Capitation

a payment model used in healthcare, where a healthcare provider, such as a physician, hospital, or other healthcare organization, receives a fixed payment per patient for a specified period, regardless of the actual number or type of services provided. This payment model is typically used by managed care organizations, like Health Maintenance Organizations (HMOs), as an alternative to fee-for-service reimbursement systems.

Under the capitation model, the healthcare provider assumes the financial risk associated with the patient's care. If the patient requires more services than expected, the provider must absorb the extra costs. Conversely, if the patient requires fewer services than expected, the provider can retain the difference as profit.