For years, many orthopedic surgeons viewed bundled payments as a concession. Accept a fixed price. Take on more risk. Hope that the math works.
Brian Curtin, MD, now believes many surgeons understood the model backward.
“I make more now on a joint in a bundle program than I ever did on fee for service,” Dr. Curtin, an orthopedic surgeon at OrthoCarolina Hip and Knee Center in Charlotte, N.C., said during a panel at Becker’s 23rd Annual Spine, Orthopedic and Pain Management-Driven ASC Conference in Chicago.
For surgeons who still see bundled payments as a race to the bottom, the message from the panel was blunt: The model is no longer just a reimbursement experiment. For groups that understand their costs, control their sites of care and build the right infrastructure, it is becoming a business strategy.
And the window to learn that strategy voluntarily may be closing.
The math changed when hospitals left the middle
Early bundled-payment programs left many surgeons skeptical. Under federal models such as the Bundled Payments for Care Improvement initiative, hospitals often controlled the episode and captured much of the savings. That created a familiar frustration: Surgeons were being asked to change care delivery while someone else controlled the economics. Direct-to-employer contracting changed the equation.
“What changed the math was cutting out the intermediary,” Dr. Curtin said. In direct contracts, the margin flows closer to the physicians and care teams responsible for managing the episode.
That shift helped turn OrthoCarolina’s bundled-payment work from a pilot into a major program. The group started about 14 years ago with roughly 80 bundled patients in its first year. For 2026, Dr. Curtin said it is on track for more than 2,000.
Over the same period, overhead to run the program fell from roughly 20% to 30% of revenue to less than 10%, while revenue grew roughly tenfold. The lesson was not that bundles automatically work. It was that they work when practices know exactly what they are selling.
Know the cost before naming the price
The most dangerous mistake in bundled payments is also the simplest: pricing the episode before understanding the cost.
“You can’t go into this blind and say, we’re just going to do a bundle for $20,000 and then six months later realize that your surgery center is way over in terms of pricing and you’re losing $2,000 on every bundle,” Dr. Curtin said.
Every expense matters: anesthesia, implants, surgery center costs, nurse navigators, postoperative care, administrative infrastructure. “You’ve got to be very transparent and know exactly where your costs are,” he said.
Praveen Reddy, MD, a neurosurgeon who owns the Center for Minimally Invasive Neurosurgery in Houston, approaches the problem through time-driven, activity-based costing. He modeled fixed costs, implant costs and operating time across about 1,000 common procedures, then compared them with what large acute-care hospitals are paid in his market.
“I’m kind of a nerd, so I put this all in an Excel spreadsheet,” Dr. Reddy said. The point was not the spreadsheet. It was the discipline behind it. Bundles reward groups that know their economics before the payer, employer or hospital tells them what their economics should be.
Data gets you in the room
For OrthoCarolina, data became the entry point. The group’s first major direct-to-employer contract was with Duke Energy. It later secured agreements with Blue Cross Blue Shield and the North Carolina State Health Plan, which Dr. Curtin said covers about 150,000 members.
“That’s how we initially got in the door with Duke Energy: We had the data to show that we could produce these results at this price,” Dr. Curtin said. “If you don’t have the data, these employers are not going to be even considering you as an option.”
That may be the clearest dividing line in the next era of musculoskeletal contracting. Large employers and payers are not looking for promises. They are looking for proof. Groups that can show cost, outcomes, complications, readmissions, patient experience and episode performance may gain negotiating leverage. Groups that cannot may find risk-based contracting happening to them rather than with them.
The hardest bundle may be internal alignment
Even when the math works, culture can get in the way. OrthoCarolina employs 110 surgeons, and Dr. Curtin said getting that many physicians aligned around bundled payments was not easy.
“Operating with 110 surgeons is like herding cats sometimes,” he said. The resistance was understandable. Sports medicine and foot-and-ankle surgeons initially questioned why the group should invest in a model that largely benefited hip, knee and spine surgeons.
OrthoCarolina solved the issue by changing the incentives. Program overhead came off the top of bundle revenue, so partners were not paying into the model. Then 30% of profits flowed back into the group’s general overhead, allowing surgeons outside the bundled specialties to benefit. The remaining 70% went to the surgeons driving the volume.
“Every one of the sports guys, foot and ankle, were all benefiting from every bundle that I did on a total joint patient,” Dr. Curtin said. The holdouts eventually became interested. That lesson resonated with Ben Schwartz, MD, a senior advisor at Los Angeles-based Commons Clinic and a total joint surgeon by training.
“You’re only as strong as your weakest link, and that can really tank any attempts to deliver value-based care,” Dr. Schwartz said. Commons Clinic was built around value-based care from the start, giving it an advantage many legacy groups do not have.
“The people that join know what they’re getting into,” he said.
Voluntary now, mandatory later
The urgency is growing. CMS is moving toward mandatory episodic models for hospitals, and the Transforming Episode Accountability Model, known as TEAM, will push many systems deeper into risk-based care.
“For now, it’s voluntary,” Dr. Schwartz said of physician groups. “The time to figure it out is not after you’re in a risk-bearing contract or you’re forced into one.”
He expects CMS to eventually extend bundled models more directly into ASCs. Dr. Curtin agreed that regulators are watching the migration of cases to surgery centers.
“They’re going to see that they can take advantage of this and get substantial cost savings from it,” he said. “It’s definitely something that’s in the pipeline.”
For independent practices and ASC-based groups, that creates both opportunity and pressure. The organizations that build the infrastructure now may shape the future contracts. The ones that wait may inherit terms designed by someone else.
Why spine is still harder
Joint replacement has become the cleanest proving ground for bundled payments because the procedures are relatively standardized and the outcomes are easier to track.
Spine is different. Aqib Zehri, MD, a neurosurgeon at The Oregon Clinic in Portland, Ore., said bundled payments remain far less developed in spine because the procedures and patient populations vary so widely.
“Bundled payments don’t really exist in spine surgery as of right now,” Dr. Zehri said.
The challenge is that spine surgery is not one category. A one-level decompression, a single-level fusion, a revision reconstruction and a complex deformity case are dramatically different episodes of care.
“The patients have various risk profiles,” Dr. Zehri said. Any spine bundle would need to account for procedure type, surgical complexity and patient factors such as age, body mass index and nicotine use. Without that nuance, bundled payments could create the wrong incentive: reward simple cases and penalize surgeons or hospitals that care for the sickest patients.
A bundle, Dr. Zehri said, could “de-incentivize” organizations from taking on larger, more complex cases. He would currently reserve bundled or ASC-based models for cleaner cases, such as one- or two-level decompressions or single-level anterior cervical discectomies and fusions.
Dr. Reddy agreed that spine resists standardization. The same condition can be treated through dramatically different approaches, with costs that vary widely depending on technique, time, implants and site of care.
“In orthopedics, you know how easy it is to define value,” Dr. Reddy said. “For us, value-based contracting is difficult.”
That does not mean spine will avoid risk-based contracting. It means the first models must be built carefully.
The patient has to win
The financial opportunity is real. So is the risk.
Several panelists warned that bundled payments only work if cost savings do not come at the expense of quality. Dr. Curtin said OrthoCarolina eventually pushed payers to share savings with patients. Under the group’s North Carolina State Health Plan bundles, he said patients now pay nothing out of pocket.
“It’s a great win-win for everybody,” he said.
Dr. Zehri also sees clinical upside when bundles are designed well. The model can force teams to optimize patients earlier, coordinate recovery and align incentives around the full episode rather than a single procedure.
“I do think it’s better for the patient as well,” he said.
That may be the ultimate test. Bundled payments are no longer an abstract policy debate. They are becoming a way for orthopedic groups to compete, contract and survive in a market moving away from fee for service. But the model only works if it rewards better care, not cheaper care alone. Dr. Reddy put the caution plainly. “Make sure that we’re not making this a race to the bottom,” he said.
For orthopedic surgeons, that may be the real lesson. The future of bundled payments will not be won by the groups willing to accept the lowest price. It will be won by the groups that understand their value well enough to name it.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
