What does the term "capitation" denote in the healthcare sector?

The term "capitation" in the healthcare sector refers to a payment arrangement where a healthcare provider is paid a fixed amount for each enrolled patient over a specified period, typically a month or year, regardless of the number of services provided. This model incentivizes providers to focus on the overall health of their patient population rather than the volume of services offered, which can lead to more efficient and preventive care.

Under capitation, providers receive a per-member-per-month (PMPM) fee to cover all necessary healthcare services for that patient, encouraging a focus on maintaining general health and managing chronic conditions proactively. This arrangement aligns financial incentives, as providers benefit from keeping patients healthy while controlling costs.

The other options pertain to different aspects of healthcare finance or management and do not capture the essence of capitation as a fixed payment model. For instance, a payment model based on the number of services rendered contrasts directly with capitation since it encourages higher service volumes rather than a fixed payment. Similarly, funding research initiatives and managing healthcare supplies are unrelated to how healthcare providers are compensated under capitation.