Former MemorialCare CEO Argues Fee-for-Service Undermines Care Value

In a California Health Care Foundation commentary, the former longtime CEO of MemorialCare argues that fee-for-service payment rewards volume over prevention and drives unsustainable cost growth in California's health system. The author, who sits on the advisory committee of the state's Office of Health Care Affordability, cites MemorialCare's own experience with alternative payment models (APMs), noting that shared-risk, population-based payment arrangements produced roughly 5% lower total spending and up to 25% lower pharmacy costs. The piece points to the state's four-tier APM framework, which ties higher tiers to population-based payment rather than per-service billing, as the direction payers and providers should move. The author calls for hospitals, insurers, public payers, providers, and drugmakers to collectively shift toward paying for care coordination and prevention rather than individual services.

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