Impact of Bundled Payments: Opportunities and Threats to Nurses

Nov 3, 2011, 2:00 PM, Posted by

By Ellen T. Kurtzman, MPH, RN, FAAN, Assistant Research Professor, School of Nursing, The George Washington University

While any restructuring of the payment system will create incentives that alter providers’ behaviors, bundled payments—single, all-inclusive payments for multiple services across an episode of care—are likely to have profound influences on the health care workforce. Here I contend that the impact of these new payment methodologies will present unique opportunities and threats to nurses—the single largest segment of this workforce. Though the profession’s traditional roles and historical strengths are in care management and coordination, patient education and self-care management, public health and wellness, patient safety and surveillance, and transitional care (IOM, 2011), these contributions have not been typically recognized, measured, reported or rewarded. A bundled payment system could elevate the importance of these roles.

Under bundled payments, interventions that produce cost savings and reduce waste— practices for which nurses are expert—become profitable. Economic theory suggests this will result in providers placing new value and respect on the contributions nurses make. Recognizing that each bundled payment reflects an inclusive rate, hospital executives and practice administrators may choose to substitute lower cost practitioners (Advanced Practice Registered Nurses or APRNs and Registered Nurses or RNs) for those who command a higher wage (MDs) whenever possible. Where these substitutes can achieve equivalent outcomes (“Quality of Care,” 2011), combining payments across settings and providers could inspire creative and more efficient use of the nation’s health care workforce. Certainly, the “patchwork-like” state scope of practice laws (Center to Champion Nurses in America, 2010) which have kept APRNs from practicing to the full extent of their education and training may hinder such workforce efficiencies and constrain innovation that would be otherwise stimulated under bundled care.

Notwithstanding the absence of such regulatory barriers, an increased dependency on nurses is definitely not without its risks. Despite recent, relative increases in nurse employment, workforce projections are not nearly as optimistic over the next decade (Buerhaus, Auerbach, & Staiger, 2008). The introduction of bundled payments and any accompanying reliance on the nursing workforce might contribute to more sizeable shortages in the future. Given the impact past shortages have had on nurses’ wages and the growing evidence-base that links better nurse staffing with higher quality and lower rates of complications and adverse events (Summarized in Kurtzman, 2010), such shortages could erode the savings gained.

Much remains unknown about the implementation of bundled payments. In particular, the question of how to allocate resources across the episode of care looms. Under most circumstances, nursing services are considered fixed costs making nurses’ relative economic worth invisible in the delivery of care (Welton, Fischer, DeGrace, & Zone-Smith, 2006). Nurses are therefore at a disadvantage when arguing for their contributions to be appropriately compensated. Additionally, it remains unknown whether payment bundling will dramatically reduce Medicare revenue for hospitals—leading hospitals to reduce their nursing care budgets or decrease nurse staffing.

While bundled payments are likely to motivate cost-efficient practice arrangements that highlight the contributions of RNs and APRNs, bundling alone will not trigger such workforce innovation. Without anticipating, preventing, and mitigating threats in the form of workforce shortages, decreased nurse staffing or reorganizations, threats to nursing care budgets and ongoing restrictions—or more restrictive—state scope of practice laws, the full promise of higher quality, lower cost, and more efficient health care will be unachievable.


Buerhaus PI, Auerbach DI, Staiger DO. The recent surge in nurse employment: causes and implications. Health Aff (Millwood). 2008;28(4):w657-w668

Center to Champion Nurses. (2010). Physician-Nurse Practitioner Restrictive Collaboration Requirements by State (map). Retrieved from

Institute of Medicine. The future of nursing: leading change, advancing health. Washington (DC): National Academies Press; 2011.

Kurtzman ET. The contribution of nursing to high-value inpatient care. Policy Polit Nurs Pract. 2010;11(1):36–61.

Quality of Care Provided by Advanced Practice Registered Nurses (APRNs). (2010). Retrieved from

Welton JM, Fischer MH, DeGrace S, Zone-Smith L. Hospital nursing costs, billing, and reimbursement. Nurs Econ. 2006;24(5):239-45, 262, 227.

This commentary originally appeared on the RWJF Human Capital Blog. The views and opinions expressed here are those of the authors.