Capitated Medicaid and St. Joseph's Hospital

This case study presents the initial reactions of St. Joseph's Hospital and Medical Center, a large nonprofit hospital in Phoenix, Arizona, to the creation of a competitively bid, prepaid, managed care Medicaid program in 1982. It also presents the events in the first year of the Medicaid experiment and the subsequent reactions of the hospital. It illustrates the diverse set of issues that a hospital faces when it moves toward greater vertical integration in health care.