Waste isn’t just inefficiency. In high-stakes, value-based care environments, it’s the erosion of mission. Recognizing it requires courage and curiosity.
Value-based care organizations are laser-focused on shared savings, quality scores and population health outcomes but often forget about the threat of waste. Waste creeps in under the radar through redundant utilization, misaligned incentives, unchecked variation and operational lag. If you don’t see it, you can’t tackle it. And by the time it surfaces, the damage may already be done.
Let’s pull back the curtain on the anatomy of waste: how it hides, how it hurts and how organizations can root it out before it derails performance.
Redundant Utilization: Doing More Doesn’t Equal Doing Better
In a value-based contract, the goal isn’t volume, it’s precision. Yet redundant utilization continues to occur, reflected in repeated diagnostics, overlapping specialist visits and avoidable admissions or readmissions. Every time the system duplicates effort, the cost goes up, patient trust goes down and shared savings shrink.
Consider a case from an ACO network: a patient with congestive heart failure who bounced between the ED, hospital and home health without any trigger alerting the care team. Multiple specialists ordered the same labs, imaging was repeated and no one owned the full picture. By the time utilization review flagged it, the cost impact was significant and the care team was burnt out. The root wasn’t a bad contract; it was wasted effort, uncoordinated care and lack of visibility.
What makes redundant utilization invisible? Often the system rewards “more.” Or the organization lacks the granularity to surface duplication, with dashboards only able to show total cost per capita with no signal for duplicate testing of the same patient. Without that lens, waste hides in plain sight.
Misaligned Incentives: When the Parts Don’t Pull in the Same Direction
Value-based care depends on alignment among providers, health systems, post-acute partners and payers, yet misalignment still stands as one of the most persistent forms of invisible waste.
Imagine a system participating in a shared-savings contract while certain service lines still operate under fee-for-service models. Specialists continue to refer freely because their compensation structure hasn’t shifted. The ACO sees higher cost, the hospital sees more volume and the patient sees more appointments. Waste thrives in that disconnect.
At the NAACOS 2025 Fall Conference, one panelist observed that “when downstream incentives aren’t aligned, the system becomes fertile ground for waste.” That tension goes beyond financial design; it reaches into governance, communication and shared accountability. Misaligned incentives build slowly and by the time the effects are visible, risk outweighs reward.
Unchecked Variation: When Care Pathways Diverge, Cost Multiplies
Variation in care is natural. Providers tailor treatments to patient needs. But when variation is unmonitored, it becomes waste.
Take two providers treating similar hip-replacement patients in the same network. One uses a standardized pathway with pre-operative screening, early mobilization and discharge planning that supports a return home. The other allows longer inpatient stays, orders additional imaging and relies more heavily on post-acute facilities. Without shared protocols to guide these decisions, the difference in cost remains invisible until reconciliation reports later reveal a spike in episode spending.
This pattern repeats in referral rates, length of stay, readmissions and post-acute placement in ACOs and in health systems. Unless performance awareness mechanisms exist, variation drifts unchecked, eroding both financial and clinical value.
Operational Lag: The Hidden Drag on Performance
Operational lag quietly taxes efficiencies. It appears as slow workflows, delayed alerts and care transitions that miss the window when they matter most. It doesn’t spark headlines. It simply drains momentum a little at a time.
A patient is discharged home without timely follow-up. A utilization alert sits in a queue instead of prompting outreach. A performance report arrives six weeks after the decisions that shaped it. Each delay may seem small but together they create missed opportunities, higher costs and growing frustration.
Operational lag often traces back to structural silos, where analytics teams surface insights faster than clinical or administrative teams can respond. Without shared accountability, the delay becomes routine. And in an environment where speed-to-action protects both cost and care quality, that routine becomes expensive.
The Human Cost: Burnout, Frustration and Fractured Trust
Waste isn’t just measured in dollars; it’s measured in morale.
For providers, it means longer hours and administrative fatigue. For care teams, it’s firefighting instead of prevention. For patients, it’s confusion, repeated tests and a sense that no one’s in charge.
If waste is allowed to persist, it wears people down. Teams lose energy, patients lose confidence and the promise of value-based care shifts from a shared mission to a message with no traction.
One ACO found its care managers drowning in transitional cases with no real-time insight into which patients were at highest risk. Readmissions soared, margins fell and the organization’s leadership realized too late that their waste wasn’t financial – it was structural and human.
Getting Ahead of Waste: Building Accountability and Awareness
If waste hides in blind spots, the solution is to bring it into view. High-performing value-based organizations make waste visible on purpose and then address it with intention.
- Make waste visible early
Relying on retrospective reporting is too slow. Use in-the-moment signals to spot duplication, variation and transition delays as they happen – not months later. - Align incentives and decision-making
Compensation models, partner agreements and organizational metrics should reinforce the same goals. When incentives conflict, waste fills the gap. - Standardize where consistency drives value
Not every clinical decision can be uniform but core processes should be. Shared pathways reduce unnecessary variation and create predictable, measurable outcomes. - Close the feedback loop faster
Insights only matter if they reach the people who can act on them quickly. Weekly or quarterly reviews are not fast enough for value-based care environments. - Encourage curiosity and accountability
Waste grows when no one is asking why. Create space for teams to question workflows, challenge defaults and own improvement. - Tie cost stewardship back to patient purpose
Reducing waste is not just a financial effort. When teams see how efficiency supports better care and better experiences, improvement becomes shared priority rather than pressure.
The Takeaway
Waste in value-based care isn’t a spreadsheet issue – it’s a mission issue. It reflects misalignment, limited visibility and organizational drift. The willingness to look for it and question it is what differentiates organizations that perform from those that truly lead.
You can’t address what you don’t see. Acknowledgment is the first step toward meaningful improvement.
