All signs point to the increasing adoption of value-based payment models, including bundled payments. For many in the industry, including some who have been skeptical of broad-based payment reforms, the question is no longer if their organizations will adopt bundled payments, but rather when. Increasingly, the answer is sooner rather than later.

The follow-on question is of course how – that is, what’s the best way to move forward with bundled payments? As we move closer to critical mass around bundled payments, here are five observations that pertain to all healthcare stakeholders.

1. Bundles work. How do we know? Because where pilots and initial implementations have taken place (at Blue Cross and Blue Shield of North Carolina, UCLA and the University of Pittsburgh Medical Center) bundles have already produced meaningful results, Contrast those with ACOs and capitation, which are generating mixed results at best. Significant numbers of Medicare Pioneer ACOs dropped out of the program, owed money or failed to receive any shared savings payments. Those struggles often have to do with limited interoperability. One study found that 70-80% of ACOs saw integrating data from out-of-network providers was the biggest challenges.
2. It’s not just about the cost. Yes, bundles offer real potential to drive down costs for consumer and employers, but their real promise is in their ability to boost quality outcomes through more consistent and coordinated care. Accountability for long-term quality is built into the payments themselves.
3. Bundles are more patient-focused than capitation. They offer “all-in” pricing for a specific procedure that is the common way to purchase everything from automobiles to travel. Further, while capitated approaches align physicians and other care providers around specific episodes of care, bundles take the bigger-picture view that reflects how care really works. Thus, bundles will drive care teams (including primary care physicians, specialty care physicians, nurses and care coordinators) around final outcomes, not standalone events. That is a big step away from the fragmentation of the FFS world. (Don’t’ miss the HBR piece by Porter and Kaplan for the full argument. Their Webinar is also worth your time.)
4. Bundles empower physicians. Bundles will place more power in the hands of the physicians – who better to decide the best approach to care? While some are concerned that physicians will resist taking on more risk, my experience tells me that the increased autonomy, greater focus on the patient and transition away from fee-for-service models offer great appeal to physicians. They will grow even more comfortable as bundle design continues to improve based on clearer insights into risks and what works.
5. Bundled payment pilots are the “best practice” next step. The early track record is strong, but employers, health systems and providers will experience challenges as they gain their first experiences with bundles. Pilots will be necessary to better understand the risks (including organizational barriers) and move past the transition challenges. Starting with a specific procedure or two and a narrowly defined network of providers will be essential to moving forward with pilots.