Explain the concept of capitation, its importance to the HMO and participating providers, and how the concept of capitation varies with the ACO model.

Evaluation of HMO Models based on Region 13

You have been presented an outstanding opportunity to serve as a graduate student intern for the chief executive officer (CEO) of a large HCO. The HCO is an HMO model and originated approximately a century ago as a small rural hospital. Due to the rural setting, the HMO model flourished and, over the years, expanded throughout the region. Today, the HMO has a presence in over eighteen counties and has a number of competing interests from for-profit and not-for-profit HCOs in the region.

The board of directors recently approved the acquisition of two regional hospitals. First, the HCO decided to acquire a small rural critical-care-access hospital in a relatively remote county. The interest in acquiring the hospital is to service the existing population and expand the reach of the HMO. Second, the HCO decided to acquire a private full-service hospital in a moderate-size city (population forty-two thousand). The HCO’s move is strategic in nature, preventing the sale of the hospital to its for-profit competitor, and will gain the region its sole emergency department level 2 (two) trauma center with helicopter transport while giving the HCO the ability to service its growing HMO membership in the area.

Based on the above information:

• Evaluate the various HMO models (staff, group, and network) and identify the model that would probably be best suited for the region. Justify your answer.
• Research and comment on the importance and applicability of the various levels of emergency department trauma care. Investigate the exemptions afforded to a critical care rural hospital with respect to Medicare reimbursement and accreditation.
• Elaborate on the difference between an HMO and an accountable care organization (ACO).
• Explain the concept of capitation, its importance to the HMO and participating providers, and how the concept of capitation varies with the ACO model.
• Explain patient-centered care and its importance in healthcare delivery.