Bundled payments can be a powerful tool to combat rising costs and poor value in healthcare. They are seen as a middle ground between traditional fee for service and capitation—lump sums to providers for all services for a defined patient population. Evidence suggests bundled payments can reduce unnecessary utilization and lower costs. Used alone, evidence of quality improvement is scarce, but when bundled payments are combined with quality scorecards the combined approach encourages quality improvement. Hence, bundled payments are an important tool that should be used alongside other payment reform measures. Moving forward, there are several considerations to take into account to create effective bundled payment systems, including: selection of outcomes-based quality metrics; use of global budgeting to ensure a net savings to the system; matching the bundle to providers best positioned to coordinate care; and creating effective cross-organizational partnerships.