Why Direct Contracting Isn't Scaling (Yet)
Creating a functional marketplace for specialty care
A short exchange with Mark Cuban on Twitter this weekend highlighted a question that’s plagued healthcare for years: if price transparency and direct-pay models are so obviously better for patients and employers, why haven’t they scaled?
Cuban argues that removing intermediaries and exposing real prices should let markets function. He’s directionally correct. But the reality on the ground is more complicated.
My current work on Commons’ direct contracting platform has driven home this point.
Direct-pay options exist, and many deliver excellent value. However, they remain fragmented, niche, and (as yet) insufficient to shift broader economics, particularly in specialty care.
The will is there. The infrastructure is still catching up.
In my view, three structural limitations are holding things back: leverage, demand aggregation, and cost structure/scalability. Overcoming these constraints is necessary for transparency to work and for healthcare marketplaces to function as intended.
The Leverage Problem
Transparency is a good thing. The problem is that without leverage, transparency can backfire.
If small independent practices (or even a few supergroups) publish rational, all-in pricing, most of the economic power still sits with the payers. Carriers can ratchet payments down, threaten network removal, or simply steer patients toward the lowest priced option.
Unless quality, risk, appropriateness criteria, and outcomes are visible and appropriately weighted, price becomes the only adjustable variable. The predictable result is commoditization and a marketplace few want to enter voluntarily.
For a transparent marketplace to function, providers need:
Sufficient supply-side alignment around defensible, rational pricing
Clear, consistent, straightforward quality/appropriateness metrics that payers and employers trust
Proper risk adjustment so groups aren’t punished for treating complexity
Consolidation can be a net benefit if it creates real operational value, lowers costs, and improves outcomes. Aggregating providers purely to distort market forces doesn’t count. But, without leverage, transparency becomes a liability and the marketplace too uninviting for those trying to do the right thing.
The Demand Problem
This may be the biggest constraint, yet it doesn’t get enough attention. We assume there’s more demand than actually exists.
There’s no question direct contracting is growing. Employers are exploring alternatives, convener/navigation services are expanding, and cash-pay bundle activity is increasing.
But the demand side is still highly fragmented:
Too many contracting models
No unified navigation infrastructure
Limited steerage volume
Benefit designs still tied to traditional insurance rails
From a physician standpoint, this translates into a trickle of volume, nowhere near enough to justify major operational changes. Employers must balance employee choice with making benefits usable and attractive, mandate or not. It’s a classic “chicken and egg” problem — supply can’t scale without demand, and demand won’t grow without more supply.
We’ve seen firsthand that direct-pay and direct-contracting work extremely well in pockets including direct primary care, cash pay diagnostics, and some DTC offerings. But they don’t yet reach the scale needed to change the broader economics of procedural-based specialty care.
Critical mass matters. Until enough demand is pooled and routed consistently, transparent marketplaces remain aspirational rather than transformative.
Cost Structure & Scalability
Benchmarking off Medicare rates, while common, has limitations. Targeting percentages above Medicare feels as arbitrary as the rates themselves. Site-of-service payment discrepancies persist and CMS-like price setting is, ironically, anti-marketplace.
Simplified payment structures reduce overhead — assuming most or all of your volume comes from direct care arrangements. Until then, eliminating prior auth, streamlining billing, and removing administrative friction, still don’t allow specialty practices to break even at Medicare-equivalent rates.
Again, transparent, rational pricing requires volume to make new cost structures sustainable and scalable.
Specialty practices, like Orthopedics, build overhead expenses around commercial reimbursement. That doesn’t make them greedy or inefficient — it’s the system they operate in. Asking them to shift to transparent marketplaces without addressing cost structure is unrealistic. Yet another chicken and egg problem.
Successful models combine low acquisition cost with high lifetime value — ASC-centric, clinically integrated care models designed from the ground up for efficiency and reproducible outcomes. Their unit economics can support transparency and marketplace dynamics.
The Fix
Creating a transparent marketplace requires aggregating demand, aligning supply, standardizing the product, and building rational economies of scale.
A functioning marketplace requires:
1. Pooled employer demand
Employer consortia, regional networks, navigation platforms—any mechanism that consolidates steerage and sends predictable, scalable volume.
2. Simple, standardized bundles
Clear inclusions/exclusions, transparent pricing, and outcome warranties that reduce buyer risk and eliminate ambiguity.
3. A low friction, trusted front door
No patient or HR leader wants to navigate 27 separate portals or direct-care point solutions. They want comprehensive treatment channels they can trust.
4. Care delivery models built for marketplaces
Groups should accept risk, deliver consistent outcomes, safely migrate care to cost-efficient settings, and operate on financial structures capable of sustaining rational, transparent pricing.
Combine these elements and transparent marketplaces become achievable and sustainable.
That’s the fix.
Purpose-Built Models
Committed volume is the biggest unlock. Aggregate 50,000+ covered lives in a market through employer consortia, and you create immediate viability for providers willing to participate.
Models built to serve direct contracts with transparent pricing and lean operations are particularly well-suited to enable this shift. They can escape legacy cost structures calibrated to commercial rates when volume is guaranteed. The Commons model is built for this transition, we’re seeing early traction with self-insured employers ready to commit volume.
Pair committed employer demand with delivery models built for it, and you begin solving the chicken-and-egg problem at scale. It just requires enough employers willing to move together and delivery infrastructure ready to meet them.
The Moment is Now
My early New Year’s prediction: 2026 could be the year of direct contracting, transparency, and healthcare marketplaces.
There’s broad frustration from all corners: clinicians drowning in admin burden and shrinking margins, employers absorbing unsustainable premium growth and point solution fatigue, and patients left with opaque prices and sticker shock.
The willingness of someone like Mark Cuban to engage thoughtfully and push these debates into the mainstream helps.
The desire for a simpler, more rational marketplace is real. But leverage, demand, and scalability still lag.
We’re unquestionably getting closer.
Direct-to-employer bundles, ASC migration, surgical warranties, and clinically integrated specialty groups are all early versions of a model that can scale — once demand is aggregated and supply is aligned.
If we can cleanly prove this model at small scale and demonstrate repeatability, it becomes a blueprint for transformation. A system where transparency and marketplaces work because we finally built the architecture to support them.
The pieces are there, we just need to do a better job putting them together.
Ben Schwartz, MD, MBA
Editor-in-Chief, The Surgeon’s Record
SVP, Care Services & Strategy
ben@commonsclinic.com
The idea of a direct-care marketplace is good. Historically, creating a new niche when one never existed has been really, really hard and timing has a lot to do with it. Many can't afford healthcare and coverage denials seem to be rising. That doesn't mean there is enough friction to switch over to a new marketplace.
I just purchased health insurance for my wife through healthcare.gov. I would have preferred to buy one through healthcoverage.you but the fine print would turn many away. I'm hopeful that it will change.
I sure hope your prediction is correct. We helped a lot of people obtain care at MDsave through a defined, fully bundled price.
In any given city, the healthcare ecosystem should direct contract with its local employer market. Teachers, city employees, and chamber of commerce members.
Large national employers have difficulty providing this benefit as it cannot be consistent across geographies, although they don’t mind the “2nd opinion” approach, similar to Walmarts program.