Five digital essentials for building sustainable value-based care models

Hospitals no longer have the option to sit on the sidelines of episode-based care. Launching January 1, 2026, the Transforming Episode Accountability Model (TEAM) will require selected acute care hospitals to coordinate care for Traditional Medicare beneficiaries undergoing one of several high-cost surgical procedures. For each episode, CMS will set a target price that covers the surgery itself as well as 30 days of recovery and follow-up care after discharge.

The message is clear: Value-based care (VBC) is moving from experiment to mandate. TEAM follows earlier bundled payment models, but its mandatory structure raises the stakes. Hospitals unprepared to manage costs and quality across a patient’s full episode of care will face financial risk, not just administrative burden.

As models like TEAM take hold, the question shifts from whether episode-based care will expand, to how hospitals and their partners can make it work in practice. Success depends on more than clinical coordination. It requires a digital foundation that can manage attribution, define and operationalize contracts, align diverse stakeholders, and deliver timely reporting and communication.  

Five essentials for episode-based payment models

Fee-for-service systems were never designed to manage the complexity of shared accountability. Payments are fragmented, each provider is reimbursed in isolation, and no one individual party is responsible for the total cost of care. Episode-based models aim to solve this by aligning hospitals, specialists, and post-acute providers around cost and quality. But alignment will not happen on its own. It requires a digital foundation built on five capabilities:

1. Population attribution. Who belongs in which program? Episode-based care models have rules for which patients qualify, which procedures may trigger an episode, and how long the accountability window lasts. The TEAM model, for example, states that participants will “assume responsibility for the cost and quality of care from surgery through the first 30 days after the Medicare beneficiary leaves the hospital.” Rule sets will need to be defined, implemented, and applied consistently.
   
2. Contract modeling and analytics. For each episode, hospitals will need to figure out how to share risk and payments with specialists, surgeons, post-acute providers, and others. These contracts include many moving parts. Purpose-built analytics and modeling engines can help simulate different financial scenarios and flag problems early, while predictive tools can identify patients at risk of complications during recovery. VBC contracts may vary by specialty — orthopedics and oncology, for example, might require separate episode-based pricing models — or they can take an enterprise-wide approach that applies a single cost framework across all participating providers.
   
3. Stakeholder management. Episode-based models make hospitals dependent on a network of partners, from specialists to home health agencies. The question is, how will they keep them aligned? Hospitals that use digital systems to onboard participants, set clear expectations, and manage referral pathways are far more likely to keep their networks coordinated and effective.
   
4. Performance reporting. Accountability requires visibility. Hospitals must show their partners whether they are meeting cost and quality expectations. That means pulling together claims data, EHRs, and post-acute records into clear reports. Programs that cannot provide timely and transparent performance data lose credibility with both clinicians and regulators.
   
5. Communication and engagement. Roughly 27% of readmissions are considered preventable, often linked to missed follow-ups, medication lapses, or poor discharge planning. Hospitals need reliable ways to stay connected with patients and caregivers, and to keep the next provider informed. Strong communication between inpatient and post-acute settings is one of the most effective ways to lower avoidable costs and improve outcomes.

Digital tools make value-based care sustainable

Commercial insurers and large employers are already experimenting with similar arrangements that link payments to outcomes across a defined episode of care. Hospitals that treat these programs as temporary pilots may find themselves unprepared when they become the norm.

The path forward requires investment in clinical coordination and the digital scaffolding that holds these programs together. Attribution, contracts, stakeholder networks, reporting, and communication are not side projects. They are the operating system for value-based care. Hospitals that build this foundation will be able to manage risk with confidence, expand partnerships, and deliver care that is both higher in quality and lower in cost — the very goals value-based care was meant to achieve.