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Administrative competencies for physician organizations with capitation
1College of Professional Studies, University of San Francisco, CA, USA. Penner@usfca.edu
Insights
Physician organizations managing capitation contracts need specific administrative skills. Key competencies include network development, financial forecasting, and quality management for successful risk-sharing with Health Maintenance Organizations (HMOs).
Area of Science:
- Healthcare Administration
- Health Economics
- Medical Group Management
Background:
- Health Maintenance Organizations (HMOs) commonly delegate financial risk to physician organizations via capitation contracts.
- These contracts require physician organizations to manage professional and ancillary services, sharing risk for inpatient care.
- Delegation of administrative functions necessitates physician organizations to possess robust management capabilities.
Purpose of the Study:
- To identify key administrative competencies required by physician organizations to effectively manage capitation contracts.
- To assess the knowledge, skills, and abilities essential for administrators in risk-bearing physician organizations.
Main Methods:
- Qualitative study involving interviews with administrators from four HMOs and 22 physician organizations.
- Competencies were identified as critical administrative work activities.
Main Results:
- Key administrative competencies include provider network development, financial forecasting, utilization and quality management, contract negotiation, and establishing administrative systems (claims, reporting, authorizations).
- These competencies are crucial for managing financial risk effectively under capitation.
Conclusions:
- Physician organizations must develop specific administrative expertise to succeed in capitation arrangements.
- These identified competencies are essential for organizations preparing for both HMO and Medicare capitation models.
Abstract:
In California, it is common for HMOs to capitate physician organizations (e.g., independent practice organizations and multispecialty medical groups) for all professional and outpatient ancillary services (and to share risk for inpatient care) under professional risk capitation contracts. This arrangement exports most of the financial risk from the HMO to the physician organization. When HMOs and physician organizations contract under these arrangements, HMOs delegate many of their administrative functions to physician organizations--giving the physician organization authority to make the decisions needed to manage capitated risk. As a result, administrators of physician organizations must be competent in such areas as provider network development, financial forecasting, utilization and quality management, contract negotiation, and establishing systems for claims, reporting, authorizations, and the like. In this study four HMO and 22 physician organization administrators were interviewed concerning key administrative competencies for managing capitation contracts. The competencies were assessed as key administrative work activities that required specific knowledge, skill, or ability to perform. Identifying these competencies is important for physician organizations preparing for capitated risk and will be essential for organizations preparing for HMO or Medicare capitation.
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