Posted: April 5th, 2017

Health plans may pay a physician per member, per month (PMPM) capitation payment for each person in which they are responsible. Prepare the following information for the CFO’s upcoming meeting to explain capitation and its relation to your hospital.

Your company’s CFO begins the preliminary work of developing the organization’s financial plan for the upcoming year. Recently, there have been several articles in the newspaper regarding the state’s need to cut its healthcare budget. There have also been rumors in the community that the state Medicaid budget may be reduced, including those eligible to enroll in government-funded health plans. Over the past year, there have been Board discussions regarding diversifying and opening healthcare facilities that provide services to various populations other than Medicaid recipients.
1. Compose a memo to the CEO regarding your department’s preparation for next year’s financial plan.
2. In the memo, address the possible issues surrounding next year’s forecasting including the management structure that could be considered for next year’s financial plan.
3. In addition, the CFO has requested a brief summary of information on capitation. You are familiar with capitation as a payment methodology used in the healthcare industry.
Health plans may pay a physician per member, per month (PMPM) capitation payment for each person in which they are responsible. Prepare the following information for the CFO’s upcoming meeting to explain capitation and its relation to your hospital.
explanation of capitation
1. Challenges of working with capitation