Subcapitation: sharing risks and rewards with community physicians

The continuing growth of managed care and payers' growing preference for working with integrated systems require medical groups of all sizes to examine their options. A Cincinnati multispecialty group developed a network--in partnership with community physicians--that may serve as a model for other evolving managed care markets. To provide geographic coverage and cost effectiveness, the group created a network of more than 350 primary care and specialty physicians to serve as the delivery system for three capitated payers. The system is based on subcapitation and aligned incentives. These enable the multispecialty group to deliver a wide array of specialty services cost effectively and allows subspecialty and primary care groups to benefit from this tie to a multispecialty provider. The groups approached to participate in the subcapitated network were selected carefully and chosen according to objective criteria. The system provides incentives for physicians to increase their efficiency and to work cooperatively to improve patient care processes. The subcapitated network physicians are represented on many of the system's quality improvement committees and have generally found the arrangement to be favorable.