Capitation

Healthcare people do, managed care people do, insurance people hear about it all the time, but body shops, not so much.

Capitation changes the basic financial question around an industry.

It sounds more complicated than really what it is.

In simple terms, instead of paying a provider, separately for every individual service, you agree on a fixed amount to manage the expected overall cost of a whole group of services or people over a set period of time.

We'll argue over labor rates, parts, what scans it needs, what calibrations it needs.

And then eventually somebody gets to decide what's going to get paid on that claim.

Capitation looks at the problem completely differently.

Instead of obsessing over the exact cost of every individual event, you model the expected cost across a population of events or claims.

David? Anna described me as experienced and I translated that to old.

There are 30-odd PHOs in New Zealand and every year there is a negotiation with Te Fata Ora for new money for changing what's called capitation.

Capitation is that bucket of money that goes to a general practice.

And this year was a once in a lifetime opportunity for about 20 odd years.

Practices have said the funding we get is wrong, it's outdated, and it doesn't take into consideration all of the issues that we face as a general practice.

To earn the confidence of payers, primary care doctors will need to take bold steps, not small incremental ones.

Capitation aligns payment with the outcomes primary care physicians believe they can achieve, and it improves the odds of clinical success.

Organized groups of clinicians can spread the financial risk, and they can create the operational excellence required to succeed.

Genitive AI offers new capabilities for closing care gaps that episodic primary care has struggled to address.

But so I came in to health policy and a lot of people said to me, this is the answer.

Capitation and managed care are the answer.

If we can only spread that across the system, all the problems, all the dysfunction will disappear and we will have something.

And it didn't turn out that way.