Bridging Theory and Practice: Untangling the Design and Implementation Complexity of Bundled Payment Contracts in Health Care

Due to persistently increasing pressure on health systems in high-income countries, many payers are searching for alternative models to pay providers for care delivery — and ‘bundled payments’ are often considered among the most prominent. Although in theory their potential ‘value’ for patients and society seems high, little is known about how a bundled payment contract between a payer and provider can best be designed and implemented to actually achieve this potential in practice. Because of this knowledge gap, bundled payment contracts are often seen as complex and their adoption is slow. Therefore, this dissertation aims to fill that gap by 1) exploring the complexity in the design and implementation of bundled payment contracts and 2) exploring solutions to reduce this complexity in order to accelerate adoption. Concerning the first part of this aim, this dissertation shows that over 50 key elements contribute to the complexity of the design and implementation process of bundled payment contracts. These elements encompass all phases of care procurement and relate to actors on all levels of the health care system. In addition, the dissertation shows that, although it is theoretically possible to address each of these elements in an overview of over 30 strategic, tactical and operational design choices, these choices — and the options within them — are often: context-dependent (e.g., options in a single-payer system are different than in a multipayer system), interchangeable (i.e., different choices can achieve similar effects) and/or interrelated (i.e., choosing one option can have a positive or negative impact on the options in other procurement phases). Precisely this multitude of elements and intertwining choices and options are responsible for making the design and implementation of bundled payment contracts so complex. Concerning the second part of this dissertation’s aim (i.e., ‘to explore solutions to reduce this complexity’), each of the chapters in this dissertation offer multiple insights, lessons and even practical tools that can be used to help reduce the complexity of the design and implementation of bundled payment contracts — such as the included specification of a structured roadmap for a bundled payment contract design process. In conclusion, compared with traditional ‘fee-for-service’ models, bundled payment contracts introduce alternative financial incentives that affect the entire health care system, involve almost all aspects of governance within organizations and demand a different type of collaboration between organizations. Therefore, bundled payment contracts should not be strategically approached by payers and providers as being the mere adoption of a new contracting model but, rather, as being part of a broader transformation to a more sustainable and value-based health care system, based less on short-term transactional negotiations and more on long-term collaborative relationships between payers and providers.