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4 Reasons to Start Preparing Now for a Future of Capitated Payments

Between the mid-1970s and mid-1980s Medicare introduced a program) that paid health maintenance organizations (HMO) a fixed monthly amount for each enrolled beneficiary. The program never took off because patients and providers perceived HMOs to be rationing care (and withholding necessary care) to remain profitable under a capitated system.

In an article published in the Journal of General Internal Medicine in 2001, author Thomas S. Bodenheimer, MD noted that only 30% of medical practices were making a profit from capitation, and both HMOs and physicians were rebelling against the program – with some physicians even refusing to accept capitated contracts.

It might have been tempting around the turn of the century to declare that experiments in capitated payment arrangements were done, and the payment model was not viable in the U.S. healthcare system. But capitation has seen a resurgence, and this time it’s something that every healthcare delivery organization (HDO) should be taking seriously. There are four key reasons your organization should be preparing for a future that includes capitation payments.

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