What is capitation in healthcare financing?

Capitation in healthcare financing is a payment model where providers receive a set amount of money per patient for a specific period of time, regardless of the number of services provided. This model emphasizes preventive care and the efficient management of healthcare resources, as providers are incentivized to keep patients healthy rather than simply providing more services.

In essence, capitation shifts the financial risk to providers, as they must manage the health of their patients within the fixed payment received. This can lead to improved care coordination and potentially lower overall costs for the healthcare system, as it discourages over-utilization of services. Therefore, understanding capitation as a payment model is crucial for grasping how healthcare providers are reimbursed and their responsibilities in managing patient care effectively.