Will the U.S. healthcare system achieve a technological breakthrough, or will another promising tool die on the vine due to medicine’s illogical financial model?
That was the question I set out to answer this morning from the main stage of the 10th annual Accountable Care Symposium in Orlando, Florida—an event hosted by Wellvana, one of the nation’s leading value-based care providers. The gathering brought together hundreds of healthcare professionals and policy leaders from across the country at a pivotal moment for medicine.
For the first time, we have a technology—generative AI—that holds the power to make healthcare affordable for all Americans by improving patient health and reducing medical errors—not by restricting access or compromising clinical outcomes.
But unless we pair that technology with the right payment model, its potential will remain unrealized.
A Tool Unlike Any Other
Generative AI is the first technology in medicine that delivers expertise to both physicians and patients. Tools like ChatGPT, DeepSeek and Gemini are trained on massive datasets and can generate human-like responses to complex medical questions, summarize clinical records and offer decision support. Future iterations will go further: detecting diseases earlier, personalizing treatments with greater precision and empowering patients to participate more fully in their medical care.
But nowhere will GenAI have greater impact than in the prevention and control of chronic disease.
Six in 10 Americans live with at least one chronic condition (diabetes, hypertension, or heart failure) that accounts for roughly 70% of all medical spending. And yet, the U.S. healthcare system consistently underperforms in managing these conditions. Nearly 40% of Americans with high blood pressure don’t have it under control. Fewer than half of patients diagnosed with diabetes achieve normal glucose levels.
According to CDC estimates, better management of chronic disease could reduce the rate of heart attacks, strokes, cancers and kidney failure by 30 to 50%, with a potential savings of more than $1.5 trillion dollars annually.
So why hasn’t that happened? The answer lies not in medicine, but in money.
Why Payment Reform Is Essential
The problem with American healthcare has never been a lack of innovation or an absence of skilled, compassionate professionals. The problem is incentives.
In today’s fee-for-service (FFS) model, clinicians are paid more for treating illness than for preventing it. But when generative AI helps patients avoid a heart attack or stroke through consistent at-home monitoring and early intervention, there’s little—if any—financial reward.
As the late financial expert Charlie Munger once said, “Show me the incentive, and I’ll show you the outcome.” When doctors are paid to prescribe home monitors, patients will use them—but clinical outcomes won’t dramatically improve. But when the payment model shifts to capitation, then effective chronic disease control becomes the norm, not the exception.
Value-based care (VBC) offers a better way. When healthcare providers are paid a fixed, risk-adjusted amount per patient, they’re financially rewarded for keeping people healthy, not simply treating them when they’re sick. Under a capitated model, prevention, early diagnosis and evidence-based medical care become not just clinically sound but economically smart.
Real-World Examples Of What’s Possible
Value-based models enable what the fee-for-service (FFS) system undervalues: continuous, proactive medical care. Clinicians can use wearable devices and home monitors, connected via Bluetooth to generative AI applications, to track chronic diseases in real time and adjust treatment without waiting months for in-person visits.
For example, if a patient with newly diagnosed hypertension fails to achieve adequate blood pressure control after 30 days, the generative AI application can notify both the patient and the physician. The doctor can then review the data and adjust the patient’s medication through a brief telemedicine visit.
Similarly, in patients with chronic heart failure, wearable monitors can detect early signs of fluid retention—such as weight gain, ankle swelling, and increasing shortness of breath while lying flat or climbing stairs. With this information, physicians can intervene immediately—often days before the patient would otherwise require an emergency room visit or hospitalization.
These scenarios aren’t science fiction. They’re fully possible today. But in a fee-for-service world, every avoided office visit or hospitalization means lost income for providers. That’s why the shift to capitation is not just beneficial. It’s essential.
Systemic Barriers And A Path Forward
Of course, transitioning to value-based care isn’t easy. Individual doctors can’t shoulder the financial risk of capitation alone. Building multispecialty groups and accountable care organizations (ACOs) takes time, capital and coordination. And improved control of chronic disease requires several years to yield the health benefits, resulting in lower medical costs. As such, long-term contracts are essential, something few insurers have been willing to provide at present.
That’s why conferences like the Accountable Care Symposium prove so valuable. They provide a platform for leaders to share what’s working, describe ways to remove roadblocks and explain how to build the infrastructure required for long-term success.
With its recent acquisition of CVS Health’s Medicare Shared Savings Program business, Wellvana now supports physicians in 40 states and serves approximately 1 million patients. More importantly, it’s helping physicians thrive in value-based care programs by offering tools, education, and operational support.
Generative AI, combined with a capitated payment approach, offers the opportunity to save hundreds of thousands of lives each year, reduce burnout among clinicians and make American healthcare affordable. But to realize that future, we must align our financial incentives with our clinical goals.
The time for incremental improvement is over. It’s time to fix the payment model, embrace the transformative potential of generative AI, and unleash the full power of modern medicine.
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Dr. Robert Pearl is the former CEO of The Permanente Medical Group, the nation’s largest physician group. He’s a Forbes contributor, bestselling author, Stanford University professor, and host of two healthcare podcasts. Check out Pearl’s newest book, ChatGPT, MD: How AI-Empowered Patients & Doctors Can Take Back Control of American Medicine with all profits going to Doctors Without Borders.
