For nearly two decades, Leo Spector, MD, orthopedic spine surgeon and CEO of Charlotte, N.C.-based OrthoCarolina, has been working toward a different model for delivering orthopedic care.
At OrthoCarolina, that work began long before direct-to-employer contracting became a strategy employers openly pursued. It took shape through early bundled payment models, the standardization of care pathways and a sustained focus on lowering total cost while improving outcomes.
What is emerging now, through a partnership with specialty care platform Lantern and the North Carolina State Health Plan, is not a sudden pivot. It is the long-awaited alignment of incentives, infrastructure and urgency.
“This is really a culmination of 15 years of work,” Dr. Spector said.
The program connects more than 700,000 state employees and their families with a curated network of surgeons who agree to deliver care at pre-negotiated, bundled rates, often with zero out-of-pocket cost for patients.
It reflects a broader shift already underway across healthcare, one that is quietly redefining who drives decision-making in the system.
Employers move closer to the point of care
For years, employers have absorbed rising healthcare costs with limited control over how care is delivered or priced. Premium increases, higher deductibles and administrative complexity have become routine, with few meaningful changes to underlying care models.
That frustration is now translating into new purchasing strategies.
“We’re no different. We’re frustrated,” Dr. Spector said. “We see our healthcare costs as a company, and every year they just keep going up.”
The shift begins with a reframing of who ultimately pays for care.
“Who really pays the cost of healthcare? It’s really whoever employs us, because most employers are self-insured,” Dr. Spector said.
Direct-to-employer models bring those stakeholders closer to the delivery of care itself. Instead of relying entirely on insurer-designed networks, employers can contract directly with providers offering defined pricing and consistent outcomes.
The implications extend beyond cost control. Surgical procedures account for a significant portion of healthcare spending, often between 15% and 30% for large plans. At the same time, recovery time affects workforce productivity in measurable ways.
“Employers want employees healthy and back to work,” Dr. Spector said.
Why orthopedics is leading the transition
Orthopedics has emerged as one of the most natural entry points for this model.
Procedures such as joint replacements follow relatively predictable clinical pathways, making them well suited to bundled payments that combine all services into a single, upfront price. For organizations that have invested in standardization, the model offers both clinical and financial clarity.
At OrthoCarolina, that work began more than a decade ago.
“The payers have been somewhat slow to adopt bundle payments,” Dr. Spector said.
That lag created a disconnect. Physician groups capable of delivering value-based care were ready to scale, but the traditional system was not moving at the same pace.
Direct-to-employer partnerships have begun to close that gap by creating an alternative pathway for adoption.
For patients, the difference is immediate. Deductibles and out-of-pocket costs, which have steadily increased in recent years, are removed as a barrier to care. For employers, the benefit lies in predictable pricing and improved outcomes.
“If you tell me I’ve got the opportunity to have zero out of pocket with as good, if not better, results, that’s a win for everybody,” Dr. Spector said. “It starts to reward those practitioners who are willing to lower the cost of care and improve outcomes.”
The infrastructure behind value-based care
While the concept is straightforward, executing it requires significant investment and coordination.
OrthoCarolina spent years building the infrastructure necessary to support bundled payments, including care navigation teams, internal cost analytics and new approaches to payer contracting. The organization also worked to align physicians around standardized care pathways, reducing variation in surgical technique and postoperative care.
“If you’re going to sell a product, you need to know what it costs you to manufacture it,” Dr. Spector said.
That level of operational discipline is not yet widespread. Many physician groups remain interested in value-based care but lack the systems and cultural alignment required to take on financial risk.
“It took time. It took investment,” Dr. Spector said.
Redefining networks, not restricting them
As employers begin to steer patients toward curated provider networks, questions around choice and quality inevitably follow.
Lower cost is often perceived as lower quality, particularly in a system where pricing has long been opaque. Dr. Spector said that assumption does not hold in this model.
“Lantern has a pretty rigorous process by which they credential our practitioners,” he said, noting that not all physicians even within his own group are approved for every procedure.
The intent is not to limit access but to guide patients toward providers with demonstrated outcomes. Patients are typically given multiple options within the network and supported by care navigation services throughout the process.
A disruption that may reshape the system
Whether direct-to-employer models can fully replace traditional insurance remains uncertain. Expanding the approach beyond procedural specialties into more complex areas of care presents additional challenges.
“I think it’s definitely durable in the orthopedic space,” Dr. Spector said. “The question is going to be, can you replace an entire commercial pay? Where you see the direct-to-employer take off are the areas that are much more amenable to value based care, especially the bundle payments.”
Even without full replacement, the model is already exerting pressure on the broader system. By introducing competition around cost and outcomes, it may accelerate adoption of bundled payments and value-based care among traditional payers.
A moment that has been building for years
For Dr. Spector, the current moment reflects both validation and inflection.
Rising costs, employer frustration and the growing maturity of value-based infrastructure have converged to create conditions that are difficult to ignore. What was once a gradual evolution now feels like a directional shift.
At its core, the model rewards a different set of behaviors than the system it is beginning to challenge.
“It’s rewarding the behavior you want to see,” Dr. Spector said.
The extent to which it reshapes healthcare will depend on how widely it is adopted. What is already clear is that the change is no longer theoretical. It is being built, scaled and tested in real time by the employers and physician groups most motivated to make it work.
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