Although logistically difficult to deal with, capitation isn't overwhelming California hospitals-at least not yet.
That's the conclusion of a survey of 48 California hospitals by the West Coast division of VHA, a not-for-profit hospital alliance.
The division, based in El Segundo, Calif., released the results exclusively to MODERN HEALTHCARE last week. The division represents about 120 hospitals, including about 100 in California. Non-VHA hospitals were also included in the survey.
The hospitals, which were surveyed in September, reported that on average only 19% of their revenues came from prepaid reimbursement contracts from managed-care plans. The survey was the first of its kind by the group, so there are no figures from previous years.
But the 19% figure is lower than many healthcare experts expected, according to officials at VHA West Coast.
"There's been a misconception that if a hospital decides to go into capitation, it changes everything," said Ed Berger, vice president of managed care for the Sacramento, Calif.-based Sutter Health hospital system. Berger headed VHA West Coast's survey project.
Overall, the hospitals surveyed had nearly $2 billion in annual capitated payments. Approximately three-quarters of the hospitals said they had lost money on capitation in at least one of the past two years.
However, survey participants said capitation increased their market share, improved the quality of care in their facilities and improved overall cost-effectiveness.
On the downside, 92% of the hospitals surveyed reported that dealing with capitation "has been more difficult than expected."
Surveyed hospitals also griped about increased utilization, "adverse selection" and tension with affiliated physicians.
A majority called moving into capitation "the right strategic move at the time," but one-fourth dismissed it as a disaster.
Nearly 90% of those surveyed expect their capitated payment rates from commercial HMOs to increase next year.
The average hospital participating in the study has seven capitated contracts covering about 35,000 enrollees and generating average annual capitated revenues of $36 million.