The American healthcare system is an outlier, but not the kind we should be proud of. We spend $4.9 trillion in annual spending on sickcare rather than healthcare. This spend is far higher than other developed countries as a share of GDP, chronic diseases are rising across age groups, and outcomes continue to lag behind global peers.
Under the traditional fee-for-service (FFS) model, the system treats patients like cars on an assembly line: providers are reimbursed for the volume of parts they replace, not whether the car actually runs better. It’s a model where the incentives are fundamentally misaligned with the patient’s well-being. By 2033, US health spending is projected to account for over 20% of GDP; whereas outcomes from life expectancy to obesity rate to chronic diseases’ prevalence are getting worse. Our current FFS model is no longer sustainable.
The shift to Value-Based Care (VBC) changes the math. It moves the goalposts from “How many tests did you run?” to “How healthy is your patient population?” It’s the difference between treating a crisis and preventing one. It aligns incentives across patients, providers, payers, and policymakers to drive both better health outcomes and lower costs.
We’ve been investing in fintech and healthtech for 15 years and we see a striking parallel to the evolution of finance. Not long ago, financial infrastructure was a mess of closed systems and manual processes. Fintech modernized those “dumb” pipes into interoperable, intelligent platforms that can move money faster and more transparently.
Healthcare is now at that same “Plaid moment.” To move from volume to value, we must build interoperable, intelligent platforms and AI will be at the forefront of enabling these platforms. The entrepreneurs and technologies that will define this future are building the data rails, agentic workflows, and risk management/incentive systems that will power VBC at scale.
Why Value-Based Care?
Fun fact: VBC was conceptualized and popularized by Harvard Business School legend Michael Porter in 2005, the same professor that popularized the Five Forces framework that drives competitive analysis across industries. Fast forward to today, VBC offers the clearest path forward to solve the healthcare crisis. Unlike the traditional FFS model, which rewards volume, VBC aligns incentives around outcomes. Instead of paying for how much care is delivered, it pays for how well care is delivered.
VBC creates shared wins for all major healthcare stakeholders:
- Patients receive better outcomes and smoother care experiences at lower costs.
- Providers gain financial rewards when they improve care quality and reduce unnecessary utilization.
- Payers benefit from clearer visibility and control over costs.
- Practitioners find greater satisfaction through better workflows and team-based care.
- Populations experience improved equity, access, and long-term health.
According to McKinsey, improving health outcomes could unlock $3 trillion in incremental GDP by 2040 for the US. Mindboggling numbers.
Why Now – Haven’t we been talking about VBC for decades??
After two decades of pilots and policy experimentation, VBC is no longer a niche concept. Between 2015 and 2024 in the U.S., FFS payment share reduces from ~60% to ~40%. Share of population-based payment has encouragingly almost doubled from 2022 to 2024 (7.4%-14.2%), albeit still not close to where it should be due to multiple challenges from data fragmentation to performance reward timeline lag causing negative cash flow impact.
VBC is still in the early innings. We are witnessing the perfect storm of technology breakthroughs, structural evolution of care delivery, and a strategic push from policymakers and payers.
First, technology breakthroughs are enabling a platform shift. For years healthcare was held together by manual glue. Thousands of hours spent on tedious work. Far from being a buzzword, AI is now being deployed to streamline some of the most expensive and inefficient layers of the U.S. healthcare system.
- AI as a foundational enabler: From automating administrative workflows to surfacing predictive insights, AI is enhancing productivity across the VBC stack, helping providers reduce overhead and focus on patients, not billing codes. AI also enables hospitals to create new capabilities and workflows that were previously unimaginable: notably, the transformation of unstructured-to-structured multimodal data at scale.
- Home health is on the rise: Centers for Medicare & Medicaid Services (CMS) had authorized more than 366 hospitals across 139 health systems (by February 2026) to offer acute hospital care at home since the waiver-based program launched in November 2020. And those numbers are climbing. Technologies like Remote Patient Monitoring (RPM) and AI-driven alerting systems are making it possible to manage patients proactively, outside traditional clinical settings. This unlocks more scalable models for chronic care, post-acute recovery, and population health management.
Second, care delivery redesign is gaining traction at scale. What started with a few niche independent PCPs is now scaling across the ecosystem:
- Health systems are going all-in on VBC: Institutions like Advocate Health (2.4M attributed lives in VBC), Ochsner Health (1M patients in the Gulf South) and UNC Health (400K lives in VBC) are proving that value-based models can be both operationally sustainable and clinically effective. Community Care of North Carolina (CCNC – statewide medical home network serving ~1M Medicaid/Medicare members), Accountable Health Partners (3.5K providers) also recently announced technology partnerships to advance VBC. Across the industry, we’re seeing a shift in sales cycles for VBC enablement businesses.
- Integrated care is the next frontier: The historical divide between primary care and specialty care is blurring. Teams of PCPs and specialists are forming joint care models that deliver more coordinated, efficient, and value-aligned outcomes.
Lastly, policymakers and payers are driving a hard pivot. A very strong tailwind for VBC comes from those setting the monetary rules of the game. Both public and private payers are aligning incentives to push the industry forward.
- CMS’s 2030 mandate: The Centers for Medicare & Medicaid Services (CMS) has declared an ambitious target: 100% of Medicare beneficiaries in VBC arrangements by 2030. To get there, CMS is rolling out mandatory models that require providers to take on real financial accountability for outcomes.
- Payers are reshaping the ecosystem: More commercial plans are now linked to VBC. We’re also seeing vertical integration among payers and VBC enablers, CVS with Oak Street Health, Aetna and UnitedHealth with Optum. These moves signal a deep belief in the long-term viability of value-based care and the infrastructure required to support it.
The Critical Need of New VBC Infrastructure
Today’s health tech stack falls short because traditional EHR platforms were not designed to support value-based care. We have built “fancy cash registers” that don’t speak to each other, leading to complexities: fragmented data, non-standardized outcome measures, and misaligned incentives. These issues prevent providers from embracing financial risk models that reward real value. A recent report from Pearl Health highlights that “fewer than half of physicians (45.5%) believe their organizations are equipped to deliver proactive, preventive care, and only a third (34.1%) have access to technology that supports outcomes-based performance.”
The future of VBC demands a patient-centered approach and innovation across the tech stack. We believe this moment presents a rare opportunity to power the VBC transition by building foundational infrastructure across three critical cross-cutting infrastructure layers:
- Administrative Workflows Layer: Tools that operationalize value-based care by coordinating teams and automating the work around care: attribution, referrals, prior auth, care-gap closure, documentation, coding, so performance improves and the organization can prove it (and get paid) with less friction.
Clinical care is increasingly constrained by admin overhead. Studies show primary care physicians spend substantial time in the EHR, including after-hours “pajama” time, and industry efforts (including CMS) are targeting these frictions. This is also the area with easiest-to-prove ROI and faces less adoption challenges if the tools can reduce the burden of doctors and nurses in a measurable way.
For instance, ValleySteer is an AI-assisted chart intelligence layer that helps VBC organizations close care gaps and strengthen coding by turning unstructured documentation into clinician-validated, audit-ready evidence, without adding new provider workflow. Another example for specialty models is Chamber’s cardiology-focused platform, built to support cardiologists and payers in VBC programs for cardiovascular disease. It helps target high-risk patients and close care gaps that ultimately drive quality gates and cost performance under VBC contracts.
- Financial Plumbing Layer: Actuarial intelligence, payment accuracy, and tools to operationalize value-based contracts.
As more providers take in downside risk (capitation, shared savings), this layer becomes the financial system that converts messy claims and clinical signals into rolling forecasts, risk normalization, and settlement-grade reporting, reducing disputes on VBC performance. Most VBC operators still reconcile performance months after the fact, with disputes over attribution and risk adjustment delaying payment, overall impacting predictability and cash flow.
Sparx positions itself as an integrated actuarial/insurance/data platform plus guarantees that enable participation in VBC when balance-sheet constraints would otherwise block it. Many VBC contracts and regulatory setups force providers, ACOs, and risk-bearing entities to park cash in escrows, LOCs, or other collateral so payers feel protected. Instead, Sparx provides a financial guarantee product that uses performance-driven underwriting to help satisfy those requirements with lower or even zero collateral, reportedly freeing $750M cash for operations and growth.
- Data Rails Layer: Platforms that connect datasets and unlock insights from siloed, unstructured health data and enable outcome measurement across time and systems.
The healthcare industry sits on the largest verticalized dataset, estimated at 30% of world’s data. With rapid adoption of wellness devices and remote monitoring, this data footprint is expected to expand quickly, outpacing broader data growth. That creates a major opportunity to build an interoperability layer that connects disconnected systems of records, and subsequently, engineer a system of actions that help save costs and improve outcomes for all stakeholders.
For example, Innovaccer acts as a data rail layer by turning messy multi-source healthcare data into a single, trusted, interoperable dataset that downstream VBC apps can reliably use.
What We’re Looking For
At Core, we invest in the infrastructure that makes value-based care actually work at scale. We focus on these three foundational layers: (1) Administrative Workflows, (2) Financial Plumbing, and (3) Data Rails. Within those layers, we look for platforms that combine strong product execution with a clear path to becoming a system of record and ultimately a system of action. In practice, that means we are looking for:
AI-native product architectures that can automate high-cost workflows, enhance predictive patient & population management, and enable scalable, trust-based human & AI collaboration. The key is uniting the clinical and financial sides of the business across stakeholders. AI-native systems can proactively secure insights that keep every stakeholder bought in and incentivized. The question we ask: does AI make this business structurally cheaper to run at scale, or is it just a better UI on top of the same labor model?
Risk contract intelligence as a core product. Most VBC infrastructure companies can tell you what happened. The next generation will tell you what to do about it, before the contract settles. The core problem remains that healthcare organizations lack the transparency, tools, and support needed to manage risk-based contracts effectively, and that gap is widening as contract complexity grows. We want companies that are embedding actuarial logic directly into the workflow, automating reconciliation across risk models, and giving providers and payers a shared view of performance in real time, not at year-end.
Focused entry points with room to run. The companies we back start by solving one urgent, painful friction, earn trust inside the workflow, then expand vertically across the stack. Depth before breadth, defensibility before scale. A thoughtful GTM is extremely important in this operationally complex environment.
The Road Ahead
The next decade in U.S. healthcare will be shaped by value-based care. We’re moving from a system designed for throughput to one focused on outcomes, from billing codes to predictive models, from fragmented, reactive care to integrated, proactive coordination.
This transition demands a rearchitecture of incentives, data models, and trust. But as we’ve seen in financial services, when new infrastructure aligns with both economic and human outcomes, change starts slowly then builds fast.
The rails for value-based care are being built now.
