Bundled pricing is an innovation in healthcare delivery that promises to deliver reduced costs, improved quality, and greater transparency. At a high level, the concept is a single fixed price for a defined set of physician and facility services with a specified quality outcome. Currently being piloted by a small number of market leaders and in some CMS-sponsored pilots, this mechanism for payment represents a significant departure from the current fee-for-service model. By changing utilization incentives and shifting some financial risk from payers to providers, bundled payment presents an opportunity for providers and physicians to work together to drive better, more efficient care; it also presents significant challenges.

In theory, the development of a bundled price is simple — on the surface, all that’s required is that an organization ensure that its bundled price is at least as much as would be reimbursed under current payment mechanisms. However, in reality, healthcare finance professionals seeking to prepare their organizations for bundled pricing must overcome several key hurdles.