Hospital Capitation Agreements

Hospital Capitation Agreements

Providers tend to be small compared to insurers and are therefore closer to some consumers whose annual cost varies much more as a percentage of their annual cash flow than those of large insurers. For example, for 25,000 patients, a capita eye care program is more convenient than a capita ophthalmic program for 10,000 patients. The smaller the list of patients, the greater the variation in annual costs and the more likely it is that the costs will exceed the provider`s resources. In very small capitation portfolios, a small number of expensive patients can have a dramatic impact on a provider`s total cost and increase the provider`s risk of insolvency. Suppliers do not have the means to afford reinsurance, which would have further exhausted their insufficient capital payments, given that the loss costs, expenses, profits and risk charges expected of the reinsurer must be paid by the suppliers. .


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