By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    stress management for healthcare workers
    3 Tips For Healthcare Professionals: How To Stay Beautiful, Healthy, and Happy
    November 2, 2021
    importance of relaxing on the weekend for your health
    Importance of Relaxing During the Weekend for Optimal Health
    March 25, 2022
    LASIK Eye Surgery
    What Is LASIK Eye Surgery?
    May 16, 2022
    Latest News
    7 Most Common Healthcare Accreditation Programs: Which Should You Use?
    August 20, 2025
    Hospital Pest Control and the Fight Against Superbugs
    August 20, 2025
    Hygiene Beyond The Clinic: Attention To Overlooked Non-Clinical Spaces
    August 13, 2025
    5 Steps to a Promising Career as a Healthcare Administrator
    August 3, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    All That You Need to Know About Clenbuterol
    November 22, 2019
    Top 5 Facts About CPPA Accreditation
    April 9, 2015
    mental health benefits school
    Mental Health & Practical Benefits of Continuing Education After 30
    June 30, 2024
    Latest News
    How Social Security Disability Shapes Access to Care and Everyday Health
    August 22, 2025
    How a DUI Lawyer Can Help When Your Future Health Feels Uncertain
    August 22, 2025
    How One Fall Can Lead to a Long Road of Medical Complications
    August 22, 2025
    How IT and Marketing Teams Can Collaborate to Protect Patient Trust
    July 17, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: ACOs vs. Bundled Payments: Can Either Save Healthcare?
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Finance > ACOs vs. Bundled Payments: Can Either Save Healthcare?
BusinessFinanceHospital Administration

ACOs vs. Bundled Payments: Can Either Save Healthcare?

Abby Norman
Abby Norman
Share
7 Min Read
ACO or Bundled Payments?
SHARE

ACO or Bundled Payments?Everyone in healthcare knows that something’s got to give. it’s not a matter of “if” but “when” – and to some extent, how?

Contents
  • ACOs
  • Bundled Payments

ACO or Bundled Payments?Everyone in healthcare knows that something’s got to give. it’s not a matter of “if” but “when” – and to some extent, how? In the arena of change, two major payment players, ACOs and Bundled Payments, are fighting to become the savior of American healthcare. Chances are you’ve already heard plenty about the former; accountable care is the hot topic of the year. Not only has it made headlines, but it’s been the topic of industry wide webinars and education.

Bundled Payments, however, are lurking just below the surface when it comes to healthcare hubub. If you need a refresher, here’s a quick run down of each.

ACOs

Primary care doctors join an accountable care organization and the ACO carries the weight of the health of the patient population. Medicare is still paying providers how they normally would – by comparing the treatment to what they define as being the average for treating a patient in a similar medical situation. If providers are able to treat the patient and actually require less than the target payment, the ACO will get bonuses. In this sense they are similar to Medicare Advantage plans, except patients don’t enroll in an ACO the way they would an MA plan.

More Read

Two Sisters Captured For Medicare Fraud
Is Managed Care the Answer to Reduce Medicaid Drug Costs?
Reference Pricing and the Role of the Government
Medicare Data Access Provides Payment Transparency
Is Fee-For-Service Really Dead?

Bundled Payments

The idea behind Bundled Payments is that instead of focusing on population health, cost savings can be achieved by focusing on the reduction of hospital services. One way they are lobbying for this is through changing laws surrounding cost sharing between physicians -and, unlike ACOs, factors specialists into the equation alongside primary care providers. In this case, the cost savings is shared amongst physicians and the hospital, but not necessarily with Medicare. The “bundled payment” piece comes in because CMS will give a set amount to the organization, which is then divvied up amongst all the providers as payment – they do not receive additional payments from CMS.

Some key differences between the two are outlined in the table below.

Bundled PaymentsACOs
Specific patientsEvery patient
Budget determined by hospitalBudget determined by CMS
Specific conditionsAll conditions
Includes specialistsFocused on PCPs
Organization keeps all savingsSavings shared with Medicare
Payment from contracted org.Payments from Medicare
Less money involved (pilot project)More money involved

Bundled payments allow physicians to have monetary rewards directly placed into their hands when they achieve a major cost savings initiative, such as reducing costs of tools or technology. Of course, that being said, there’s a lot less being risked in bundled payments, so, therefore, there’s less to lose than in ACOs. ACOs involve more gain and, on the flip side, more risk – and the overall success is not going to be truly known until several years have passed and CMS can look at the data longitudinally. Some organizations can take the risk of ACOs, while others that are thinking along more conservative lines may benefit from taking the Bundled Payment approach. 

The patients being dealt with in each case are vastly different too. ACOs are trying to capture an entire population and manage their health on a much broader scale than Bundled Payments, which have a hospital-centered approach. While in the long run, improving population health is certainly likely for sustainable cost savings, those who need short term fixes may find that focusing first on hospital based projects will help them “ease in” to accountable care later on down the road.

One should consider, however, that the benefit of ACO’s focus on population health is that special attention is paid to patients with chronic conditions – patients that make up at least half of all health care costs; numbers that will only increase in the next decade as our population continues to age. In properly addressing the health needs of this patient demographic, incredible savings could be achieved. But, it’s not a quick and easy fix.

Many criticize ACOs for being too similar to the Managed Care flops of the 1990s. It’s not that the design needs to change, it’s that the attitudes must. ACOs are not focused on the financial desires of the hospital, and Bundled Payments are. Physicians who are in primary care don’t typically have especially close-knit relationships with hospitals to begin with, and thus, they are more dubious than specialists when it comes to taking the plunge into an ACO. Not only are they worried about the financial risk, but the risk to their patients – with whom they have likely built up a trusted rapport. While Bundld Payments will appeal to specialists who are already working closely with the hospital, for precisely the same reason PCPs may be hesitant about ACOs, they may feel like the odd man out in Bundled Payment plans.

Where everyone is concerned, ACOs are the larger risk but also have the largest and longest lasting payoff if they are successful. Bundled Payments may be a great way for more conservative organizations to stretch their legs and “test the waters of healthcare reform” without putting too much on the line. Bundled Payments also have the potential to strengthen and nurture relationships between physicians, hospitals and patients that could prep them for the leap into an ACO in the future.

TAGGED:ACOsbundled payments
Share This Article
Facebook Copy Link Print
Share
By Abby Norman
My name is Abby Norman and I am a healthcare blogger. With over 10 years of experience in the medical field, I have developed a passion for helping others understand the complexities of healthcare.

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

engineer fitting prosthetic arm
How Social Security Disability Shapes Access to Care and Everyday Health
Health care
August 20, 2025
a woman explaining the document
How a DUI Lawyer Can Help When Your Future Health Feels Uncertain
Public Health
August 20, 2025
physiotherapist at work
How One Fall Can Lead to a Long Road of Medical Complications
Health care
August 20, 2025
Common Healthcare Accreditation Programs
7 Most Common Healthcare Accreditation Programs: Which Should You Use?
Health News
August 20, 2025

You Might also Like

Top 3 Healthcare Trends of 2016

May 23, 2016
share online content
Business

Secrets of Engaging, Contagious and Shareable Content

March 13, 2015

Healthcare’s Most Disruptive: Next-Gen Genomics, Memory Implants

June 19, 2013

Digitized Pathology Improves Study Results and Cuts Costs

May 14, 2016
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?