Risk-sharing arrangements

Risk-sharing arrangements are agreements where different parties, such as healthcare providers and insurers, share the financial risks of certain events or expenses. Instead of one party bearing all the costs or uncertainties, they collaborate to distribute potential financial impacts. This approach encourages cooperation and can improve service quality while managing costs effectively. For example, in healthcare, a hospital and an insurer might agree that if patient costs exceed a certain amount, both will share the extra expenses. Overall, it aligns incentives and creates a balanced approach to managing financial risks among stakeholders.