More than half of provider organizations surveyed by Evergreen Re, a national reinsurance consultant and broker, had at least one capitation contract last year — but use of capitation fell dramatically from 1999 to 2000. Perhaps not surprisingly, net profit, as a percentage of capitation revenue, for physician groups was down from 16 percent in 1999 to 8 percent in 2000.
Involvement in capitation among physician groups — that is, the share of groups with at least one capitation contract — was down 17 percentage points, and even more dramatically among single-specialty physicians.
As for physician groups that are staying with capitation, they're taking on more of it — suggesting that fewer yet better-prepared groups are taking on risk contracts. Double-digit increases in capitation use occur for some hospital-related services, but drops are seen in pharmacy risk and, notably, physician services.
As use of capitation for physician services dropped, so did the average stop-loss deductible for professional services. Other deductibles rose, consistent with increased use of capitation for hospital-related services.
SOURCE: FOURTH ANNUAL MANAGED CARE INDICATOR, EVERGREEN RE, STUART, FLA., 2001