Pay-for-performance compensation: moving beyond capitation - capitated health care payment - Cover Story

Healthcare Financial Management, July, 1998 by Lawrence B. Garcia, Scott Safriet, David C. Russell

CONCLUSION

Capitation can be a powerful tool for health plans that need to respond to increasing marketplace demands for lower premiums. Experience has shown, however, that capitation payments that emphasize cost reduction alone do not adequately address the complex and continually changing expectations of consumers and purchasers. Incentives should be balanced to encourage improved performance. The purposeful implementation of a pay-for-performance program with a better balance of economic incentives and operational outcomes can generate significant benefits for health plans, physicians, and hospitals.

a. 1997 Healthcare Advisory Board physician compensation survey.

ABOUT THE AUTHORS

Lawrence B. Garcia, JD, is principal, BDC Advisors, LLC, San Francisco, California.

Scott Safriet, MBA, is manager, BDC Advisors, LLC, San Francisco, California.

David C. Russell is senior associate, BDC Advisors, LLC, San Francisco, California.