Healthcare systems have made great strides in recent years in learning how to use their medical records and claims data to identify patients at high risk of contracting chronic diseases such as diabetes. Unfortunately, under fee-for-service medicine, doing something with that information is rarely a smart move financially.

Providers are reimbursed for some effective prevention measures. For instance, Medicare is expanding its Diabetes Prevention Program, a proven, low-cost counseling intervention currently run by the YMCA. By reducing obesity in people with elevated blood sugar, the DPP slows or eliminates their progression to full-blown diabetes.

But the income providers derive from counseling is far less than what they get for treating acute-care episodes associated with the poor management of diabetes. The worst effects of persistent high blood sugar—kidney failure, neuropathy and eye failure—are treated with some of the most expensive interventions in medicine: dialysis, amputation and pricey eye…