Value-Based Care Has Arrived, and It Lives in Your Patient's Living Room

**Disclaimer: All opinions and ideas expressed in this article are solely mine and none represent a recommendation or should be viewed as advisement of any kind to anyone to do anything.*

Policy Pulse

Your Hospital Isn't Designed to Heal You

Why the shift to care at home is the most important transformation in modern medicine

If you want to know where the biggest dent in American healthcare spending will come from, look no further than the hospital. Specifically, the significant amount of care we provide within its walls that simply doesn't belong there.

The Hospital Was Built to Stabilize You. Not to Heal You.

The case against the hospital as a default care setting starts with a fact most patients would find shocking: the hospital is one of the more dangerous places you can spend time. On any given day, about 1 in 31 hospital patients has at least one healthcare-associated infection. The CDC estimates roughly 687,000 healthcare-associated infections occur in U.S. acute care hospitals annually, with approximately 72,000 patients dying during hospitalizations linked to those infections.

A summary of peer-reviewed research published in the BMJ puts the total at an estimated 250,000 deaths per year from preventable errors and infections in American hospitals. The WHO's 2024 Global Patient Safety Report confirmed that more than one in ten patients globally experience harm in medical care settings — and roughly half of that harm is preventable.

Beyond infection risk, there's the immobility trap. Patients confined to beds for days experience deconditioning. That muscle atrophy, those falls, that functional decline–they have nothing to do with the underlying illness.

In many cases, we are paying premium 'hospital prices' for care that doesn't actually require a hospital's infrastructure. This fiscal waste stems from a deeper misunderstanding of what these buildings are designed to do. While patients come through the doors in some ways expecting a journey toward long-term health optimization, they are entering a high-velocity stabilization hub. The entire institution is engineered around managing crises and clearing beds, a setup that fundamentally prioritizes short-term stability over the slow, intentional work of human flourishing and a return to a state of wellness. 

To fix the math of American medicine, we have to move care into environments that are actually capable of prioritizing a patient's quality of life, rather than just their most recent data points.

What We Are — and Aren't — Going to Disrupt

Here is what we are not going to disrupt in the hospital setting: childbirth, the ER, surgery, and the ICU. These belong in hospitals. Acute, emergent, high-acuity situations that require sterile operating environments, immediate life-support technology, and surgical teams on standby — that's exactly what hospitals were built for, and they remain essential for it. In the future, hospitals will function to support what only they can do. 

A massive portion of our national healthcare spend is essentially a real estate tax—we are paying premium 'hospital prices' for care that doesn't actually require a hospital's infrastructure. This fiscal waste stems from a deeper misunderstanding of what these buildings are designed to do. While patients walk through the doors expecting a journey toward long-term health optimization, they are entering a high-velocity stabilization hub. The entire institution is engineered around managing crises and clearing beds, a setup that fundamentally prioritizes short-term stability over the slow, intentional work of human flourishing. 

The federal government has clearly recognized this mismatch; as of 2026, CMS has expanded the Acute Hospital Care at Home initiative to include over 320 hospitals across 37 states, recently extending the necessary waivers through September 2030. This shift marks the first time Medicare has fundamentally decoupled high-acuity payment from the physical hospital ward, proving that the 'hospital' is increasingly becoming a set of services rather than a specific zip code

The Care-at-Home Continuum Is Already Operational

The vehicle for this shift is "hospital at home.” It includes full inpatient-level care, including IV medications, daily physician visits (hybrid), lab draws, remote monitoring, and more, delivered inside a patient's home. Johns Hopkins, which pioneered the model, reports cost savings of 30% compared to traditional inpatient care, with lower average length of stay and fewer unnecessary diagnostic tests. 

Patient use of hospital-at-home programs grew tenfold from 2020 to 2024. By April 2024, CMS had authorized more than 320 hospitals across 133 health systems in 37 states to offer this model. And Massachusetts data shows hospital-at-home patients are more than 14 times less likely to be discharged to a skilled nursing facility than matched inpatient counterparts — which is its own quiet revolution, because SNF stays are miserable, expensive, and often functionally damaging.

The care-at-home spectrum is broader than most people realize. 

This shift moves beyond standard primary care into high-acuity medical intervention. Through consolidated platforms like DispatchHealth, which recently merged with Medically Home to form a unified acute-to-transitional continuum, patients now access emergency-level care and inpatient-style monitoring in their own living rooms. This integrated model is already diverting complex cases from overcrowded emergency departments and is projected to free up more than 62,000 hospital bed days annually. From wound care and IV antibiotics to full-scale 'hospital at home' programs, the shift has fundamentally redefined the site of care.

Tech, AI, and Robots Are Making It Possible

Technology is the backbone. Over 68% of Medicare-certified home health agencies now use some form of telemonitoring or virtual care. AI-driven predictive tools in home care are demonstrating the ability to reduce hospitalizations by up to 27%. Remote monitoring devices, AI-generated clinical alerts, tele-rehabilitation, and robotics-assisted care have crossed the line from pilot program to production tool. The infrastructure that didn't exist ten years ago is here, and the question is no longer whether it works. It's how fast the system reorganizes around it.

The financial signals are unambiguous. Home healthcare spending is projected to grow at 7.1% annually — the leading category among all healthcare sectors, outpacing hospitals at 4.7% and nursing homes at 4.8%. The U.S. home healthcare services market, valued at over $100 billion in 2024, is projected to reach $176 billion by 2032. The American Hospital Association's own Sg2 forecasting model projects home health will grow 22% in the coming decade, enabled by virtual care capabilities. The FDA launched its "Home as a Health Care Hub" initiative in April 2024, reimagining the home as a central, integrated health environment.

Payers and Outpatient Providers Want the Same Thing

This truly doesn't get enough attention: there’s so much alignment that can happen between payers and outpatient providers.

In the hospital setting, payers and providers have often been seen as adversaries. Hospitals want to fill beds and bill for services. Insurers want to be sure patients who don’t need hospital-level care are treated in less restrictive and high cost settings. The incentives are structurally opposed. 

But in the outpatient and home-based care world, something different is possible and is beginning to happen. Payers and outpatient providers can find common ground, because both benefit from keeping patients out of the hospital. Remember, it’s the hospital and the sequelae of utilization after the hospital that drives the bulk of avoidable and/or preventable healthcare spending. 

A primary care practice that proactively manages a diabetic patient's blood sugar (and teaches them to self-manage and provides access when they need help), a home health agency that catches a heart failure exacerbation before it becomes an admission, an AI-powered monitoring platform that flags a medication interaction before it sends someone to the ER…these interventions reduce cost for the insurer and create value for the provider (especially in value-based care payment structures) and for the patient. That's an alignment in American healthcare, and it shouldn't be underestimated.

As value-based care contracts expand, Medicare Advantage plans are increasingly acting as the primary financiers of the home-based shift. While KFF reports that the total share of plans offering in-home support services dipped slightly to 6% in 2025 as insurers recalibrate their margins, the demand for these services continues to act as a flywheel. For outpatient providers, getting paid to keep patients healthy rather than simply treating them when sick makes every successful home-management case a catalyst for further investment.

However, this alignment only works if it directly tackles the primary drivers of hospital over-utilization: affordability and access. KFF reports that more than one-third of U.S. adults (36%) skipped or postponed needed care in 2025 specifically because of the cost. When patients defer care, manageable chronic conditions inevitably spiral into acute crises, forcing them into the very high-cost inpatient settings we are trying to disrupt. By removing the logistical and financial friction of the traditional office visit (where 1 in 6 adults now report cost-related delays) home-based models transform patient behavior from reactive to proactive. They eliminate the price-driven barriers that currently make the emergency room the only 'affordable' option for millions

The Patient Mandate: Preference vs. Infrastructure

Nearly 9 out of 10 seniors say they want to age in place rather than move into institutional settings. The demand isn't just a preference; it’s a demographic inevitability. Yet, there is a stark physical mismatch: while the desire is nearly universal, only 10% of U.S. homes are actually 'aging ready' with the modifications needed to make that stay safe

The hospital isn't going away and never will. It's going to become what it should have always been: a place of last resort, not first instinct. The disruption of healthcare spending — the thing that has eluded three decades of policy ambition — will come from moving care to where it belongs. The data is there. The infrastructure is building. And the business case has never been clearer.

Sources: CDC HAI Data · WHO Global Patient Safety Report 2024 · Leapfrog Group Hospital Safety Grades · Massachusetts HPC Report · Vizient/Sg2 Impact of Change 2024 · CMS Acute Hospital Care at Home Data · DispatchHealth/Medically Home Merger · FDA Home as a Health Care Hub · AARP Home Preferences · KFF Medicare Advantage Benefits Spotlight · McKinsey & Company Healthcare Shift

Career Moves

The Command Center Era: From the Unit-Bound Clinician to the Clinical Architect

The decoupling of medicine from the hospital zip code will fundamentally redefine the "office" for the modern professional. We are entering the era of the Clinical Air Traffic Controller.

For stakeholders like the physician, physical therapist, and health tech innovator, this is a massive invitation to move from a reactive, facility-bound existence to a proactive, environment-agnostic career. Instead of waiting for a patient to arrive at a clinic or a ward, the next generation of leaders will operate from "clinical cockpits," using streams of real-time biometric data to orchestrate high-acuity care across hundreds of living rooms simultaneously.

This evolution is fueled by a projected 23% growth in virtual consultative services and the emergence of nationwide clinical command centers that require a new kind of "virtualist" expertise. The opportunity here is to transition from being a "cog in the facility" to an "architect of the outcome":

For the Physician: The path leads toward the Acute Virtualist. This role trades the "floor walk" for high-level data synthesis, overseeing complex hospital-at-home clusters where you are the invisible hand ensuring stability in a decentralized ward.

For the PT: This is the shift from reactive rehab to Predictive Movement Management. Using remote biometric streams, you become the primary defense against the 'immobility trap,' identifying functional decline in real-time and intervening in the living room—not the clinic

For the Health Tech Innovator: Your "customer" is moving from the hospital IT department to the human environment. The mission is building the "invisible infrastructure.” This includes the sensors, AI-triage layers, and logistics engines that make a living room feel as safe and precise as an ICU.

This is going to make the bedside more scalable. If you are willing to trade the “safety” of the hospital walls for the autonomy of the “clinical cockpit,” the next decade of healthcare can be a professional rebirth.

This Week, Try This

Read about the Kidney Care Choices Model Year Two Results and Celebrate What Good Looks Like

If you care about kidney disease, Medicare payment reform, or simply what it looks like when healthcare policy gets something right, this week's assignment is to read the newly released Kidney Care Choices (KCC) Model Performance Year 2023 Evaluation — and to sit with what it actually means.

First, some context: why this model exists at all.

End-stage renal disease (ESRD) is one of the most expensive, complex, and devastating conditions in the Medicare program. More than 430,000 Medicare fee-for-service beneficiaries with ESRD spend an average of 12 hours a week receiving in-center hemodialysis. It’s a grueling, life-altering regimen that is also, critically, the default. The current Medicare payment system encourages in-center hemodialysis as the default treatment for patients beginning dialysis.

In traditional Medicare fee-for-service, providers get paid per service rendered. A dialysis facility receives a bundled payment every time a patient comes in for in-center hemodialysis which is three times a week, week after week, for hours at a time. It creates a stable, predictable revenue stream built around the patient showing up at the center. Nobody is being villainous. Providers are simply responding rationally to the incentives in front of them.

Home dialysis disrupts that model. If a patient switches to peritoneal dialysis at home, they stop coming to the center. The facility's revenue drops. There's no financial reward built into the traditional system for the care coordination and training work it takes to get a patient successfully doing dialysis at home, even if that patient will have a dramatically better quality of life. Transplants are even more complicated: a successful kidney transplant means the patient no longer needs dialysis at all. From a pure revenue standpoint, a dialysis center loses a patient when a transplant succeeds.

So when we say in-center hemodialysis became the default, what we mean is: the payment system made it the path of least resistance — for providers and for patients who were never given real information about their alternatives. Patients with chronic kidney disease may experience fragmented care and high-cost treatments that do little to slow disease progression. They also receive limited if any education about their disease and treatment options.

Patients are often receiving some of the most intense medical treatment in all of Medicare without being properly educated about what other choices exist. And those choices like home dialysis, preemptive transplant waitlisting, and living donor transplants, can be life-changing.

Meanwhile, in-center hemodialysis patients suffer from poorer health outcomes, such as higher hospitalization and mortality rates, often the result of underlying disease complications and multiple co-morbidities.

This is precisely why CMMI launched the KCC Model — and why you should care.

The CMS Innovation Center (CMMI) is the federal body charged with testing new ways to pay for and deliver care. Congress created it because it recognized that fee-for-service rewards volume over value, and that someone needs to systematically test whether better care designs can produce better outcomes before being scaled nationally.

CMMI is, in essence, the laboratory, the research and development arm, of American healthcare.

The KCC Model's approach is this: rewrite the financial logic so that doing right by the patient is also financially rational for the provider. The KCC Model brings nephrologists and other kidney care providers and practices together to take accountability for patients who have late-stage chronic kidney disease, ESRD, or a kidney transplant, offering coordinated and seamless treatment and care, along with patient education.

Practices receive payments for care coordination, bonuses for successful transplants, and shared savings opportunities when they keep costs down and quality up. Home dialysis stops being a revenue threat and starts being a goal.

The model's three core goals are clear and ambitious: slow the progression of CKD, increase home dialysis, and increase kidney transplantation.

This evaluation is only for year two of the model. The longer models run, the more positive the results.

The results just released cover Performance Year 2023, which is only the second year the model has been running. The first cohort of participants didn't even begin until January 2022. We are watching a new care delivery model find its footing in real time, across 44 states and the District of Columbia, serving patients who represent 51% of Medicare fee-for-service patients with advanced kidney disease. That context matters enormously when you read the findings.

So what did Year 2 actually show? Four things worth celebrating. 🥂 

1. More patients on home dialysis. Home dialysis rates increased by 10%, translating to 800 more patients receiving care at home rather than in a center, driven primarily by increased use of peritoneal dialysis. This matters because home dialysis is associated with better quality of life, greater flexibility, and for many patients, better clinical outcomes. Remember: the old payment system gave providers no reason to make this happen. The KCC Model changed that calculus — and 800 more patients are living it.

2. More patients starting dialysis the right way. Optimal ESRD Starts — meaning new dialysis patients who began renal replacement therapy in a planned, coordinated way rather than urgently or in crisis — increased by 31%, reaching 700 more patients. An unplanned start to dialysis is a medical emergency and a signal of care failure. A planned start means the patient was educated, prepared, and supported before the moment of crisis arrived. That's 700 patients who didn't have to experience the chaos and trauma of landing in dialysis without warning.

3. More living donor transplants and earlier waitlisting. While overall transplant rates didn't move yet, living donor transplant rates rose by 22% — 75 more patients. Even more encouraging, preemptive waitlisting (being placed on the transplant list before needing to start dialysis at all) increased by 37%, reaching 128 more patients. These are patients whose care teams are thinking ahead, planning proactively, and giving them the best possible shot at a transplant before dialysis becomes their reality. Under the old model, a successful transplant meant lost revenue. Under KCC, it means a bonus payment. Same providers, different incentives, better outcomes.

4. Better-informed, more activated patients. The KCC Model was associated with more CKD patients receiving information about their treatment options, and KCC patients showed improved patient activation scores. This is a validated measure of a person's ability to understand and manage their own health. This is the foundation everything else is built on. Educated patients ask better questions, make more informed decisions, and are more likely to pursue options like home dialysis or transplant listing. You cannot fix a system that kept patients in the dark without first turning the lights on.

Net Medicare spending increased — and here's how to think about that.

The evaluation found a net increase in Medicare spending of $304.8 million in Year 2, primarily from incentive payments made to participating practices. This is the number that will generate headlines, and it deserves an honest reading. The model did not increase Parts A & B payments, and it did not increase acute care utilization — hospitalizations, readmissions, and emergency department visits were all unchanged. The spending increase came from the model's own payment design: the investments made to reward better behavior.

CMMI models are explicitly designed to test whether upfront investments in better care coordination generate downstream savings and quality improvements. Two years in, the quality signal is real and pointing in the right direction. The financial story is still being written, and it will take time for improved starts, more home dialysis, and more transplants to translate into avoided hospitalizations and reduced total cost of care over a patient's lifetime. Kidney disease is a long game. So is payment reform.

Why does this matter to you?

Because every value-based model, every shared savings arrangement, every effort to move beyond fee-for-service starts here — with real patients and real dollars and real evidence. When a model like KCC shows genuine quality improvement in just its second year of operation, that's not a small thing. It's proof that when you align incentives, coordinate care, and actually tell patients what their options are, better things happen.

The CKCC model option has been extended through December 31, 2027. There is more to learn, more to refine, and more patients to reach. In the meantime, Year 2 gave us something rare in healthcare policy: measurable, meaningful, patient-centered progress — achieved by changing not what providers are capable of, but what the system rewards them for doing.

Full evaluation materials are available here.

*Disclaimer: All opinions and ideas expressed in this article are solely mine and none represent a recommendation or should be viewed as advisement of any kind to anyone to do anything.*