In healthcare finance, what does the term "Capitation" directly refer to?

Capitation refers specifically to a payment model in which healthcare providers receive a fixed monthly payment for each enrolled patient, regardless of the quantity or type of services that the patient may require during that month. This method incentivizes providers to focus on preventative care and efficient management of patient needs, as they receive a consistent revenue stream that is not dependent on the number of services rendered.

In this model, the emphasis is on maintaining the health of the patient population rather than maximizing the number of visits or procedures, which can lead to improved health outcomes and reduced costs for both patients and healthcare systems. By aligning financial incentives with health outcomes, capitation effectively promotes a more patient-centered approach to care.