St. Louis-based SSM Health is working to bring more specialty care under value-based compensation models over the next two years, as the health system seeks to extend physician accountability for quality metrics beyond traditional primary care-focused arrangements.
The system already redesigned compensation for specialities closely aligned with primary care — including pediatrics, endocrinology, rheumatology and oncology — several years ago. In this model, physicians are paid for 70% of the relative work value units they generate, with the rest of their base pay dependent on panel management and quality metrics.
This shifts incentives away from maximizing patient visits and toward maintaining the health of their patient panel, with primary care physicians able to earn quality-based incentives up to 20% on top of base compensation, said Kalyan Katakam, MD, vice president of medical practice at SSM Health Medical Group.
The system is now working to bring more specialties under compensation models that tie pay more closely to patient outcomes. Currently, cardiology and obstetrics are the only other specialties in a similar accountability model. These physicians have 10% of their RVU-based compensation withheld and placed in a pool. At year’s end, they receive full or partial payouts depending on performance in certain quality metrics relevant to their specialty. Strong performers may earn additional bonuses beyond the withheld amount.
“What we’re trying to do in 2026 and 2027 is look at adopting the same model for all other specialties,” including surgeons, Dr. Katakam said.
The approach aims to address a long-standing accountability gap: Hospitals face financial penalties for poor outcomes such as readmissions, surgical site infections and mortality, but individual physicians often bear no direct financial consequences. This can create misaligned incentives, particularly for surgeons and other hospital-based specialists whose work directly affects these metrics, Dr. Katakam said.
Part of the challenge in aligning compensation with hospital quality metrics is many physicians still think of value-based care solely in terms of ambulatory payer contracts, which largely focus on primary care conditions.
“When you look at these ambulatory value-based care contracts, there is no direct link to mortality, there is no direct link to many of these metrics I’m talking about,” Dr. Katakam said. “But on the hospital side, there is a direct link to mortality, readmissions and surgical site infections. That is where we are trying to move toward.”
SSM Health’s compensation model redesign represents a step toward accelerating specialty integration into value-based models — an area where significant gaps remain. Research from the Association of American Medical Colleges found that medical specialists, surgeons and psychiatrists were significantly less likely than primary care physicians to participate in value-based care payment models.
Successfully transitioning specialists to value-based compensation models requires having the right physician leaders at the table, particularly those keenly focused on quality who can educate and engage their colleagues, Dr. Katakam said.
“We have to educate our providers about what value-based care means,” he said. “It doesn’t just mean value-based contracts, which are primarily based around diabetes and all things primary care.”
Better data infrastructure is also critical to the effort. Many systems currently lack comprehensive data on individual physician performance across quality, productivity, patient satisfaction and cost, making it difficult to have transparent conversations about performance and resource allocation.
Industry-wide alignment would ease the transition as well, Dr. Katakam said, because many health systems still compete for physicians based on RVU rates.
“What would help is if all health systems did the same thing, where they all held people accountable to the same things,” If we all have the same thing — meaning RVUs plus quality — then it becomes a little bit easier. But when systems are just playing the RVU game, it’s not easy.”
When physicians understand that value-based care reflects what matters most to their patients and their specialty — including access, surgical outcomes, complications or follow-up care — they become more willing to embrace accountability.
“Once they understand that, they will be willing to hold themselves accountable to what is important for patients in their specialty,” Dr. Katakam said. “[Value-based care] doesn’t have to have any connection to contracts, but it does need to have connection to what value means to their patients and their specialty.”
