Abstract
Academic medical centers (AMCs) excel in many ways, but struggle to succeed at delivering cost-effective care in value-based payment models. To the extent these payment models become more widespread, or mandatory, this could be a giant risk to the future success of AMCs. Many attributes of AMCs that have served them well in a fee-for-service payment system may hinder the transformation needed to succeed in value-based care. Much of the underperformance of AMCs may be explained by two core competencies that AMCs lack: the limited ability to redesign clinical workflows and inability to change their economic relationships with their own specialists and primary care providers. These limitations, in turn, flow from a combination of electronic medical record systems that lock-in existing practice patterns, compensation systems that reward volume over value, organizational structures that make it very hard to drive clinicians to change, workforces with too many specialists, and complex accounting systems. To preserve current margins in value-based care, AMCs need to reduce their cost structures and gain new skills in primary and preventive care. Alternative, AMCs may choose to eschew value-based care and raise their prices for fee-for-service to offset declines in patient volume.