July 30th, 2013
Posted by Stephanie Kreml, M.D.
With apologies to William Shakespeare, in this post I ask: will capitation smell sweeter, if called by another name? A recent article by venture capitalist Abbas Gupta lays out the case for a new variant of capitation (i.e., fixed healthcare fees), called the Affordable Care Organization (ACO). This time, consumer-facing technologies that empower consumers and generate more precise profiles of consumer behavior may bring promise to the previously ill-fated payment system.
In the 1990s, capitation was reintroduced as a way to manage healthcare costs. Doctors able to keep costs under a certain level could keep the amount they “saved,” but they were not reimbursed for costs in excess of that level. Capitation failed partly because of the perception that doctors sacrificed quality of care (measured in procedures and tests), and partly because doctors eventually were better able to negotiate contracts by consolidating practices and leveraging their numbers for better reimbursement rates.
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