Which payment method aligns incentives between healthcare providers and physicians?

Bundled payment is a payment method designed to align incentives between healthcare providers and physicians by providing a single comprehensive payment for all the services related to a specific treatment or condition over a defined period. This approach encourages collaboration among healthcare providers, as they work together to deliver quality care while managing costs within the payment framework.

In a bundled payment model, providers share the financial responsibility for the patient's care, fostering a team-based approach to treatment. This collaboration can improve patient outcomes by promoting coordinated care and reducing unnecessary services, as providers are incentivized to deliver efficient, high-quality care rather than simply maximizing the number of individual procedures or services rendered.

This contrasts with fee-for-service payment, which compensates providers for each individual service rendered, potentially promoting a volume-driven approach rather than a focus on overall patient outcomes. Similarly, per-procedure payments can lead to similar volume-driven practices without the collaborative benefit offered by bundled payments. Capitation involves paying a fixed amount per patient regardless of the services provided, which can lead to underutilization of care if not managed properly. Thus, bundled payments uniquely foster a cooperative environment that prioritizes broad health outcomes over singular financial incentives.