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Sacramento: Health Providers Collaborate and Weather Economic Downturn

CHCF Regional Markets Issue Brief
September 2012
Ha T. Tu, Laurie E. Felland, Joy M. Grossman, Divya R. Samuel, Lucy B. Stark

As part of the California Health Care Almanac project, the California HealthCare Foundation (CHCF) funded HSC to conduct interviews in six California communities in 2011-12 to assess how the organization, financing and delivery of health care are changing, including preparations for health reform.

While hospitals and physicians in the Sacramento region weathered the economic downturn fairly well, a number of market trends have posed challenges for the area. Key findings of the market report include:

  • Increased pressures on hospitals to contain costs. Hospitals reported deteriorating payer mixes because of declining commercial coverage; an uptick in public coverage; smaller commercial payment rate increases; and rising rates of uninsured patients. Despite these pressures, most hospitals continued to have strong financial performances.
  • Increased use of narrow-network arrangements. The market is developing new health plan-provider collaborations, including accountable care organizations and narrow networks of providers that accept lower payment rates in exchange for exclusivity.
  • Growing concerns about an inadequate supply of physicians—especially primary care physicians. In the words of one respondent, the coverage expansions under health reform will result in a “tsunami of unmet need” among both privately and publicly insured people.
  • Increased dominance of Kaiser. Kaiser is viewed as an even more formidable competitor now, especially given the perception of Kaiser Permanente Health Plan as a lower-cost option
  • Increased pressure on outpatient capacity at safety net providers. With the economic downturn driving up the proportion of uninsured people, the fragmented safety net’s outpatient capacity is insufficient to keep pace with demand, in spite of considerable growth in community health centers.

Click here to access the Sacramento report at the CHCF Web site.





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