate trade: they’re giving up scale, leverage, and infrastructure in exchange for the freedom to practice medicine on their own terms. That trade gets harder to justify every year.

The common thread: every one of these models exists because someone looked at the existing healthcare system and decided to build around its limitations rather than work within them.

Payer-Provider Convergence — Insurance companies buying physician groups. UnitedHealth Group now employs or affiliates with roughly 90,000 physicians through Optum. CVS Health owns Aetna, Oak Street Health, and Signify. Humana owns CenterWell clinics. This is the biggest structural shift in healthcare. When the company that pays for care also delivers care, the incentives align — but so do the conflicts of interest.

Direct Primary Care (DPC) — About 1,800 practices that bypass insurance entirely. Patients pay $50–$150 per month for unlimited primary care. No billing codes. No insurance claims. No prior authorizations. Just a doctor with 400 patients instead of 2,000. It works beautifully for the doctors and patients who participate. The problem: it’s inaccessible to people who can’t afford the membership fee.

Concierge Medicine — Similar to DPC but fundamentally different economically. Patients pay an annual retainer ($1,500–$25,000+) for enhanced access, but the practice also bills insurance for clinical services. DPC bypasses insurance; concierge layers premium access on top of it. MDVIP is the largest network with about 1,100 physicians.

Virtual-First Primary Care — Companies like Amazon One Medical, Firefly Health, and Galileo that deliver most care through video, chat, and messaging. The promise: appointment within hours, not weeks. The challenge: you can’t do a physical exam through a screen.

Employer-Sponsored Clinics — Large self-insured employers (Apple, Disney, Boeing) operating their own clinics for employees. Premise Health manages 800+ sites for employers. The logic is straightforward: if you’re paying for your employees’ healthcare anyway, cut out the middleman and run the clinic yourself.

The Pattern

Every emerging model follows the same pattern: identify a failure in the existing system (access, cost, coordination, experience), then build a structure that routes around it. The question for each is whether the model can scale beyond its initial niche without losing what made it different.

These aren’t insurance programs. They’re direct delivery systems — the government owns the facilities, employs the providers, and delivers the care.

Veterans Health Administration (VA) — The largest integrated delivery system in the United States. 171 medical centers, over 1,100 outpatient sites, approximately 9 million enrolled veterans. The VA employs its own doctors, runs its own hospitals, and operates its own EHR (they pioneered electronic health records with VistA in the 1980s, decades before the private sector caught up). It has unmatched expertise in PTSD, traumatic brain injury, polytrauma, and veteran-specific conditions.

Military Health System (DoD/TRICARE) — Healthcare for active-duty service members, their families, and military retirees — about 9.6 million beneficiaries. Hospitals and clinics on military bases provide direct care. TRICARE insurance fills in the gaps with civilian provider networks. The system’s primary mission isn’t just healthcare — it’s maintaining medical readiness for military operations.

Indian Health Service (IHS) and Tribal Health Programs — The most underfunded of the three. About 2.6 million American Indians and Alaska Natives receive healthcare through IHS-operated facilities, tribally operated programs, or urban Indian health organizations. The federal government has a treaty and trust obligation to provide this care. Per-capita IHS spending is a fraction of what the VA or Medicare spends. Health disparities are profound — life expectancy 5.5 years lower than the national average.

Why They Matter

These three systems are often invisible in mainstream healthcare conversations. But they represent fundamentally different models of care delivery — government-owned, government-operated, and government-funded — that test assumptions about integration, access, and efficiency in ways the private sector can’t.

The VA’s Nuka System of Care partnership with Alaska’s Southcentral Foundation is arguably the most patient-centered care model in the world. IHS tribal programs under self-determination are some of the most culturally competent. DoD’s unified command structure enables coordination that private systems envy. The lessons from these systems are underappreciated.

The shift from fee-for-service (do more, earn more) to value-based care (keep people healthy, earn more) is the defining transformation in American healthcare. But “value-based care” isn’t one thing. It’s a spectrum of payment models, each creating different incentive structures.

ACOs (MSSP) — About 480 groups of providers that share savings (or losses) with Medicare based on whether they keep costs below a benchmark while meeting quality targets. The gentlest form of risk. Think of it as fee-for-service with a year-end bonus or penalty.

ACO REACH — The aggressive version. Capitation-like payments within traditional Medicare. Allows non-provider entities (insurance companies, PE-backed firms) to participate. Politically contentious — critics call it backdoor privatization of Medicare.

Medicare Advantage — Private insurance plans that receive a fixed monthly payment from Medicare to cover everything for enrolled beneficiaries. Over 50% of Medicare beneficiaries are now in MA. When a health system owns its own MA plan (Kaiser, UPMC, Geisinger), it controls both the premium dollar and the care delivery.

Medicaid Managed Care Organizations (MCOs) — The Medicaid equivalent of MA. Over 70% of Medicaid beneficiaries are in managed care. Centene and Molina are the largest. Unlike MA (which CMS runs nationally), every state designs its own Medicaid program, creating 50+ different rule sets.

Risk-Bearing Provider Organizations — Any provider group that accepts a fixed payment from a payer and manages total cost of care for a population. If they spend less than the payment, they keep the surplus. If they spend more, they eat the loss. This is the endpoint of value-based care.

Bundled Payment Participants (BPCI-A) — A single payment covers an entire episode of care — say, a hip replacement plus 90 days of recovery. The hospital is accountable for everything that happens during those 90 days, including whether the patient ends up at a cheap rehab vs. an expensive nursing home.

The Layering Effect

These payment models don’t replace the organizational structures from earlier sections — they layer on top. A CIN might participate in an ACO. An IDN might own an MA plan. An IPA might function as a risk-bearing entity. A community hospital might participate in bundled payments.

This layering is why healthcare organizational charts look like spaghetti. It’s not poor design — it’s the natural consequence of overlapping payment and delivery structures.