The Importance Of Capitation Payments In Healthcare

In order to provide optimal service, managed care organizations utilize Capitation Payments to control healthcare costs by making the physicians responsible for services provided to patients. Meanwhile, a report is generated to measure level rates of resource utilization which are made available to the public. From this information, the quality of care can be applied to financial rewards and bonuses.

To demonstrate, a physician is given a fixed amount of money per patient and per unit of time. This money is paid in advance and determined by the range of services provided, number of patients, and the time period in which the services are provided.

In similar fashion, there is “risk pool” which does not pay the physician in advance. Instead, if a physician’s performance is a financial success, the physician is compensated – at the end of the fiscal year. However, if the physician does poorly in this risk pool, the money is utilized to defray expenses that are in deficit.
In summary, I did not know physicians were provided with incentives to perform well and in a timely manner.
I believe the way in which Capitation Payments are set, for the most part, is beneficial for patients, which is the most important aspect. I would hope the time aspect of the criteria used doesn’t diminish the healthcare provided to patients. Another aspect of capitation, is that physicians also benefit financially by referring patients for diagnostic tests and subspecialty care. I believe this benefits patients significantly from these type of referrals because the care is extended or elevated if
necessary.