Question

What are the critical differences in profit analysis when it is conducted in a capitalized environment versus a fee-for-service environment?

Answer 1

The Capitation and the fee-for-service (FFS) are the two different payment modes for the healthcare providers. They have critical differences in profit analysis. Firstly, in the capitation, a set amount of payments are made to the doctors on the basis of every patient they see, whereas in case of FFS payments to the doctors are done on the basis of the procedure procedures used by them for treating the patient. Secondly Healthcare provider takes the insurance function in case of Capitation, while in case of FFS risk is assumed by the payers (insurance companies).