The effects of capitation payment on the organizational structure of medical group practices

This study explores the effects of capitation payment on the structural elements used by medical group practices to control physician-directed use of resources and the quality of patient care. Forty-five medical groups located in the highly competitive Minneapolis/St. Paul metropolitan area were studied. The range of capitation payment in these medical group practices is from 2% to 87%. Although the practices vary considerably in the extent to which they have developed these control mechanisms, it does not appear that capitation payment is a major factor influencing that pattern. It appears that many of these medical group practices either use less formal mechanisms than those included in this study to control resource use and the quality of care or use none at all. In either event, the data suggest that the effects of capitation payment on the structure of medical practices may be overestimated.