**2. Theoretical framework**

Our world is complex and made up of subsystems. These subsystems interact with each other and each has vividly coherent dynamics and defined boundaries. Ludwig von Bertalanffy developed the Systems Theory in 1932 with an aim of simplifying the world's complexity and making it more comprehensible to human beings. Basically, the theory aims at explaining how things function around us. The theory views the world as a set of smaller subsystems that humans utilize on a daily basis. For instance, a hospital is a system that has outputs, processes, and inputs. In itself, the National Health Insurance Scheme (NHIS) is part of a bigger health care system. This study is premised on System theory. NHIS as a system has many subsystems that contribute to its proper functioning. Therefore, NHIS must work hand in hand with the healthcare facilities, the enrollees, the Health Maintenance Organizations, the banks, the insurance companies, and the other stakeholders. Hence, the System theory is relevant to the present study and will be used to support our work. In this regard, NHIS gives inputs, which are the resources that are capitation to the healthcare facilities through the HMO, which they use banks to transact the fund to the facilities. When NHIS gives money to HMO for the payment of capitation to the healthcare facilities this is called the process. Therefore, when the healthcare facilities successfully received capitation funds from the HMO and utilize the fund for the purchasing of drugs, consumables, and the procurement of expenditures and give services to the enrollees this is called the output, which is the effect of capitation. This flow of money called capitation payment is represented in **Figure 1**.

#### **Figure 1.**

*How capitation payment is being made. Source: The Author, 2021.*
