The Providence Plan: prepaid health care for a voluntarily enrolled population

In July 1979, Oregon Physicians' Service and Providence Medical Center (PMC) entered into a contract that established the Providence Plan, a prepaid health care delivery system. The most innovative feature of the plan is the method of paying for hospital service: PMC is paid a prospectively fixed amount per enrolled person per month to cover the total costs of hospital inpatient and outpatient care. From this capitation-based fund, PMC pays other hospitals for services it cannot provide directly. The Providence Plan marks the first cooperative effort in Portland between a single hospital, its active medical staff, and an insuring organization for the organization and operation of a fully functioning health care delivery system in competition with existing formal and informal delivery systems.