In: Economics
How are incentives to providers different when they are paid on a capitated basis rather than a fee-for-service basis?
Discuss the arguments for using capitation over fee-for-service.
Which would you prefer?
Capitation as the payment method used in healthcare sector. This
is based on the quality and the improving patient outcomes. There
are mainly two types of capitation; global and partial. Among his
partial is more flexible than other. This is better for primary
care services and specialists. The incentives for these services
were based on the service rendered by the patient. The providers
keep the money above they spend on patient services. This includes
cost control, preventive care, quality care and the outcome of
patients. The providers are able to supplement some services among
the patients for certain services. All these are different from the
fee for service.
The capitation is a fixed per capita payment which made
periodically. Here the risk was hand over by the doctors and
healthcare providers. But in fee for service system, the risk
managers were the insurance companies. Capitation gives more
preference to the wellness and prevention. This makes the people
healthy. The capitation provides financial certainty for both
doctors and hospitals and the insurance companies. The fee for
service (FFS) focuses only the insurance companies, their risk
management and financial features. The capitation is more
beneficial than the FFS. This will ensure the wellness and
prevention of illness of the patients.