Scale and structure of capitated physician organizations in California

Physician organizations in California broke new ground in the 1980s by acce pting capitated contracts and taking on utilization management functions. I n this paper we present new data that document the scale, structure, and ve rtical affiliations of physician organizations that accept capitation in Ca lifornia. We provide information on capitated enrollment, the share of reve nue derived by physician organizations from capitation contracts, acid the scope of risk sharing with health maintenance organizations (HMOs), Capitat ion contracts and risk sharing dominate payment arrangements with HMOs. Phy sician organizations appear to have responded to capitation by affiliating with hospitals and management companies, adopting hybrid organizational str uctures, and consolidating into larger entities.