Changes Are Coming to Regional Health Care Markets

Riverside/San Bernardino

Access to care continues to be a challenge as the vast Riverside/San Bernardino region recovers slowly from the economic downturn. The following are key findings:

1. Improved hospital financial performance – Many hospitals maintain bargaining clout on payment rates because health plans must ensure access in each of the region’s many sub-markets, some of which are underserved. This has helped maintain and even improve financial performance while hospitals struggle with a declining payer mix with people losing private health coverage.

2. Increased presence of Kaiser – Kaiser Permanente’s presence has expanded. Other providers (hospitals and physicians) view Kaiser as their biggest competitive threat.

3. Growing concerns about physician supply – The per capita physician supply in the region is low compared to other California markets. Some say that demand for physicians continues to outpace supply.

4. Growing efforts by hospitals to align with physicians – Although physicians remain largely independent, some are joining larger physician-owned organizations. Hospitals are seeking to align more closely with physicians to gain patient referrals and inpatient admissions and prepare for new payment arrangements under national health reform.

5. Increased pressures on safety nets – County-run safety net organizations face pressures to care for growing numbers of Medi-Cal and uninsured patients. Counties are trying to work more with federally qualified health centers and other private community clinics and health centers, especially as they prepare for health reform.

The San Bernardino/Riverside report is available at

http://www.chcf.org/publications/2012/09/regional-market-riverside-san-bernardino.

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 10/20/2021

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