Capitation payments encourage healthcare providers to:

Capitation payments are a healthcare financing arrangement in which providers receive a set amount of money per patient for a specific period, regardless of the number of services provided. This payment model incentivizes healthcare providers to manage patient care effectively within a fixed budget.

By receiving a predetermined payment, providers are encouraged to focus on preventive care, efficient management of resources, and overall patient health outcomes rather than the quantity of services rendered. Since providers are financially responsible for the patient's healthcare within that budget, they are motivated to prioritize cost-effective treatment options and preventive measures that can lead to better health outcomes, which ultimately benefits both the patient and the provider in the long run.

This model contrasts with fee-for-service arrangements, where providers may be incentivized to increase the number of services delivered to maximize income, regardless of patient need or outcomes. Therefore, under capitation, the goal shifts towards managing care effectively, ensuring that patients receive appropriate and timely care while controlling costs.