Managing Healthcare Costs: Understanding Capitation
Capitation is a payment arrangement where insurance companies or healthcare organizations pay medical providers a fixed amount per enrolled patient, per month, regardless of whether that patient seeks care. This set fee covers all agreed-upon medical services, from routine checkups to urgent care visits.

Behind the Payment Model
Instead of billing for each service, providers receive predictable monthly payments based on their patient pool. They maintain responsibility for all patient care within the contract’s scope, encouraging them to balance quality care with cost-effective decisions. For example, a physician might receive $150 per month for each patient in their practice, whether they see that patient multiple times or not at all.

On the Front Lines: Benefits and Trade-offs

• The model incentivizes preventive care – providers profit more when patients stay healthy
• Large healthcare networks like HealthPartners use capitation to control costs while maintaining care standards
• Smaller clinics often partner with larger networks to share financial risk
• Providers may hesitate to accept high-risk patients who require expensive treatments
• Some practices blend capitation with fee-for-service to balance predictable income with flexibility