Healthy Lives, Healthy System: The Case for Prevention in Healthcare

A few years back, population health and value-based payment models were seen as the future of healthcare, offering a shift from the traditional fee-for-service model toward one focused on outcomes and preventive care. These models promised to improve patient care while reducing costs, but recent changes in Medicare Advantage regulations, combined with declining valuations of value-based primary care organizations, have cast doubt on the long-term viability of these models. As a result, many in the industry are questioning whether they can deliver on their potential to transform healthcare.

But this shift in optimism is just part of a broader cycle of innovation. If history has taught us anything, it’s that new ideas often go through a phase of excitement, followed by an adjustment period, before entering a longer phase of growth and maturity. The internet boom and bust of the late '90s and early 2000s is the perfect example of this—despite the crash, the internet has since transformed nearly every aspect of our lives. We're seeing a similar pattern in the current wave of excitement around AI and large language models.

I believe we’re in the midst of a similar cycle with population health and value-based payment models. My hope is that healthcare innovators, federal and state agencies, employers, providers, and investors will continue to push forward with the progress we’ve made in shifting healthcare towards proactive, preventive care. Now is not the time to hit pause; it’s time to double down on innovation—in programs, regulations, technology, and payment models—to keep improving our healthcare system.

Why This Shift Matters

For the sustainability of both our healthcare system and our economy, this is more than just an option—it’s a necessity. Here’s why: the U.S. economy typically grows at a rate of 2-3% annually, and individual incomes generally rise by around 2-4%. In contrast, healthcare costs have been rising at about 6% per year. It’s easy to see that this gap is unsustainable in the long run.

In The Longevity Imperative, Andrew Scott makes a strong case for why our healthcare system needs to focus more on prevention. He presents some compelling stats, including how in the early 1900s the average global life expectancy was around 30 to 40 years, depending on the region, mainly due to high infant mortality rates, infectious diseases, and limited healthcare. Now, it’s increased to over 70 years globally, with many high-income countries expecting 50% of children born today to live into their 80s or 90s. While this increase in lifespan is generally seen as a positive, Scott argues that without major changes to our healthcare approach, the economic strain will become overwhelming. For example, as of 2022, U.S. healthcare spending reached $4.5 trillion, accounting for 17.3% of the GDP. If we continue down the current path, healthcare spend is expected to increase to nearly 20% of GDP by 2032.

Scott also highlights the importance of focusing not just on how long people live but on how many of those years are spent in good health. This shift in perspective is crucial. When a large chunk of a person’s life is lived in good health, they can stay active, productive, and independent longer, putting less strain on the healthcare system and leading more fulfilling lives.

Moving Toward Prevention

By focusing on "healthy life expectancy" rather than just life expectancy, we can start to move away from a healthcare system that focuses on sick care and instead build one that’s centered on prevention. This shift would prioritize interventions that maintain health and prevent chronic conditions, which would have far-reaching benefits for individuals and society as a whole. To get there, we need to rethink how our healthcare system operates, particularly around prevention and accountability. Population health and value-based payment models are built on these concepts, emphasizing a proactive approach to care.

"Population Health" can be a bit of a confusing term, but at its core, it means looking beyond traditional medical care to address all the factors that influence health—like where people live, what they eat, and how easily they can access care. Research has shown that around 80% of our health outcomes are determined by factors outside the healthcare system itself—30% comes from healthy behaviors and another 50% from the physical environment and socioeconomic factors like community and education. That’s why people often say that "health is determined by our zip code."

One of the challenges with our current healthcare payment model is that it doesn’t always prioritize preventing health issues. In a fee-for-service system, hospitals tend to be compensated based on the care they provide, pharmaceutical companies benefit from increased medication use, and physicians are often paid based on the number of office visits. As a result, there’s less focus on addressing health concerns before they arise.

Progress in Prevention and Value-Based Care

Despite this, we’ve seen progress over the past 20 years with the rise of programs designed to reward preventive care. The Centers for Medicare and Medicaid Services (CMS) has been at the forefront of this shift, creating initiatives like Medicare Advantage, the Medicare Shared Savings Program, and the Accountable Care Organization (ACO) REACH program. CMS has even set a goal to have 100% of Medicare beneficiaries enrolled in Value-Based Payment models by 2030.

In addition, we are seeing innovative approaches in employer-sponsored healthcare programs designed to incentive preventive care. One of the most compelling reasons to embrace population health and value-based payments is their potential to address gaps in our healthcare system, particularly for vulnerable populations. Population Health and Value-Based Payments have the potential to close gaps in healthcare for underserved communities, where access to care is often limited and rates of chronic conditions are higher.

We’re already seeing the benefit of these programs. A study published in Health Affairs found that value-based primary care for Medicare patients led to 11% fewer ER visits and 6% fewer hospital admissions. In underserved areas, access to care improved dramatically, with primary care visits increasing by 39% in Black communities and by 21% in lower-income neighborhoods.

Such changes in the healthcare system can have a significant impact on overall costs. In fact, a 2022 McKinsey report estimated care delivery reform could result in $500 billion in annual savings, which is approximately 15% of total healthcare spending.

The Path Forward

Transitioning from a volume-based system to one that focuses on outcomes is no small task. The existing infrastructure—medical education, technology, and business models—has long been built around rewarding volume rather than value. Additionally, the complexity of our healthcare system has led to fragmented care, where duplicated tests, disconnected information systems, and inefficiencies like preauthorization slow down the process and frustrate both providers and patients.

To really change healthcare, we need to keep pushing for innovation and invest in the basics of the system. The key to making these breakthroughs work is having payment models that reward prevention and move away from paying for volume. This shift will drive more progress in areas like technology, care models, AI, and other game-changing tools. We’re already making strides with things like interoperability standards, which are helping connect information systems and cut down on fragmentation. AI is turning documents into usable data for doctors, and new workflows are making it easier for providers to deal with the administrative load. Plus, we're seeing exciting developments in primary care and specialist treatments with new models of care. My belief in the power of innovation to improve healthcare is what led me to join Define Ventures, whose mission is to support entrepreneurs who want to transform healthcare by providing them with early-stage funding and resources to make it happen.

To really change healthcare, we need to keep pushing for innovation while also investing in the foundational elements of the system. The key to making these breakthroughs successful is developing payment models that reward prevention and shift away from paying for volume. This change will drive progress in areas like technology, care models, AI, and other transformative tools. We’re already seeing advancements like interoperability standards that connect information systems, reducing fragmentation. AI is converting documents into actionable data for clinicians, while new workflows are easing the administrative burden on providers. Plus, we're seeing exciting developments in primary care and specialist treatments with new models of care. I look forward to collaborating with others in the industry who share my passion for transforming healthcare, so we can make the system work better for those it’s meant to serve.

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In the end, I see healthcare moving more toward preventing illness rather than just treating it, and while this shift won’t be easy, it’s key to keeping both our healthcare system and economy sustainable. To get there, we need everyone—investors, regulators, payers, providers, and entrepreneurs—working together to create programs, policies, care models, and technologies that lead to better health and lower costs. We also need to shift from just focusing on how long people live to how healthy they are throughout their lives. The future of healthcare—and our country—depends on it.