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Exposing the true risks of capitation financed healthcare
Author(s) -
Cox Thomas
Publication year - 2011
Publication title -
journal of healthcare risk management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 16
eISSN - 2040-0861
pISSN - 1074-4797
DOI - 10.1002/jhrm.20066
Subject(s) - capitation , inefficiency , business , risk management , actuarial science , health care , payment , profitability index , finance , risk analysis (engineering) , economics , microeconomics , economic growth
Many healthcare finance mechanisms involve transferring uncertain costs to healthcare providers in lieu of fixed payments or global capitation. Global capitation violates basic principles of risk management through insurance. Risk‐theoretic analysis of capitation shows that risk disaggregation forces efficient providers to become inefficient insurers. Risk‐assuming providers face lower profitability and increased exposure to operating losses, and must reduce patient benefits. Global capitation causes inefficiency, increases healthcare costs, and threatens patient‐provider relationships.