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Capitation

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Even though legislation creating managed care was passed in 1973 (the Health Maintenance Organization Act), managed care did not become a major player or driving force in health care until the late 1980s. In an effort to reduce the number of hospitalizations and control profit incentives for health care providers, managed care plans offered hospitals and practitioners a capitated set fee for office visits and hospitalizations for a group of patients. Capitation is the payment of a fixed dollar amount, per person, for the provision of health services to a patient population for a specified period of time, for example, 1 year. Under capitation, health care organizations benefit from using their financial resources to keep people well. Otherwise, health care providers bear the financial loss. Then in the mid‐1990s, the U.S. population had quality concerns with this system and backlashed against managed care organizations.

Kelly Vana's Nursing Leadership and Management

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