Healthcare Finance

Introduction: Many health care providers are experiencing financial hardships that could eventually lead to bankruptcy. Often these hardships are the result of shortfalls in the payments received for patient care as a result of the methods used to calculate the amount the health care provider will receive for services rendered to patients. Financial difficulties include operating losses, bond downgrades, and even bond defaults.

According to an essay by Francis B. Quinn, M.D. published online by the University of Texas, managed care via capitation involves a healthcare delivery system in which the healthcare provider will receive a flat fee per enrollee. The payment is the same no matter how many services or what type of services each patient actually receives. Under a managed care via capitation payment method, the healthcare provider is financially responsible even if the actual cost of providing services greatly exceeds the amount of money received. The challenge of working with capitation is managing risk against potential rewards. For example, it would be high risk to be compensated

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