Joint-venture, capitation model can strengthen market share

As health maintenance organizations (HMOs) and preferred provider organizations (PPOs) control an increasingly larger percentage of the healthcare market, many hospitals are entering capitation contracts to capture and preserve market share. A joint-venture and capitation model may provide an additional mechanism for large referral centers and community hospitals to jointly maintain or increase market share through improved service delivery. While the model includes many benefits, hospitals should thoroughly consider ramifications. Only through substantial institutional commitment, careful planning, and ongoing management will the model prove successful.