Changes Are Coming to Regional Health Care Markets

In some markets, California hospitals will face increased pressure to contain costs. There is also growing concern about physician shortages and strained safety nets, according to local health care leaders surveyed by the Center for Studying Health System Change (HSC). The report looks at Sacramento and Riverside/San Bernardino. In the coming months, the California HealthCare Foundation (CHCF) will publish studies of the San Francisco Bay Area, Fresno, Los Angeles, and San Diego.

Sacramento

Hospitals and physicians in the Sacramento region have weathered the economic downturn fairly well, but the following trends have posed challenges:

1. More pressure on hospitals to contain costs – Hospitals face deteriorating payer mixes because of declining commercial coverage, an increase in public coverage, smaller rate increases for commercial payments, and rising numbers of uninsured patients. Despite these pressures, most hospitals still have strong financial performance.

2. Increased use of narrow-networks – New health plan-provider collaborations are developing including accountable-care organizations and narrow provider networks that accept lower payment rates in exchange for exclusivity.

3. An inadequate supply of physicians in the future, 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 privately and publicly insured people.”

4. Increased dominance of Kaiser Permanente Health Plan – Kaiser has become an even more formidable competitor, especially given the perception of Kaiser as a lower-cost option.

5. Increased pressure on outpatient capacity at safety net providers – With the economic downturn driving up the number of uninsured, the fragmented safety net of outpatient centers can’t keep pace with demand. This is despite considerable growth in community health centers.

The Sacramento report is available at

http://www.chcf.org/publications/2012/09/regional-market-sacramento.

Last Updated 10/4/2017

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