As industry veterans, we know the conventional wisdom as well as anyone: Value-based doesn’t produce results overnight. It takes years, maybe five to seven years, to reduce costs and make patients healthier — and to change the deeply ingrained habits of the people who deliver care.

We know what everyone says. We just didn’t believe it. That’s why we were particularly gratified this spring to see the effect of new care models implemented at Cornerstone Health Care only twelve months before.

A pivot to value

Cornerstone Health Care is a multispecialty group practice in North Carolina with more than 330 physicians and advanced practice professionals working in 90 practice locations in a 12-county region.

At the time the new care models launched, Cornerstone was, by all measures, successful. The group prospered as a fee-for-service enterprise despite being one of the lowest-cost providers in the region. And Cornerstone was generally regarded as progressive, being an early adopter of electronic health records and having achieved Level 3 recognition from the National Committee for Quality Assurance for multiple patient-centered medical homes.

But at its core, the group was pursuing a productivity model, and Cornerstone leadership didn’t believe that the fee-for-service, sick-care-oriented model would remain viable in a rapidly changing market. So Cornerstone placed a bet on the future and chose change: pivoting from volume- to value-based care across all lines of business.

How? First, efforts were made to identify Cornerstone’s five highest-risk populations: late-stage congestive heart failure, oncology, Medicare-Medicaid dual-eligible patients, those with five or more chronic conditions, and complex patients with multiple late-stage chronic conditions. Then, rather than bolting on care management resources and services to existing practices, the group redesigned the care those patients received from the ground up.

Cornerstone created five new comprehensive care models and restructured everything from staffing, care team roles, policies and procedures, and patient engagement methods to the physical layout of offices. Leadership determined that to best meet the needs of Cornerstone’s more complex and higher-risk populations, the group needed dedicated facilities, and so it built two entirely new clinics.

Essential ingredients

The new care models were customized to meet the unique needs of the population each was designed to serve. There were, however, some essential ingredients:


Each practice had physicians as well as newly created teams consisting of nurse practitioners, clinical pharmacists, registered nurse patient navigators, social workers, psychiatrists and others. These teams huddled daily and flexed the resource configuration around the needs of each day’s visits.

Primary care

Full-time primary care physicians were embedded in the condition-specific models (like oncology), which helped address comorbidities such as diabetes and heart disease.

Behavioral health

Mental health care was provided on-site — with social workers and psychiatrists incorporated directly into practices. Comprehensive screenings helped identify related issues and direct clinic resources to addressing social and lifestyle factors that served as barriers to care.

Population health

A new population health enablement arm, CHESS, was launched to develop pathways and protocols, build patient engagement platforms, translate data into actionable insights at the point of care and serve as a sustained change engine for the practice overall.

One year later, Cornerstone analyzed the results of the program. And the results were impressive:

  • The transformation program as a whole yielded a nearly 13 percent decrease in total cost of care.
  • Some programs achieved savings as high as 19 percent.
  • Inpatient hospital costs were reduced by 30 percent.
  • Some individual care programs reduced hospitalization by as much as 45 percent.

The reduced inpatient costs were particularly significant, as they are a key to overall savings. Previously, inpatient costs accounted for 47 percent to 70 percent of total medical costs for these patients. In just one year, Cornerstone cut that by one-third.

Lessons learned

We believe that this focused-care model transformation approach can serve as a powerful example for organizations embracing population health, and we have identified three key lessons for other health delivery systems:

Partway isn’t enough

The usual approach to shifting to value-based care is to hire a few care coordinators and navigators and then work on reducing unnecessary diagnostic scans and increasing the use of generic drugs. No one thinks this is a final solution; but to many, it seems like a good first step.

Cornerstone inadvertently had the opportunity to test this idea and found just the opposite is true. The group originally intended to implement a new care model for patients with multiple chronic diseases at four Cornerstone locations. Only two locations, however, were able to fully implement the plan; the other two fell back on practicing a kind of medicine that maximizes volume but with the addition of care coordinators and navigators.

After a year, the results of the fully implemented program were compared with the “partway” programs, and the results were surprising. While the fully implemented programs achieved savings, as had been hoped, the locations that practiced traditional fee-for-service care with the addition of a care coordinator actually saw costs increase. And when it came to hospitalization, the difference was even more extreme: The locations with fully implemented programs reduced hospitalization costs by 45 percent, while the other two locations experienced a 20 percent increase in hospitalization costs.

Our conclusion: You can make it easier for patients to navigate the system, but if you don’t also change the kind of care you deliver, costs will go up.

Care has to be designed from the patient up

The Cornerstone experience proves that what makes value-based care work is the care — with new models specifically designed to fix the problems and seize the opportunities associated with narrowly defined groups of patients. In implementing the oncology care model, for instance, the group discovered that the factor that made its cancer patients unnecessarily expensive to treat had nothing to do with cancer: It was comorbidities such as diabetes and heart failure that tended to be neglected while the battle against the tumor proceeded. (This problem was corrected by assigning an internist to the oncology practice.)

Similarly, most traditional congestive heart failure programs focus on preventing the readmission of previously hospitalized patients. Cornerstone sought to proactively identify patients at high risk of hospitalization and keep them out of the hospital by reducing exacerbations and providing palliative care.

Finally, with Medicare/Medicaid dual-eligible patients, it was learned that they mostly needed someone to track them down and coax them into receiving care — in this case, a combination of social workers and partner community organizations.

Disruption is never easy

Cornerstone was willing to invest in a disruptive approach — one that upended systems and operations — because leadership was confident the care models could deliver. But it was not a painless process.

When the care model redesign program was implemented, Cornerstone did not have risk-sharing contracts with all payers, much less capitation-based payment models. Yet many of the new care protocols involved longer, more intensive interactions between patients and physicians and other staff. In other words, Cornerstone was practicing fee-for-value care in a fee-for-service world and was not getting paid for the value it was creating. This resulted in significant financial exposure for the business as it did not have the balance-sheet security of a large health system. And while Cornerstone had built the information infrastructure and clinical models to thrive in risk, several payers were reticent to strike alternative payment contracts.

Beyond the financial exposure, leadership also had to rally the entire employed-physician base around the new direction and fundamentally change how clinicians approached each patient encounter. Like many provider organizations, Cornerstone battled imperfect data and worked to convert reams of data into meaningful information that could guide its population health strategies.

Encouraging results

All of us involved in the redesign emerged with scar tissue, but we now have an organization that is galvanized around care model transformation and a committed group of providers who have rallied around — and believe in — something new and different. In fact, Cornerstone has already developed additional models, including a nephrology medical home and a care model for patients with chronic obstructive pulmonary disease. And Cornerstone was accepted as one of the Centers for Medicare & Medicaid Services' Next Generation accountable care organizations.

We will study and report on the impact of these new models once we have more data. In our minds, though, the results are already in. Targeted care models are the right way to manage patients. The past year has given us confidence that these programs not only promise the possibility of savings and better cost management; they emphatically deliver it. And patients and the system as a whole are better with them.

Grace Terrell, M.D., is founder and strategist for CHESS (Cornerstone Health Enablement Strategic Solutions) and former president and CEO of Cornerstone Health Care. Bruce Hamory, M.D., is the chief medical officer of the Health & Life Sciences practice of the consulting firm Oliver Wyman. Josh Michelson is a partner with Oliver Wyman and director of the Oliver Wyman Health Innovation Center Leaders Alliance.