CAPITATION: Not As Widespread As Expected
California hospitals are not receiving as much of their revenue from capitation as experts expected, according to a new VHA survey. Conducted by the nonprofit hospital alliance's El Segundo-based division, the survey of 48 hospitals found that "on average only 19% of their revenues" came from capitated payments. Modern Healthcare reports that "[o]verall, the hospitals surveyed had nearly $2 billion in annual capitated payments." On average, hospitals have seven capitated contracts that cover about 35,000 enrollees, generating revenues of $36 million annually. However, nearly 75% of the surveyed hospitals said they had lost money on capitated contracts "in at least one of the past two years." And almost all the hospitals (92%) said dealing with capitation "has been more difficult than expected," while 25% of the hospitals "dismissed it as a disaster." On the other hand, nine out of 10 hospitals said they expected their capitated payments to increase next year, and many survey participants "said capitation increased their market share, improved the quality of care in their facilities and improved overall cost-effectiveness" (Rauber, 12/7 issue).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.