As the healthcare payment system continues a steady march toward creative deconstruction, the upending of old assumptions is spurring the need to adopt a whole new mind-set. Success in this new world pivots on the ability of a responsible entity, whether it be physicians, payers, or health systems, to reduce total cost for groups of beneficiaries, starting prior to delivery of primary care and moving through acute and post-acute care. Future winners will be visionary organizations that embrace a new definition of success, one that does not rely on filling beds or generating procedures but rather demonstrating to savvy consumers the ability to manage care at a lower cost point.Such vision requires a strategic shift that reimagines the breadth of the healthcare enterprise. The impetus for this change comes from the Centers for Medicare & Medicaid Services (CMS) and commercial payers, which are migrating toward a payment system based on per capita spend. Shifting the focus from per episode, per case, or other volume-related measures to managing the range of services for groups of attributed customers will require new perspectives and skill sets. Savings will not be realized on per unit margins but on reducing total use rates. In short, a per capita payment model redefines the role of the provider and poses new challenges for healthcare leaders.ADOPTION OF PER CAPITA PAYMENTThe proliferation of accountable care organizations (ACOs) represents the strongest move in the direction of per capita payment models. The framework for value-based payments articulated by CMS lays out a progression that transitions from fee-forservice to population-based payments, such as Medicare Advantage, per member per month, and other nonvolume methods (Rajkumar, Conway, & Tavenner, 2014). CMS is committed to making fee-for-service an afterthought. In the future, margins will be generated by creating customer value for the whole healthcare dollar.Limitations around per capita spend are fundamental drivers of the recently revamped payment system for the State of Maryland. In the only rate-regulated state that allows for such experiments, Maryland officials agreed to institute a guaranteed cap on total hospital spend per Medicare beneficiary. In exchange, CMS will extend a waiver that continues a decades-old system of setting a single negotiated rate for hospital services for Medicare, Medicaid, and commercial payments. The waiver is conditional on keeping statewide Medicare hospital expenditures below a 3.58% annual per capita increase To achieve this threshold, the Maryland rate commission instituted globalbudgeting. Hospitals now manage against predetermined budgets to collectively meet per capita spending targets. Failures to keep spending below these targets will jeopardize the waiver and limit the pool of dollars available to pay for services. Under future consideration are population-based models that attribute geographically based clusters of lives to designated health systems. Just short of a full capitation model, this concept applies shared savings against a set target for a group of attributed lives, blending the best of capitation and payments that add bonuses to fee-for-service rates. This program is being tested by CMS through modified demonstration projects in other states. Clearly, setting limits on total spend and encouraging providers to offer a bundle of services within a budgeted cap is being strongly considered as a future payment model.Impact on PhysiciansFundamental reform of the payment system is coming for physicians. By calculating upside rewards against benchmarks of Part A and Part B spending, the Medicare Shared Savings Program (MSSP) represents an early prototype to encourage physician-driven networks to pay close attention to total spend. For the first time, physicians are able to receive incentive payments for managing costs with a bull'seye on reducing use rates for expensive inpatient hospitalization. …