Medical schools are very good at teaching students how to diagnose disease and prescribe treatment. They are significantly less good at teaching students how the healthcare system they are entering actually works — who pays for what, how clinical decisions aggregate into systemic costs, and what role physicians play in shaping the economics of care.
I have spent years on this problem — teaching residents about medical economics, championing US federal price transparency mandates, building compliance products for hospitals, and lecturing at Boise State University on price transparency and value-based care. The gap in medical education between clinical training and healthcare economics training is not a minor oversight. It is producing graduates who are unprepared for the system they will practise in.
What Value-Based Care Actually Means
Fee-for-Service
- Paid per procedure, per test, per admission
- Volume = revenue
- Readmissions are profitable
- No penalty for unnecessary care
Value-Based Care
- Payment tied to patient outcomes
- Quality = revenue
- Readmissions are penalised
- Waste reduces performance scores
This shift has profound implications for how physicians make clinical decisions. In a fee-for-service environment, ordering an additional investigation costs the physician nothing. In a value-based environment, unnecessary investigations are a quality metric. Understanding this is not optional for a physician entering practice in 2026.
Price Transparency: What I Learned Championing the Mandate
When the US federal government mandated that hospitals publish their prices, it revealed something patients had long suspected: the same procedure at the same hospital can cost radically different amounts depending on the payer. I built products to help hospitals meet this mandate, and I conducted webinars on price transparency for administrators, finance teams, physicians, and policymakers.
The most important message in every session was the same: physicians who understand how their hospital is paid are in a much better position to advocate for their patients, make appropriateness decisions with full information, and push back against administrative pressures not aligned with patient welfare.
Teaching Medical Economics to Residents
When I taught medical economics to residents in US GME programmes, the goal was not to turn them into healthcare administrators. It was to give them enough economic literacy to be effective clinical advocates.
"Evidence-based medicine is not just about efficacy. It is about appropriateness. Ordering a test that will not change your clinical management is not thorough medicine. It is clinical waste."
— Dr. Chandra Sekhar Bondugula, Founder & CEO, EdMedAIPhysicians who internalise this principle practise better medicine and are more effective advocates for their patients in an increasingly resource-constrained environment.
What Indian Medical Graduates Need to Understand
India's healthcare system operates on different economic principles from the US system — but the underlying logic of value-based care is universally relevant. The question of whether a clinical decision produces value for the patient, relative to its cost and risk, is a fundamental dimension of clinical quality in any healthcare system.
India is moving toward more structured healthcare financing. Ayushman Bharat, national health insurance expansion, and growing private hospital accreditation requirements are creating incentives for value-based practice that did not exist a decade ago. Medical graduates who understand these dynamics will be better positioned to navigate them — and to lead the quality improvement initiatives that India's healthcare system urgently needs.