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A model of capitation.

T M Selden1

  • 1Syracuse University, NY 13244.

Journal of Health Economics
|December 10, 1989
PubMed
Summary
This summary is machine-generated.

This study models capitation contracts, finding the optimal medical plan balances full insurance with a mixed provider payment system. This approach combines capitation and cost reimbursement for better healthcare delivery.

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Area of Science:

  • Health economics
  • Healthcare management
  • Insurance and risk management

Background:

  • Capitation contracts are prevalent in healthcare, influencing provider behavior and patient choice.
  • Understanding optimal contract design is crucial for efficient healthcare resource allocation.
  • Previous models often assumed exogenous patient admissions, limiting applicability.

Purpose of the Study:

  • To develop a theoretical model of capitation contracts.
  • To determine the optimal medical plan considering consumer choice and provider payment systems.
  • To analyze the implications of endogenous admissions on contract optimality.

Main Methods:

  • Theoretical modeling of consumer ex ante choice of medical plan.
  • Derivation of optimal provider payment systems under flexible assumptions.

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  • Comparison with existing payment models like prospective payment systems.

    • Main Results:

    • The optimal medical plan integrates full insurance with a hybrid provider payment structure.
    • This structure combines capitation with partial reimbursement of provider costs.
    • The derived optimal plan may outperform previous mixed payment systems, especially with endogenous admissions.

    Conclusions:

    • A mixed payment system, blending capitation and cost reimbursement, is theoretically optimal for capitation contracts.
    • Endogenous admissions significantly influence the preferred medical plan design.
    • This model offers insights for designing more efficient and patient-centered healthcare contracts.