Sharp is negotiating with Medicare and MediCal to find a way to capitate the government part of the business. To the degree to which we are successful, it means money in the pocket. For instance, in order to join Sharp's HMO, you have to go through an assessment. If you undertake the lifestyle changes that the counselor recommends, Sharp will give you a discount on your premium. Beyond that, Sharp educates over 20,000 San Diegans a year in special health classes.
Capitation also becomes the catalyst to the cooperation between the hospitals and the doctors.
But the more than 2000 doctors that work with Sharp come under a welter of independent and group contracts. At the same time, Sharp management has centralized all the business functions, the warehousing and materiel functions, and contracting. And Sharp clinicians have embarked on the long task of setting up system-wide clinical protocols. Sharp's achievement is integrating doctors, hospitals, clinics, and insurance products into one system that is increasingly driven by the premium, not by the procedure, that has the capacity to treat almost every patient at an appropriate level of care without leaving the system. Single ownership provides Sharp an efficient method of making decisions, allocating capital, and forming strategic plans, which Rochester lacks.