What is the purpose of the capitation model in healthcare?

The capitation model in healthcare is designed to standardize payments regardless of the specific services rendered to patients. Under this model, healthcare providers receive a set amount of money per patient for a defined period, typically on a monthly basis, regardless of the number of visits or services the patient utilizes within that timeframe. This approach promotes a focus on preventive care and effective management of patient health, as providers are incentivized to keep patients healthy rather than focusing solely on a fee-for-service model where they may earn more by providing more treatments or services.

As a result, capitation aims to streamline healthcare costs and can create a more predictable revenue stream for providers, which can support budgeting and resource allocation in practice settings. By eliminating the variability in payments associated with different services, it encourages providers to improve the efficiency and quality of care they deliver.