Leadership Health Care (LHC), a Nashville Health Care Council program for emerging leaders, Cohorts provide the participants an opportunity to engage in a peer mentoring program facilitated by an experienced healthcare executive. Throughout six cohort sessions, participants discuss substantive topics around a common focus area to enhance their knowledge and leadership skills.
In a recent session of the Nashville Healthcare Council's COHORT series, healthcare investors, executives, and professionals gathered to discuss the ever-evolving landscape of healthcare delivery. Brian Tanquilut, Healthcare Services Equity Research Analyst at Jefferies LLC, shared deep insights on the state of value-based care and the challenges and opportunities that lie ahead for the industry.
Tanquilut’s perspective on VBC was candid—its success varies across different sectors. One key insight was the growing divide between for-profit and nonprofit healthcare providers in their approaches to value-based models.
While many nonprofit systems are aligning with value-based care initiatives, focusing on population health management and accountable care organizations, for-profits are more cautious. Some are only cautiously investing in VBC where they see clear financial benefits. Tanquilut noted that the adoption of value-based care is largely driven by financial incentives and regulatory mandates. "The challenge isn’t whether VBC works," he said. "It’s how to balance the financial risk with patient outcomes."
Tanquilut also highlighted the efforts of a few private equity-backed companies, carving out their own paths in value-based care by leveraging technology and focusing on Medicare Advantage populations. These PE-backed companies are making strides, but the question remains whether these innovative models can scale sustainably.
A major concern brought up during the session was the financial viability of value-based care models, particularly the so-called “J curve.” The J curve refers to the timeline in which value-based care providers typically experience financial losses in the first two years before breaking even in year three and finally becoming profitable by year five. However, as Tanquilut mentioned, other companies have started to rethink this model, acknowledging that the path to profitability may be longer than originally anticipated due to shifting demographics and increased healthcare utilization as patient populations age.
Despite these financial challenges, value-based care is still showing promise in specific specialties. Tanquilut highlighted areas like cardiology and dialysis care as spaces where VBC models are demonstrating real potential for savings and improved patient outcomes.
One of the most poignant moments of the session came when the discussion shifted from finances to the personal, local impact of healthcare. As one participant pointed out, "Healthcare is personal. And it’s local." While national policies and financial models are crucial, real change happens when healthcare is tailored to individual communities. This perspective was further reinforced by a story Tanquilut shared about a clinic in Miami, which integrated services like a nail salon and hair salon into its care model to enhance patient wellbeing. This community-focused approach, while not without its financial challenges, has proven effective in reducing risks and improving patient outcomes in underserved populations.
Brian discussed the rise of VBC, noting how the Affordable Care Act (ACA) and the Centers for Medicare & Medicaid Services (CMS) laid the foundation for the growth of this model. The goal set by CMS to have every Medicare beneficiary in a VBC arrangement by 2030 fueled industry excitement and investment. However, he stressed that despite its potential, VBC faces significant challenges, especially with the economic pressures many healthcare companies are encountering.
"There’s no question that value-based care is the future of healthcare," Brian noted. “But right now, it’s struggling. Companies like Agilon Health and Oak Street Health are facing capital constraints, burning through cash at unsustainable rates. This isn’t because the concept of VBC is flawed, but because the financial models they’ve relied on aren’t viable in today’s tighter capital markets.”
He further illustrated the risks, citing how companies that went public or tried to expand rapidly are now grappling with the difficulties of scaling VBC operations.
Brian also addressed the significant role that policy plays in the viability of VBC. The Biden administration’s tough stance on Medicare Advantage plans, alongside changing CMS reimbursement models, poses additional hurdles. Brian emphasized that shifts in political power could further impact how value-based care is implemented and financed. For example, should a Republican administration return to power, there could be more support for Medicare Advantage plans, which currently face scrutiny from the federal government.
“Policy is a double-edged sword in value-based care. The same regulations that encouraged its growth are now challenging its survival. Changes in reimbursement, coupled with stricter audits, make it harder for providers to stay afloat, especially smaller ones with less ability to manage risk.” - Brian Tanquilut, Healthcare Services Equity Research Analyst at Jefferies LLC.
As healthcare continues to shift, one of the session's key takeaways was the need for flexibility. Both healthcare providers and investors must be prepared for a future where value-based care plays a larger role, even if it’s not fully embraced by all sectors of the industry yet. Tanquilut emphasized the importance of finding ways to innovate and improve patient care without putting unnecessary financial strain on providers—a balance that some health systems are trying to strike by leveraging technology and focusing on Medicare Advantage patients.
While the road to value-based care may still be uncertain, the session made it clear that discussions like these, led by thought leaders like Brian Tanquilut, are crucial for shaping the future of healthcare in Nashville and beyond. As the industry continues to transform, Nashville’s collaborative spirit, combined with its deep expertise in healthcare, positions it to be at the forefront of this transformation.
Leadership Health Care’s mission is to cultivate talented healthcare professionals into the industry leaders of tomorrow. LHC aims to provide young professionals with ongoing opportunities to develop their knowledge of the healthcare industry through educational events and networking opportunities. Fill out this form to learn more about LHC.