What type of payment encourages providers to keep operating expenses under control?

Capitation is a payment model that effectively encourages providers to manage operating expenses in a controlled manner. Under this model, healthcare providers receive a fixed amount of money per patient enrolled over a specific period, regardless of the number of services provided. This incentivizes providers to focus on preventive care and efficient management of patient needs since they benefit financially when they can minimize costs while still maintaining quality care.

By receiving a predetermined payment per patient, providers are motivated to keep their operating expenses low, as they will not earn additional income for extra services performed. This model encourages practices that promote patient wellness and reduce unnecessary procedures, fostering the development of effective and efficient healthcare systems. Capitation can lead to more sustainable financial practices in healthcare, as providers learn to allocate resources wisely to stay within budget.