Succeeding Under Bundled Payments

Reducing Readmissions and Protecting Hospital Profitability in an Era of Increasing Performance Risk

Evaluate the strategic implications of accepting bundled payments and explore key lessons for collaborating with physicians, post-acute care providers, and patients to thrive in a bundled payment environment.

Executive Summary

Institutions preparing for bundled payments

With Medicare’s Acute Care Episode (ACE) Demonstration underway and the National Pilot Program on Payment Bundling on the horizon, hospital and health system executives are evaluating the strategic and operational challenges of facing greater performance risk. Bundled payments present an attractive vehicle for payers to shift financial risk to providers, creating a platform of shared accountability by replacing individual fee-for-service payments with a single lump sum payment designed to reimburse a complete episode of care.

Accountable Care Risk Outlook

Bundled payments reward providers who collaborate to improve the efficiency and reliability of acute care—and penalize those who continue to drive excess costs across the continuum. As a result, many organizations are questioning the relationships and competencies needed to succeed under bundled payments.

Effective physician partnership critical to program success

Under any type of bundled payment model, effective physician partnership is the cornerstone of financial and operational success. The lump sum reimbursement central to bundling provides a new means for hospitals to develop financial alignment with physicians—particularly independent specialists. By including well-crafted gainsharing models within bundling programs, hospitals can leverage division of the bundle to reward physicians for delivering high-quality, cost-effective care. Ultimately, successful programs transform the payment model into a physician alignment model.

Episodic bundling requires cross-continuum relationships

As application of bundling expands from inpatient admissions to full episodes of care, including post-acute care and readmissions within a set timeframe, hospitals must collaborate with stakeholders across the continuum to succeed. Effectively engaging primary care physicians, post-acute care providers, and patients are critical steps for streamlining episodes of care and reducing the risk of readmissions. Given the number of stakeholders involved in a full episode of care, partnership management is rapidly emerging as a new core competency necessary for success under bundled payments.

Access the full study to learn more

Succeeding Under Bundled Payments offers a detailed assessment of the strategic implications of accepting bundled payments and highlights 18 key lessons for collaborating with physicians, post-acute care providers, and patients to thrive under bundled payment models.

After reading this study, members will understand:

  • The early results and lessons from Medicare’s Acute Care Episode (ACE) Demonstration
  • How to build bundling-compatible relationships with physicians
  • How to design effective gainsharing models to drive performance improvement
  • How to collaborate with post-acute care providers to streamline patient handoffs and reduce readmissions
  • How to engage patients as partners in care to secure compliance with care instructions and mitigate the risk of readmissions

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