Implementation Outcomes, Challenges and Prospects of the Capitation Payment Model of Health Financing in Shaggar City, Ethiopia: A Qualitative Case Study

Background/Objective: The Ethiopian Health Insurance Service (EHIS) introduced the capitation provider payment model as a pilot in Shaggar City in 2023. To date, no study has been conducted on its implementation status and prospects. Therefore, this study aimed to explore the implementation outcomes, challenges, and prospects of the capitation payment model in Shaggar City, Ethiopia. Methods: We conducted a qualitative case study from 1 May to 2 June 2026. Data collection involved 18 key informant interviews, four group interviews with healthcare providers, and three focus group discussions with CBHI beneficiaries. We purposively selected study participants to explore the diversity of views from providers, CBHI implementers, and communities. The data analyses followed hybrid inductive–deductive thematic analysis guided by Proctor’s Implementation Outcomes Framework, supported by ATLAS.ti version 9.1. Results: This study included 53 participants. The analysis generated 748 codes, 39 sub-themes, and nine themes: acceptability, appropriateness, adoption, feasibility, fidelity, perceived effectiveness, challenges, facilitators, and sustainability and prospects. Capitation was generally perceived as acceptable and appropriate; however, perceptions of its fairness varied, with providers in lower-category facilities more often describing the payment rates as inadequate or inequitable. Participants reported perceived benefits in financial predictability and beneficiary satisfaction. However, implementation was constrained by challenges including shortages of medicines and supplies, rising service delivery costs, inadequate capitation payment rates, and inaccuracies in household mapping. Conclusions: Participants considered the model sustainable and suitable for scale-up only if the identified barriers, particularly inadequate capitation rates and inflation, were addressed. While stakeholders generally perceived capitation as appropriate, acceptable, and feasible, its sustainability and potential for scale-up were viewed as conditional on overcoming these key implementation barriers. Participants also reported key enabling factors, including community ownership, government commitment, evidence-informed implementation, and stakeholder engagement.