Fee-for-service vs value-based care
Two fundamentally different payment models. Fee-for-service (FFS) pays per procedure performed: more visits, more revenue. Value-based care (VBC) ties a portion of payment to patient outcomes, quality metrics, and total cost of care — clinics can earn shared savings, face penalties, or take on direct financial risk for their attributed population.
Why this matters for your clinic
In 2021, the CMS Innovation Center set a goal of moving all Medicare beneficiaries and the vast majority of Medicaid beneficiaries into an accountable care relationship by 2030. CMS's current strategic-direction materials don't repeat that target, so treat it as the direction of travel rather than an active deadline. Programs like MIPS, the Medicare Shared Savings Program, ACO REACH, and the Ambulatory Specialty Model already move real money each year. This is not theoretical — it is happening now, with financial penalties increasing each year.
The challenge for clinic owners is that most practices run on FFS economics. Your staffing, scheduling, and financial reporting are all built around volume. Transitioning to value-based care requires rethinking how you measure success: from visits-per-day to outcomes-per-patient. That is a CFO-level strategic shift, not a billing change.
What good looks like
Per the HCPLAN 2024 APM Measurement Effort (reporting on 2023 data), roughly 42% of traditional fee-for-service Medicare dollars flowed through value-based arrangements and about 49.5% of traditional Medicare beneficiaries were in accountable care arrangements. Medicare Advantage ran even higher at ~64% of payments in value-based arrangements. That 2021 CMMI goal called for 100% of traditional Medicare beneficiaries in an accountable care relationship by 2030, though CMS has not restated it in its current strategic-direction materials.
Example
Worked cash flow example. A 3-provider primary care practice seeing ~9,000 visits a year under pure FFS bills roughly $1.8M and collects ~$1.35M after contractuals and denials, with revenue varying ±15% month to month based on visit volume. The same practice enters a Medicare Shared Savings Program track with 3,500 attributed lives. Month-to-month FFS claims collections continue more or less unchanged, but the practice layers on a shared-savings payment that only arrives the following year, after CMS reconciles the performance year. That back-end payment can move total revenue by six figures in either direction depending on whether the practice beats its benchmark, so cash flow forecasting under VBC has to carry a payment that lands many months after the work, something FFS practices never have to think about.
Side-by-side
| Dimension | Fee-for-service | Value-based care |
|---|---|---|
| Revenue incentive | Volume — more procedures, more revenue | Outcomes, quality, and total cost of care |
| Who holds the risk | Payer bears utilization risk | Clinic bears some or all utilization risk |
| Cash flow predictability | Variable — tracks visit volume week to week | More predictable base (PMPM / capitation) plus back-end quality bonuses |
| Administrative burden | Coding, billing, denial management | Quality reporting, risk adjustment, attribution tracking, data infrastructure |
| CFO-relevant KPIs | RVUs, denial rate, AR days, net collection rate | PMPM, MLR, per-member cost trend, quality score, shared-savings accrual |
From Sorso
Most independent clinics in the $3M to $10M range are better off staying fee-for-service for now. The move is to build the reporting infrastructure early, so when a payer pushes you toward a shared-savings track, you aren't scrambling to produce data you should already have.
Continue with Sorso
How clinic owners typically work with us
Fractional CFO
Strategic CFO for $3M–$50M clinics
Forecasts, location-level P&L, exit prep. Starts at $4,000/mo.
Explore Fractional CFO →Accounting
Healthcare-specialist accounting
Books done right by people who understand clinic finance. Starts at $2,000/mo.
Explore Accounting →Free Assessment
See where your clinic stands
4-minute, 15-question diagnostic. Personalized scorecard emailed to you.
Take the Free Assessment →
Founder of Sorso and a CFA charterholder. Before Sorso, Stan spent 19 years in corporate finance at institutions including UniCredit and Société Générale — managing a $450M loan portfolio and making senior partner at a major mezzanine lender by 29 — then built a fractional CFO firm exclusively for outpatient healthcare clinics.
Want to see how your practice measures up?
Take the 4-minute financial assessment. It is free, and it will show you where your practice is leaking money.