Risky business: the risk-based, risk-sharing capitated HMO

Area of Science:

• Healthcare Management
• Health Economics
• Provider Financial Risk

Background:

• Traditional Health Maintenance Organization (HMO) models place financial risk on the payer.
• A new model, the risk-based, risk-sharing capitated HMO, is emerging.
• This model redefines financial responsibilities among hospitals, physicians, and HMOs.

Purpose of the Study:

• To define the risk-based, risk-sharing capitated HMO.
• To explain the evolving relationship between hospitals, physicians, and this new HMO structure.
• To lay the groundwork for accounting and management strategies in subsequent research.

Main Methods:

• Conceptual analysis of evolving healthcare payment models.
• Definition and explanation of the risk-based, risk-sharing capitated HMO structure.
• Examination of the financial role shifts for providers and payers.

Main Results:

• The hospital and physicians assume financial responsibility for services under the capitated HMO plan.
• The HMO transitions to a third-party payer and acts as a broker.
• This arrangement fundamentally alters the provider-payer dynamic.

Conclusions:

• The risk-based, risk-sharing capitated HMO represents a significant shift in financial accountability within healthcare.
• Understanding this model is crucial for providers managing financial exposure.
• This definition is foundational for future research on managing these programs.