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California Health Care Market Report Finds Continued Decline in HMO Enrollment, Growth in Pay for Performance

CHCF report offers review of health plan, hospital, and physician group performance

The annual study of California’s health plans, hospital systems, and physician organizations, commissioned by the CHCF, chronicles several important trends.

Despite a year that witnessed the creation of the nation’s largest health insurance company, the result of the Wellpoint-Anthem merger, and a controversial decision by CalPERS to exclude some higher-cost Sutter hospitals from its network, the latest version of the California Health Care Market Report finds few explosive changes in the state’s health care landscape.

Instead, the annual study of California’s health plans, hospital systems, and physician organizations, commissioned by the California HealthCare Foundation (CHCF), chronicles several important trends:

  • Medical groups, which built their systems around receiving monthly capitated payments, face a continued decline in HMO enrollment; many have been unable to reposition themselves to capture part of the growing number of PPO enrollees.
  • Pay for performance programs, which tie a portion of physician contract compensation to achievement of certain clinical measures and other criteria, are taking hold and are likely to have secondary impacts.
  • Hospital capacity has declined while utilization has crept upward, strengthening the bargaining position of hospitals.
  • High HMO premium increases have helped to improve health plan and hospital profitability. The growth of new premium dollars has prompted physician groups, hospitals, and health plans to experiment with new risk-sharing arrangements.
  • The market continues to be most responsive to the largest purchasers, health plans, and provider systems.

According to Allan Baumgarten, the report's author, these trends, particularly the growth in pay for performance, "reflect a desire to better control the incredible variation in cost and quality that exists in health care."

Now in its fourth year, the report provides a broad overview of health care organizations' financial results, enrollment trends, market share, and measures of utilization and effectiveness of care. It includes more than 50 tables and graphs and is informed by indepth interviews with 35 leaders in key health care organizations.

The report is a resource for policymakers and others interested in understanding the latest trends in the state’s multi-billion-dollar health care industry.

The California Health Care Market Report 2005 specifically addresses:

  • Comparative statistics on health plans, hospital systems, physician organizations, and purchasers;
  • California HMO enrollment and finances;
  • HMO utilization and effectiveness of care measures; and
  • Differences in the way physicians and hospitals in California organize, the role of Medi-Cal and Medicare, the involvement of private purchasers, and how health plans compete with each other.

The full report is available online through the link below.

About the California Health Care Foundation

CHCF is dedicated to advancing meaningful, measurable improvements in the way the health care delivery system provides care to the people of California, particularly those with low incomes and those whose needs are not well served by the status quo. We work to ensure that people have access to the care they need, when they need it, at a price they can afford.

CHCF informs policymakers and industry leaders, invests in ideas and innovations, and connects with changemakers to create a more responsive, patient-centered health care system.

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