An Honest Perspective from Aaron DeBoer, MBA, Executive Vice President, Honest Health, and Mary Zuckerman, FACHE, Vice President and General Manager of Michigan Market, Honest Health
Part 3 of a 3-part series exploring how health systems can navigate the risks and rewards of Medicare Advantage to drive financial and clinical success.
In the first two parts of this series, Aaron DeBoer and Mary Zuckerman examined why full-risk Medicare Advantage can be a strategic advantage for health systems and outlined the core capabilities required to succeed. In this final article, they focus on how health systems can optimize performance, create a sustainable culture shift, and leverage technology to transform Medicare Advantage into a driver of long-term success.
Medicare Advantage enrollment continues to grow, with projections estimating 60% enrollment of eligible beneficiaries by the end of the decade.1 To remain competitive, health systems should give significant consideration to proactively adopting a full-risk Medicare Advantage model and unlocking potential revenue streams, bolstering financial sustainability, and improving patient outcomes.
However, success requires more than participation; it demands a strategic transformation. By optimizing performance, fostering cultural change, and leveraging the right technology, health systems and organizations can “win” in a Medicare Advantage future — transforming the model from a perceived challenge into a high-performing, strategic business line.
Build a performance-ready Medicare Advantage model
Balancing financial outcomes with quality care is the cornerstone of a successful full-risk model. The key lies in aligning incentives and generating financial surpluses to drive high-quality patient outcomes.
Aligning incentives for physician engagement:
Strong physician alignment is essential to succeeding in full-risk arrangements. Financial incentives can play a meaningful role — with some health systems targeting 10–25% of compensation tied to value-based performance — but incentives alone are not enough. 2 True engagement comes from helping physicians understand the “why” behind the model, aligning care delivery with their clinical values, and creating an environment where they are empowered to improve outcomes. When both financial and intrinsic motivators are in place, alignment becomes more sustainable and performance more consistent.
Generating surplus through cost management:
The ability to generate surplus revenue defines success in full-risk Medicare Advantage. Health systems must:
- Employ strategic cost-management tactics while maintaining high-quality care.
- Leverage scale and system-wide efficiencies to maximize performance.
- Excel in quality metrics to unlock incentive payments and avoid penalties.
- Align utilization management with cost reduction strategies, such as preventing unnecessary emergency department visits and shifting care to lower-cost settings when appropriate.
Achieving lasting success takes more than tactics — it must be supported by both cultural alignment and the right technology infrastructure.
Improving outcomes — and the bottom line
Organizations that strengthen their Medicare Advantage strategy — through better documentation, cost management, and care delivery — can significantly improve financial sustainability.
Even modest improvements can have a meaningful impact. For example, a 10% increase in accurate risk adjustment and a 2% reduction in medical costs can substantially boost revenue per patient and grow overall surplus, demonstrating the clear financial value of performance-focused strategies.
While some worry that reducing medical costs could hurt hospital utilization, most savings come from eliminating low-value care — such as unnecessary admissions or redundant tests — which improves efficiency and leads to better outcomes for patients.
Make culture a catalyst for change
Transitioning from fee-for-service to full-risk models requires more than operational optimization; it necessitates a fundamental cultural shift across all levels of an organization. Health systems must move beyond the mindset that all utilization is inherently valuable and instead recognize that reducing low-value care can drive both financial and patient benefits.
Culture isn’t a soft skill in full-risk models — it’s a strategic foundation that shapes behavior, drives accountability, and sustains change.
Engaging physicians: the power of “why”
Physician buy-in is essential to the success of full-risk Medicare Advantage contracts. Even with the right infrastructure and capabilities in place, a lack of physician engagement can derail performance and success. Yet many health systems make the common misstep of underestimating the scale of physician change management required and find it to be one of the most challenging aspects of this transition. To drive adoption, health systems must invest time and resources in physician education and clearly demonstrate the economic and clinical benefits of value-based care. When physicians understand how spending more time with patients and focusing on preventive care leads to better outcomes and long-term results, they are more likely to embrace this shift.
Overcoming resistance: addressing physician concerns and misconceptions
Past experiences with administrative burdens and frustrations in past Medicare Advantage contracts — especially prior authorizations — can lead physicians to question the value of full-risk models. While many of these requirements do not disappear, these models offer providers a greater role in care management, increase provider autonomy, create opportunities to reduce past friction, and can improve operational efficiency with improvements over time.
A strong leader and physician champion — someone who understands and believes in the full-risk model — can play a pivotal role in peer engagement and adoption.
Use technology to power performance
A robust technological infrastructure is critical to support sustainability and success.
Technology and actionable data are key enablers of success in full-risk Medicare Advantage models. The right tools and implementation strategies empower health systems to align financial performance with improved patient outcomes by effectively converting large amounts of data into meaningful and actionable insights and identifying trends, outliers, and care gaps.
By harnessing the power of technology and data analytics, health systems can:
- Optimize risk adjustment: Accurate coding and documentation ensure revenue aligns with the true risk profile of the patient population, supporting appropriate reimbursement and stronger quality ratings.
- Enhance care management: Predictive analytics identify high-risk patients, enabling proactive interventions that reduce costly complications.
- Streamline operations: Integrated electronic medical records and real-time analytic dashboards simplify workflows, reducing administrative burdens and allowing physicians to focus on patient care.
- Guide utilization and cost efficiency: Data-driven insights can identify cost-saving opportunities, such as directing procedures to cost-effective settings or improving care coordination to reduce unnecessary hospital admissions.
Charting a sustainable future in Medicare Advantage
Given the projected growth of Medicare Advantage enrollment and the ambitious goal set by the Centers for Medicare and Medicaid Services to have all Traditional Medicare recipients enrolled in value-based care models by 2030, health systems must act now to remain competitive and financially sustainable. Considering the benefits that full-risk Medicare Advantage integration can afford is no longer optional — it’s essential.
Successfully navigating this transition requires significant investment, thoughtful risk analysis, and time to realize its full potential. Health systems and organizations that underestimate its complexity or overestimate their ability to transition alone may risk making costly missteps. Partnering with an experienced enablement organization like Honest Health can provide expert guidance, operational support, and proven strategies to ensure a smoother, more efficient transition.
With the right strategy, capabilities, and support, health systems can make full-risk Medicare Advantage not just viable — but a strategic cornerstone of long-term success.
Sources:
110 Reasons Why Medicare Advantage Enrollment is Growing and Why It Matters. Tricia Neuman, Meredith Freed, and Jeannie Fuglesten Biniek. KFF. https://www.kff.org/medicare/issue-brief/10-reasons-why-medicare-advantage-enrollment-is-growing-and-why-it-matters/. Accessed 3 Feb. 2025.
2 Medical Group Management Association (MGMA). 2024 Provider Compensation Data Report. 2024.
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Accessed April 2025.