Improving Surgical Outcomes While Lowering Costs: The Case for a Bundled Payment Model for Surgical Episodes of Care

This paper argues that improving surgical outcomes while controlling costs requires viewing surgery as one step within a full episode of care, from pre-operative optimization through post-operative recovery. We contend that Canada's current fee-for-service and block-funding models fragment this continuum, reward volume over value and misalign incentives between ministries, hospitals and surgeons. Drawing on agency theory and international bundled-payment experience, we propose an episode-of-care bundled payment made to integrated surgical programs that assume both clinical and financial accountability. We outline design options, success factors and governance requirements, and identify key policy, regulatory and cultural barriers that must be addressed to implement this model in Canada.