The most common approach to risk sharing is capitation. Capitation is a mechanism that transfers agreed-upon financial responsibilities from the MCP to a provider group, thus making financial outcomes more predictable. However, when risk is transferred from one party, another party assumes the risk. Simply stated, someone's advantage becomes someone else's disadvantage. The following is a brief outline of some of the advantages and disadvantages of capitation arrangements to specific parties.
Opportunity is provided to involve providers in risk assumption process.
Providers unable to control consumption may become dissatisfied. Negotiations and confrontations with dissatisfied providers may be difficult, with the potential of even losing contracts. Quality appropriateness and effectiveness of care must continue to be monitored by the capitator. Opportunities are created to preserve income through better management of services delivered. Revenue flow is stabilized.