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

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Capitated environments have a different profit model than fee-for service. Providers are paid one fixed price per patient regardless of how many times they are needed. It can work in both favors as this helps to ensure financial stability, while also allowing healthcare organisations to keep consistent quality care by removing the incentive or pressure to over-treat patients.

However, providers in fee-for service environments may be more inclined to provide additional services or tests as it increases their revenues. In this arrangement, the costs of providing care can be more expensive due to billing errors and unnecessary procedures. This could lead to a loss in profits. Businesses can make informed financial decisions by understanding the difference between fee-for-service and capitated model.

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