Over-Valued Based Care: What We’re Missing in the Margin vs. Mission Debate

A recent episode of the Relentless Health Value podcast explored a phrase that’s become almost sacred in healthcare leadership circles: “No margin, no mission.” It’s catchy. It feels balanced. But it misses the real question: whose margins, and whose mission?

In today’s U.S. healthcare system, there’s no shortage of margin—just a shortage of honesty about where it goes and how it accumulates. And we’ve lost sight of the most important margin of all: the one left for patients.

We now spend more than ever before in U.S. healthcare—more per capita than any other country on earth—yet our outcomes continue to lag behind. Mortality rises. Burnout deepens. Access shrinks. And too often, when systems invoke “no margin,” it’s not to protect care, but to justify why it can’t be delivered. We’ve built a system that’s incredibly efficient at defending its own financial interests and devastatingly poor at sustaining its ethical ones.

What We Call Value Is Often Just Revenue

We’ve embraced the language of “value-based care,” but too often, what we call value is just what’s easiest to bill. Procedural revenue dominates. In many health systems, orthopedic surgeons, neurosurgeons, and anesthesiologists now earn two to five times more than general pediatricians or internists. The operating room becomes the centerpiece of the business model, while the pediatric clinic down the road gets shuttered or outsourced. Expansion happens not where need is greatest, but where margin is strongest—typically in affluent, well-insured communities. Meanwhile, rural OB units, inner-city pediatric practices, and behavioral health programs are quietly cut “for financial reasons.”

And when it comes to compensation, fee-for-service medicine has split the profession in two. Those who cut, inject, scope, or intervene are rewarded. Those who prevent, counsel, coordinate, and stabilize are asked to do more with less. In 2024, orthopedic surgeons averaged over $600,000 annually, with neurosurgeons and cardiac surgeons nearing or exceeding $800,000. Some proceduralists top $1 million. General pediatricians and primary care doctors—especially those serving Medicaid populations—often bring home a third or less.

It’s not just a market distortion. It's not a sign of great business or great clinical prowess. It's a sign of a system designed for the high cost and low outcomes it produces.

This gap influences everything: medical student career choices, workforce shortages, care availability in underserved communities. And yet, when system leaders discuss tight margins, this internal physician pay inequity rarely makes the slide deck.

Thin Margins or Thick Excuses?

Hospitals love to claim razor-thin margins. But that view relies on a conveniently narrow lens—typically net operating income, stripped of context. Look at IRS Form 990s for large nonprofit health systems and you’ll find a different story. Executive compensation has more than doubled in many systems over the last decade. It’s now routine for nonprofit CEOs to earn $2–10 million a year. Add in vice presidents, legal teams, strategy arms, marketing, and lobbying groups—and suddenly it’s not that the system lacks money. It’s that the money is spoken for.

Layer in facility fees—extra charges applied simply because care was delivered in a hospital-owned site—and the illusion deepens. A primary care visit that once cost $90 becomes $290, even if the clinical care hasn’t changed. Then there are hidden profits: imaging, labs, specialty pharmacy services, infusion billing. These revenue streams rarely go to support primary care or mental health access. Instead, they reinforce an internal logic that rewards revenue capture, not mission delivery.

So when hospital leaders say, “we can’t afford this clinic,” or “Medicaid doesn’t cover costs,” the question must be: can’t, or won’t?

The Private Equity Playbook—Now in Health Systems

This isn’t just a story about salaries. It’s a broader cultural shift. Many health systems have adopted strategies that mirror private equity. Proceduralist service lines are spun off into for-profit joint ventures. Urgent care chains are acquired, not to improve care access, but to enhance the referral pipeline for higher-margin services. PE-backed staffing groups now run anesthesia, emergency medicine, and hospitalist programs at many hospitals—further insulating leadership from workforce accountability while driving up profit extraction.

All of it is still branded “value-based,” but it’s value for the spreadsheet, not for the patient. Volume is still king. Efficiency is often a euphemism for lower staffing. And the relentless pursuit of growth has left core, under-resourced services behind.

Margins as a Weapon

When states cut Medicaid budgets, the impact is immediate—and predictable. School-based health centers get defunded. Rural maternity wards are shuttered. Mental health programs shrink or disappear. These aren’t accidents. They’re choices.

We don’t cut executive salaries. We don’t renegotiate contracts with proceduralists. We don’t pause ambulatory expansion in wealthy suburbs. We cut where the margins are already slim—because it's politically and financially convenient.

What’s most troubling is how normalized this has become. Leaders will often claim they’re simply responding to financial reality. “We’re just playing the hand we’re dealt.” But that language is a cop-out. Most systems have room to move money, but choose not to. And when mission conflicts with margin, it’s the mission that gets redefined.

How Do Other Countries Do It?

No other high-income nation tolerates this level of distortion. Other countries don’t spend three to four times more on administrative overhead. They don’t pay hospital CEOs millions while claiming charity status. They don’t reward surgical volume at the expense of primary care. They don’t allow essential services to disappear from rural or impoverished areas simply because margins are lower.

Instead, they recognize that primary care is the backbone of population health. They fund prevention, care continuity, and early intervention—not just because it’s cheaper, but because it’s better. They define value in outcomes, not billable events.

The U.S. is alone in building a system where the sickest patients often generate the worst returns—and are therefore pushed to the fringes of care.

The Real Margin We Should Talk About

We’ve spent decades chasing institutional margins. But we’ve ignored the one that matters most: what’s left for the patient.

That’s the margin that determines whether a family can access pediatric care in their neighborhood. Whether a child with asthma avoids an ER visit. Whether a new mom gets postpartum care close to home. Whether a patient with depression sees a therapist before reaching crisis.

We’ve allowed margin to become a justification for retraction, rather than a tool for reinvestment. We’ve prioritized the survival of the system, even if it means neglecting the people it was built to serve.

Reframing the Question

So yes, margin matters. But the conversation is incomplete—and often disingenuous—when it ignores the places where margin is hoarded, inflated, or hidden. Until we’re willing to ask hard questions about compensation, facility fees, administrative overhead, and the lasting effects of FFS-driven pay gaps, we can’t credibly claim we’re protecting the mission.

It’s not enough to say “no margin, no mission.” The better question is: what margin, for whose mission, and who’s being left behind?

Because “value-based care” will never succeed in a system that doesn’t value the people and professions most critical to health.