California Health Care Symposium
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In many ways California health care is different - not necessarily better, just different. It is American alright - quintessentially so. But its history, geography and social context have come together to create some of the great experiments in health care finance and delivery in the United States: for example, the Ross Loos Medical Group, the nation's first prepaid group practice; California Physician's Service (now California Blue Shield), the nation's first statewide Blue Shield plan; Kaiser.

From the mid-nineteenth century, California's health system evolved uniquely. It was isolated from other American population centers by great distances. The health system was highly competitive. The population influx following the discovery of gold and silver brought an abundance of both regular and irregular practitioners. California had the highest physician-to-population ratio of any state from the late 19th Century through the mid 20th Century. California's health system incorporated alternative healing approaches. Alternative practitioners of all types flooded into the state. Especially in Southern California, many infirm sought the alleged healthful qualities of California's climate. Ultimately, the nation's most extensive public hospital system was constructed to care for this largely indigent population.

European immigrants pouring first into San Francisco and later into Los Angeles brought with them traditions of mutual risk sharing. In 1851, the nation's oldest prepaid health plan was established in San Francisco by the French Mutual Benevolent Society. Later, German and Italian health societies were formed. Geographically isolated industries, including mining, timber, the railroads and, later, the great public works projects of the Depression in California's deserts and mountains, led to the establishment of a number of closed health systems created by employers, unions, mutual benefit associations and fraternal organizations. These traditions led ultimately to the establishment of Kaiser Permanente Health Plan. With the turn of the century came a quick sequence of health system experiments: a referendum battle over compulsory health insurance in the teens; the establishment of the state's early medical groups; the explosive growth of unregulated capitated health plans during the depression; the formation of the nation's first all-hospital Blue Cross Plan in Sacramento in 1935 and the first statewide Blue Shield Plan in 1939; and the emergence of Kaiser.

By the early 1990s, California's health care vision had coalesced into what many observers called The California Model. This model was founded on a contractual partnership among purchasers, payers and providers intended to restructure and revitalize the health care landscape. Activist employers would drive employees into a limited number of health plans, and would unite to negotiate aggressively to lower premiums. Rapidly consolidating health plans in turn would capitate and delegate function to providers to encourage utilization efficiencies and quality enhancements. Providers would then pursue horizontal and vertical integration strategies to rationalize resources. Physician organizations, funded primarily by Wall Street or health systems, would coalesce to manage large pools of capitated patients.

California employers have enjoyed an unprecedented long run of medical cost inflation, arguably helping fuel California's long economic boom. Managed care California style has also lowered resource use, especially inpatient days per thousand population. However, many of the goals of the California Model remain unrealized.

The vision of provider integration proved remarkably difficult and expensive to implement and operate. Mergers, both horizontal and vertical, failed to deliver on expected efficiencies. Consumers revolted against gatekeeper models, re-popularizing open network plans and sending a strong message to the market that provider choice was everyman's proxy for quality health care. Capitated medical groups struggled to survive, and risk-sharing experiments with hospitals were abandoned as many integrated systems terminated capitated contracts. In short, by the end of the 1990's it was obvious that something had gone awry with the model.

At the same time, California's uninsured population continued to grow. More than 21% of California's population, or approximately seven million residents, are uninsured. At a time of extraordinary economic prosperity, the problem of the uninsured worsens.

California is the "Blade Runner" society of the 21st Century. Ethnically, racially, linguistically and culturally disparate, California is a melting pot. For example, Latinos make up nearly 33% of California's population. Since 1990, 55% of the State's population growth has been Hispanic. Distinct cultural, ethnic and linguistic populations have special medical needs, as well as access issues. Issues of cultural and linguistic competency have emerged as crucial policy and operational matters for California's health plans and providers.

Just when plans and providers sought to create an economical and accessible managed care-based health system for patients, consumers rose up to speak for themselves. Rejecting limits on choice of physician, this "managed care backlash" has resulted in benefit package revision to create broader provider networks and passage of patient protection legislation by the legislature. The role that the empowered consumer will play in the future of California's health system remains unclear.

Extraordinary advances in science and technology create new pharmaceuticals and medical devices. While such developments offer hope of advances in health status and treatment, new costs are being added to the system. In particular, the increased costs of outpatient pharmaceuticals have been felt by California health plans and risk-bearing providers.

The Internet investment bubble has burst - especially in health care. Still, some feel that the Internet may transform health care finance and delivery. Will content sites empower the new health care consumer? Will Internet connectivity prove to be an effective surrogate for the bricks and mortar approach to health system integration of the past decade? Will e-commerce create a much more efficient health care supply chain? Only time will tell.

How and the extent to which California's health plans and providers should be regulated are hotly debated issues. Patent protection, health plan liability and medical group solvency regulation all hang fire. Issues of seismic safety and power availability challenge California's health care providers.

The challenges facing California's health systems are daunting - the opportunities great. Leadership not found within the system will be imposed from without.

Important questions and issues will be addressed at California Health Care Symposium 2001. At the conclusion, attendees should be able to:
  • Recognize what California's health care consumers want.
  • Describe the future of employer-sponsored health insurance in California.
  • Determine if major health care purchasers will contract directly with providers in California,
  • Explain how California benefit packages will evolve; defined benefit to defined contribution, co-pays and deductibles, annual maximums, etc.
  • Discuss the future of Medicare risk in California.
  • Explain premiums, capitation, and risk adjustment in California; where are we, and where ought we be?
  • Discuss the regulatory agenda of California's Department of Managed Care.
  • Describe the demographics of California's uninsured.
  • Employ effective strategies to enroll eligible uninsured in existing programs, e.g., Healthy Families, Medi-Cal, etc.
  • Recognize health reform legislation needed to address the issue of the uninsured.

The Symposium will be attended by the following individuals and institutional representatives:
  • Consumers and Consumer Representatives
  • Purchasers, including Private Employers and Public Purchasers
  • Health Plan and Health Insurers
  • Hospitals and Health Systems
  • Medical Group and IPA Leaders
  • Health Care Executives and Board Members
  • Health Plan, Health System, Medical Group and IPA Medical Director
  • Physicians, Registered Nurses, Pharmacists, Physician Assistants and Other Allied Health Professionals
  • Investment Bankers and Venture Capitalists
  • Health Care Consultants and Advisors
  • Health Care Attorneys and In-House Counsel
  • Health Care Policy Makers and Regulators
  • Health Services Researchers and Academics
  • Commentators and the Press

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