From Sick Care to Smart Care: Aligning Incentives for Prevention

Today roughly 90% of healthcare spend is directed at managing symptoms. The real shift begins when payers, providers, patients and pharma all align their incentives—making early, effective care the norm, not the exception.

Roughly 90% of U.S. healthcare spending is directed toward managing chronic and mental health conditions—conditions that are largely preventable or modifiable with earlier intervention. As national expenditures approach $5 trillion annually and are projected to exceed 20% of GDP by 2033, the imperative is clear: the future of healthcare will be defined by how effectively we shift from reactive “sick care” to proactive, intelligent, and value-aligned “smart care.”

This transformation is not philosophical—it’s economic. Chronic disease, driven by lifestyle and social determinants of health, accounts for the overwhelming majority of system costs, yet less than 5% of healthcare dollars are invested in prevention or early detection. The result is a misaligned marketplace where payers bear the burden of late-stage disease, providers are reimbursed for volume rather than value, and patients often engage the system only after symptoms appear.

The opportunity for investors and operators lies in re-engineering this incentive stack. Smart care emerges when the economic interests of payers, providers, patients, and pharma converge around measurable outcomes—when value creation is tied not to the number of procedures performed, but to the number of complications avoided.

Why Now

Several structural and demographic forces are converging to accelerate this shift:

• Unsustainable cost growth: CMS projects annual health expenditures will rise faster than GDP through the next decade. Value-based models that emphasize prevention and longitudinal care offer the clearest path to bending this curve.

• Labor shortages: With an aging population and stagnant clinician supply, efficiency and early intervention are no longer optional—they’re existential.

• Digital readiness: Advances in AI-driven risk stratification, remote monitoring, and immune or molecular profiling are making it possible to predict disease trajectories years before symptoms manifest.

Together, these forces are catalyzing a multi-billion-dollar opportunity for innovation across diagnostics, data infrastructure, and outcomes-linked financial models.

The Smart Care Framework

Cereona Partners defines “smart care” through a four-pillar framework that aligns financial and clinical incentives across the care continuum:

• Payers → Pay for Value
  Move beyond fee-for-service to prospective and outcomes-based payments. Link reimbursement to measurable reductions in avoidable utilization and improvements in disease control.

• Providers → Manage Population Risk
  Equip clinicians with predictive analytics, integrated data, and care coordination tools that reward proactive management rather than episodic intervention.

• Patients → Activate and Adhere
  Build benefit designs and engagement platforms that lower barriers to prevention—free screenings, behavioral nudges, and access to digital therapeutics—so patients act before symptoms escalate.

• Pharma → Price on Performance
  Tie reimbursement for high-cost therapies to real-world effectiveness. As outcomes-based contracts expand, pharma’s upside increasingly depends on durable, measurable patient benefit.

When these four pillars are aligned, every stakeholder wins when patients stay healthy—a structural inversion of the current system.

The Market Thesis

Value-based care companies continue to outperform peers on both outcomes and cost metrics. Preventive screening technologies—from multi-omics diagnostics to AI-driven imaging—are demonstrating cost-effectiveness across multiple disease areas. And outcomes-based contracting between pharma and payers is scaling from pilot programs to portfolio strategies.

Capital is migrating “upstream” towards companies that can:

• Predict risk early through data and AI

• Close care gaps through integrated workflows, and

• Monetize prevention through outcomes-linked economics.

Smart care is not simply a new category; it’s reallocating nearly $4 trillion in financial waste. For investors, the question is no longer if the system will shift, but who will build the rails that make alignment possible.