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The pros and cons of working with capitation

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Health plans may pay a physician a per member, per month (PMPM) capitation payment for each person he or she is responsible for. Capitation is a payment methodology used in the health care industry.

The chief financial officer (CFO) has asked you to create a brief summary of information regarding capitation. Gather information for the CFO's upcoming meeting to explain capitation and its relation to your hospital.


* An explanation of capitation
* New trends in capitation payments over the last few years (at least 4)
* Whether capitation is effective or efficient (and why)
* The pros and con of working with capitation

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Solution Summary

The pros and cons of working with capitation are clearly denoted. References are also infused to validate the findings.

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Healthcare Capitation

What is Capitation in healthcare?

In health care the policy of capitation takes place as a method of provider compensation when the providers is paid a set fee per month for the patients that they are responsible for, as payment for all medical care rendered by the provider. Capitation was developed as an aspect of the managed care movement.

New trends in capitation payments over the last few years (at least 4)

Capitation became less popular as health care became more patient centered in the US. With capitation there exist financial incentives for providers to deny care, or cut corners to reduce their costs and ...

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