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Capitation: implications for provider cost structures.

G Lohrmann1

  • 1Mount Vernon Hospital, Alexandria, VA, USA.

Healthcare Financial Management : Journal of the Healthcare Financial Management Association
|June 7, 1995
PubMed
Summary
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Capitation in healthcare reverses financial incentives from fee-for-service models. Understanding cost structures within managed care is crucial for organizational success as markets shift to capitation.

Area of Science:

  • Healthcare Management
  • Health Economics

Background:

  • Fee-for-service models created specific financial incentives in healthcare.
  • The shift towards managed care, particularly capitation, fundamentally alters these incentives.

Purpose of the Study:

  • To highlight the inverted financial incentives caused by capitation.
  • To emphasize the necessity of understanding cost structures in managed care for organizational prosperity.

Main Methods:

  • Analysis of financial incentive structures in healthcare.
  • Review of cost-structure implications in managed care environments.

Main Results:

  • Capitation inverts traditional fee-for-service financial incentives.
  • Understanding cost structures is essential for navigating the evolving healthcare market.

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Conclusions:

  • Healthcare organizations must adapt to the financial realities of capitation.
  • Strategic understanding of cost structures is vital for thriving in capitated markets.