Conducting a financial analysis of capitation arrangements.

There is no doubt that capitation contracts are risky business. There are many issues to consider carefully that have implications in every area of the healthcare industry. However, there are many additional issues that should be considered such as hospital facility capacity, incremental cost of services, physician relations, and emergency services. The contract structure and other legal issues should also be thoroughly discussed. While there will always be an element of risk in capitation arrangements, the only hope of that risk being at a reasonable and manageable level is to be prepared both financially and operationally if and when market conditions force you to consider an at-risk healthcare delivery system.