The Foundation Model in Healthcare: A Blueprint for Shared Accountability and Community Impact

As healthcare continues to evolve, traditional models of physician employment and hospital affiliation are being reimagined. One model gaining traction—especially among nonprofit health systems—is the Foundation Model, a structure that fosters stronger alignment between physicians and healthcare systems while preserving essential elements of professional autonomy.

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The Foundation Model is not just a legal arrangement—it’s a strategic vehicle that offers value to healthcare organizations, physicians, and, most importantly, the communities they serve. By encouraging shared accountability and integrated delivery of care, the Foundation Model holds great promise for building a sustainable, community-centered healthcare system.

What is the Foundation Model?

At its core, the Foundation Model separates the delivery of clinical services (provided by physicians) from the operational management of healthcare facilities and systems (handled by hospitals or parent health systems).

Key features include:

• Physicians are employed by or contracted with a separate nonprofit medical foundation, not directly by the hospital.

• The hospital owns and manages the infrastructure—buildings, technology, staff, and administration.

• The medical foundation oversees physician governance, recruitment, clinical protocols, and care delivery standards.

• Both entities operate under a formal affiliation or contractual relationship with clear shared goals for patient care, quality, and performance.

How the Foundation Model Works in Practice

Imagine a scenario where a hospital partners with a medical foundation:

• The hospital maintains responsibility for the physical infrastructure (buildings, equipment, support staff) and ensures regulatory compliance at the facility level.

• The medical foundation employs or contracts with the physicians and advanced practice providers, manages clinical operations, and establishes quality standards.

• Together, they align on financial targets (e.g., productivity benchmarks, value-based care incentives), quality improvement goals (e.g., patient safety, care coordination), and community health initiatives.

• Shared governance committees—composed of hospital executives, foundation leadership, and physician representatives—oversee key decisions impacting strategy, growth, and clinical integration.

The Value Proposition of the Foundation Model

1. Strengthening Physician Alignment- The Foundation Model fosters a strong partnership between hospitals and physicians without sacrificing the physicians’ professional independence.

   • Physicians maintain a voice in clinical operations and decision-making.

   • Health systems benefit from consistent clinical standards, referral integrity, and coordinated care delivery.

2. Enhancing Care Coordination and Quality- By aligning financial and quality goals, hospitals and physicians collaborate more effectively on population health initiatives, chronic disease management, and preventative care programs.

3. Navigating Regulatory Environments- In states prohibiting direct hospital employment of physicians (e.g., California, Texas), the Foundation Model offers a compliant structure that still achieves close hospital-physician integration.

4. Financial Sustainability and Risk Sharing- The model encourages shared financial accountability for outcomes, helping systems transition from fee-for-service to value-based care models more effectively. Physicians and hospitals work together to manage costs while improving patient outcomes.

5. Talent Attraction and Retention- Offering physicians a stable yet semi-autonomous practice environment improves physician satisfaction and retention. Recruitment of high-quality providers is enhanced when autonomy and system support coexist.

The Foundation Model doesn’t just benefit hospitals and providers—it transforms communities. It ensures improved access to care in underserved areas, could focus on community health outcomes if built right, and ensures cultural integration by onboarding local stakeholders as employees.

Challenges to Consider

While the Foundation Model offers many advantages, it is not without complexities:

• Requires careful governance structures to balance autonomy with system oversight.

• Needs robust financial integration to ensure sustainability, especially in value-based reimbursement environments.

• Demands strong leadership to align cultural differences between hospitals and medical foundations.

Healthcare leaders must thoughtfully design affiliation agreements, quality incentive structures, and decision-making frameworks to avoid operational silos and competing interests.

A Model for the Future

As healthcare systems seek to deliver more coordinated, community-centered, and value-driven care, the Foundation Model offers a promising blueprint. It leverages the strengths of both hospitals and physicians while empowering communities through shared accountability.

Efficiency and physician alignment are critical—but so is preserving the human connection at the heart of healthcare. The Foundation Model, when executed thoughtfully, bridges the two.

Healthcare organizations that embrace models of shared leadership, strategic integration, and community-first thinking will not only survive—they will lead the future of healthcare delivery.

Best wishes,

Lana Bamiro, DrPH, FACHE