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Capitation is at the Door; Will You Be The One Who Knocks?

Philip Betbeze, for HealthLeaders Media, November 22, 2013

There's a pretty fair divide among organizations that operate comfortably under a capitation reimbursement arrangement—and those that don't. Which one are you?

Opportunity knocks, or so the saying goes. Perhaps, like me over the years, you've also noticed that the focus is always on whether you will be the one who answers that knock. But could greater opportunity lurk within the one who is doing the knocking?

If that sounds Confucian, (or makes you think of Breaking Bad) I apologize, but I think it fits the state healthcare today. For instance, if you're talking about being ready for capitation—and it's coming, regardless of the current payer environment in your local area or region—perhaps your hospital or health system could be in the position of doing the knocking. That is, being ready for it before your payer demands it. That puts you in the position of being the one who knocks.

Commercial insurers are certainly getting fond of various structures that feature capitation. Under such strategies, the health plan pays the administrator, whether it's a physician practice, a hospital or a health system, to manage all the care needs for a particular patient or group of patients, for one price per member. If what is spent on patients over the course of the year is less than the capitated payment, the provider of healthcare services keeps the difference.

Capitation has one important feature above all others—cost certainty for the purchaser.

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