Microcapitation: A Case Study

30 Jul Microcapitation: A Case Study

Case Study (kās stŭd’ē) n.

  1. A detailed analysis of a person or group, especially as a model of medical, psychiatric, psychological, or social phenomena.
  2. An exemplary or cautionary model; an instructive example

I have received a couple of off-line questions regarding the concept of micro-capitation, and having responding publicly to one, I sought permission from the author Bruce Hunter of Core-Media to respond publicly to his earnest inquiry

Tuesday, Jul 29, 2008 at 2:10 PM


I really enjoyed your blog and the information you have provided regarding microcapitation. But I have the following concerns and hope you will have an opportunity to reply the following:

The concern that I have on “microcapitation” is that it is one more thing carved out of the primary care physician’s turf. A system would need to be constructed to monitor the integration of it into routine care; a monitor would need to supervise the care given to patients outside of the family care setting. A network of providers would need to organize themselves under some sort of leadership model that is not necessarily aligned with other things they do. And most important, would the costs be additive? If so, why do it? Shouldn’t we focus on creating tight care guidelines for disease processes within the networks we currently manage? Why create a new network with no real advantages? There are many care guidelines now that did not exist even a few years ago that are tied to outcomes. I really believe that focus needs to be placed on value received from the medical community for the dollars paid. Who is defining that? When will we be able to pay for the performance of physicians and other clinicians based on outcomes (in the aggregate) from a larger patient population?

The other issues involve the fact that this type of capitation could only happen in cities where the insurer/HMO has a large enough penetration of clients and has an integrated healthcare delivery system to operate within. This leaves out the rural and small town areas which can make up a large piece of the pie for the insurer/HMO.

Best regards,


Bruce Hunter, CEO
CORE Media
11347 Eliot Court
Westminster, CO 80234
Office: (303) 458-0486
Mobile: (720) 987-9071
Fax: (303) 339-0642


Thanks for your reply . . .

You are the second person to misunderstand some of the key points I was trying to make regarding micro-capitation. As such, it is clear that I need to do a better job of articulating the message. Here is another attempt to provide clarity by answering your specific questions:

1. Primary Care. Microcapitation has nothing to do with primary care per se. Microcapitation is a financing mechanism to pay for the complete subset of services required to care for a particular medical condition over a specified period of time. It might involve a single price for all the services related to diabetic care for a single year (delivered by a primary care physician) or it might involve all the services required to replace a right hip (specialty care delivered by an orthopedic surgeon).

2. New Network. I don’t believe Microcapitation has to be delivered through a new “network”, although I do believe companies like Carol.com create a new type of virtual network based on Care Packages that are transparently priced. Any care provider any where in any care system can create a microcapitated “Care Package” – but it does require some leadership, some organization, some agreement, and some persistence to pull it off. It can also fit within the practice of any provider without disrupting his normal practice – you just pick a medical condition whose services are understood well enough that the entire range of services can be delivered and paid for within the construct of a single priced care package. The idea, of course, is that the provider[s] continue to innovate within the constraints of the Care Package creating a virtuous cycle of innovation, a care factory, based on “tight care guidelines for disease processes”

3. Health Care Value. I couldn’t agree more with you that the focus should be on health care value (outcomes/price). A challenge with this formula is that we are just beginning to get pricing information and we only have a few pockets of people who are even capable of collecting meaningful outcomes information. However, our current state should not detract us from striving to achieve some future state. In fact, because of the way that Care Packages would have to be marketed the outcomes, price, and value would be inherent the “retailization.” People could actual make rational health care decisions because they would know the outcomes/price because the providers would have to market them this way as a point of differentiation. In addition, the providers who could provide the best value would also be rewarded with the highest volume creating the virtuous cycle described above.

4. Urban Integrated Care Delivery. In additional to being physician specialty agnostic, microcapitation should be geographically agnostic as well. This is not to say it should be easier to create multi-specialty care packages within an integrated system (where all the physicians work closely together anyway), but it would not be impossible. Physicians make care arrangements all the time and this would be no different and not require onerous new organizations to be created. It would require, however, additional information capture and reporting to highlight the increases in value.

5. Case Study. Since I have not given an example as of yet, let me try one on for size. A family practice doctor in rural Driggs, Idaho (population ~5,000) currently cares for a fairly sizable population of diabetics. In reviewing several paper charts, he recognizes that many of his patients are not getting the care they should receive. In questioning these patients, it is difficult for them to track what they should be doing and their busy seasonal schedules create additional difficulties. The physician determines to bolster his sparesely attended diabetic clinic by creating a new Diabetic Care Package. The care package includes the four routine visits, the biannual podiatrist visit, the annual optometrist exam, and four additional in-home nutritional/medication consults. In order to deliver this complete package, the physician enters into conversations with the other health providers to come up with the pricing, how care will be coordinated, and how this virtual team will work together to deliver care. They agree to revenue splits, performance metrics, and the mechanism by which they market this service. Provisions are even made for what happens when care needs to go beyond what was agreed to within the package. Because the entire years worths of routine care is included for a single discounted fee (given just the simple efficiencies gained through care coordination), patients can see the value both clinically and financially. They sign up 50% of their current population immediately (250 people), and then have an additional 100+ people sign up the first 90 days as word of mouth and positive local press make the program more widely known. All of the participating providers were staffed and organized to deliver their component pieces so that there are no new equipment, arrangements, or staffing required other than the single program coordinator who helps schedule the appointments and provide the outcomes measurements that will be used in the marketing material to go out the following year. Multiple side affects emerge from initiation of the program including a spontaneous patient support group who meets bi-monthly to discuss nutrition, insulin regimens, and related diabetic health issues. The program coordinator participates actively with this group and recognizes the opportunity to have the various component providers present the latest treatment options on a monthly basis. These meetings build additional report, patient confidence, and interesting serve as a recruiting mechanism for other diabetics in the community. Within two years, three other physicians begin selling their versions of the Diabetic Care Package with new features, functions, and capabilities. The community A1C metric, which was assembled by the patient support group, drops from 9.5 to less than 7.0, for the known 472 patients with diabetes in hte community.

While this is fictional, I believe it at least provides a reasonable framework from which to begin to answer your conceptual questions. Would love to continue the dialog, and more importantly find those who have begun this experiment in practice.

Would appreciate anyone sending me additional case studies.

  • Healthday
    Posted at 20:13h, 01 August Reply

    Nice post.Keep up good work!

  • Return of Microcapitation: Condition Specific Capitation Payments « Crossover Healthcare
    Posted at 19:56h, 06 March Reply

    […] Specific” payment model.  These are examples of what I had previously described as “Microcapitation” previously (including the exact example that NRHI used). In theory, Capitation or other forms of […]

  • automotive jacks
    Posted at 12:16h, 14 March Reply

    It’s the first time I commented here and I should say that you give us genuine, and quality information for other bloggers! Great job.
    p.s. You have an awesome template . Where did you find it?

  • Dr. Houshang Seradge
    Posted at 16:17h, 02 June Reply

    As a doctor, I love your view on this particular issue. Quite a lot of my clientele discuss related issues with me, and it really is stimulating that we’re not the only ones that genuinely care!

Post A Comment