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Capitation still dominates California landscape Despite the overall importance of capitation in California's healthcare marketplace, health plans continue to migrate from the HMO model, putting financial pressure on physician organizations that retooled their medical management and administrative systems to compete on cost and efficiency. That's one conclusion of the California Health Care Market Report 2006, written by Minneapolis-based healthcare policy and finance analyst Allan Baumgarten and published in March by the California HealthCare Foundation in Oakland.