Coming to grips with risk-sharing: capitation in the long-term care industry

"Risk" means the transference of the financial payment for specified services from one entity to another. Risk transfers can occur from payers to providers or between providers. Risk can be transferred through a number of different payment structures. The concept of sharing risk originated several decades ago as employers began to tighten their health care budgets. Meticulous attention to details is a necessity if risk contracting is to be a profitable venture for long-term care providers. Long-term care providers are in different stages of development with risk-sharing contracting. With some attention to detail, the formation of the right team, and an understanding of costs, ancillary provider risk sharing can be profitable for all partners involved. This article details issues that should be considered before entering into a risk-sharing arrangement.