A payment mechanism whereby an organization receives a fixed, pre-specified amount of money per time period (e.g. month, year) for each individual for which it is responsible for meeting defined health needs (e.g. primary care, primary and secondary care), regardless of the volume of services rendered.
In other words, payments will vary according to the number of patients enrolled, but not with the number of services rendered per patient.
A tax or fee levied per head, or a grant or budget provided per head of a given population who are entitled to a certain service.
Capitation is common as one basis for providing the budget for health facilities or for health workers like primary care physicians. It may be used in combination with other methods of payment such as fees-for-service.
Good and bad sides of capitation: prevents overuse of services, but at same time could limit necessary services.