Most physicians practicing medicine today were trained to diagnose and treat patients, not to navigate one of the most complex industries in the world, an industry characterized by ever-changing payer contracts, evolving reimbursement structures, complex and sometimes mystifying coding, and challenging operational realities. Despite the lack of training, these same physicians and providers are leading multimillion-dollar businesses and are expected by their health systems to reduce costs, improve outcomes, and enhance patient experience. Physicians are expected to achieve these outcomes without formal training in the business side of care delivery.

The stakes are high for health systems that don’t bridge the gap in physician education and training. Provider dissatisfaction with the ability to deliver high-quality care and work-life balance, workforce burnout, and diminished patient access threaten system sustainability, while operational inefficiencies drain resources that could be redirected to patient care. Health systems that invest in developing physicians’ financial and operational literacy unlock a powerful advantage: They foster clinicians who can optimize resource allocation and drive both clinical and business performance. Understanding the financial structures of health care is no longer optional; it’s a strategic imperative that determines which health systems will thrive and which will struggle to survive.

The traditional fee-for-service (FFS) model, where revenue follows volume, is giving way to value-based payment structures that reward quality, coordination, and cost efficiency. The result is a hybrid compensation model that combines the predictability of FFS with the accountability, incentives, and upside revenue potential of value-based care (VBC). The upcoming WISeR and TEAM models, starting in 2026 and designed to reduce wasteful low-value services and fragmented, potentially avoidable acute care, reflect CMS’s continued, steady push toward accountable care. Physicians who can be educated to understand this significant shift in physician revenue dynamics and the subsequent requirements to actively engage in documentation, utilization management, transition planning, and care coordination will be the ones to safeguard revenue for health systems, drive performance, and ultimately shape the future of health care delivery.

Business literacy allows physicians to see the full picture and understand:

• How accurate documentation and coding can serve as the bridge between patient care, quality metrics, and financial accountability.
• How a better understanding of health care dollars flow, Medicare Advantage structures, and evolving hybrid compensation models helps align clinical decisions with financial realities.
• How effective management of patients and care transitions drives the financial and operational performance of the health system.

Understanding these operational realities requires that health systems train and educate their physicians on business literacy, enabling physicians to understand economic forces and the impact of policy and payment structures on their daily practice. This type of training should frame physicians as leaders who can align their clinical excellence with the operational and financial sustainability within hybrid payment environments.

Operationally, complete and accurate coding supports quality metrics like Star Ratings and performance-based incentives, directly linking accurate clinical work to organizational revenue. Accurate documentation and coding ensure a patient’s true risk level is captured through the Risk Adjustment Factor (RAF) model. This enables more effective care delivery and also aligns patient complexity and needs with resources. This economic literacy transforms physicians from passive participants to active stewards of sustainable, high-quality care.

Physician education in the business of health care should focus on the centrality of primary care as the hub for disease prevention, chronic disease management, and care coordination. Three performance-reinforcing levers, panel management, team-based care, and advanced access models, strengthen this foundation. Coordinated care transitions and information sharing across acute, post-acute, and community and home settings further enhance clinical outcomes while improving cost control. Together, these tenets ensure health systems and their physicians improve quality and lower the total cost of care by keeping people and populations healthy.

Ultimately, health care is a business because it must sustain itself to serve people and communities. It’s designed to ensure that the most vulnerable populations have the care they need. When physicians understand the business side of health care, they protect what matters most: access, quality, affordability, and better financial stewardship. By learning what they were likely never taught, physicians can lead not just in the exam room, but also at the table where the future of health care is decided.

Kelly Bain is a physician executive.