Fresno: Poor Economy, Poor Health Stress an Already Fragmented System

Center for Studying Health System Change


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Background

The greater Fresno area, with a total population of 1.6 million people in 2007 (4.5% of the state’s population), has recently seen strong growth: 22% in the past decade, compared with a state average of 14%, and 9% in the past five years, more than double the state average.

Fresno, one of the poorest communities in California, is sometimes referred to as “the Appalachia of the West.” Nearly half of the population has a family income below 200% of the federal poverty level, compared to one-third statewide. Moreover, the income gap between rich and poor residents is strikingly larger in Fresno than in California as a whole, and the gap has widened substantially in Fresno since 1980. Educational attainment is also well below the California average: 22% of adults aged 25 and older hold college degrees, compared with 36% statewide. The Fresno area is characterized by a much higher proportion of Latinos and much lower proportions of whites and Asians than the state overall. The health status of Fresno residents is worse than average in the state, with more people self-reporting fair or poor health and living with chronic conditions such as asthma and diabetes.

Unemployment is high and rising in the greater Fresno area. The unemployment rate reached 15.5% in Fresno in January 2009 (substantially higher than the state average of 10.6%), representing a large increase from Fresno’s rate in January 2008 of 10.6%.

The agricultural sector is an important part of the economy in the greater Fresno area. Although agriculture directly accounts for fewer than one in five jobs, it has a much greater impact on the area’s economy when related businesses such as packing, processing, and transporting agricultural products are included. The largest employers in the market tend to be public-sector employers, including the county, city, and school district of Fresno. The two major health systems, Community Medical Centers (CMC) and St. Agnes Medical Center (St. Agnes), are among the largest private, non-agricultural employers.

Issues to Track

The greater Fresno area’s already weak baseline economy of low wages, high unemployment, and poverty has been hard-hit by the current economic downturn. Market observers noted that the recession will not just result in employers curtailing or eliminating health benefits, but “a lot of these vulnerable [firms] are just going to disappear, period.” The deterioration of an already small commercial insurance base is of grave concern not only to insurers but also providers. Many providers noted that a shrinking commercial insurance base will exacerbate their already unfavorable payer mix and further reduce the willingness of commercial payers to subsidize uncompensated care and inadequate public reimbursement, at a time when the demands on the safety net are expected to reach new levels. The following are among the key issues to track:

  • To what extent will Fresno’s commercial insurance base contract in the economic downturn? What will be the impact of such a contraction on the financial health of providers in the market and their ability and willingness to continue providing care for Medi-Cal and other low-income patients?
  • As unemployment and uninsured rates increase, how will the county governments and safety-net providers cope with increasing demands on safety-net services? To what extent will Medi-Cal reduce payment rates and covered services, and what impact will these cutbacks have on the market? Will there be increased pressure on Fresno County to increase eligibility for its indigent care program?
  • What impact will the growing physician shortage have on the market, and how will the market respond?
  • How will the recent problems experienced by St. Agnes affect its competitive position in the market and the strategies it pursues? Will the quality of care issues at St. Agnes help raise awareness about quality and prompt collaborative efforts to improve quality in the market more broadly?
  • Among employers who continue to offer health insurance, will there be a more pronounced shift toward products with fewer benefits and higher cost-sharing arrangements as a cost-containment strategy?

Since 2009, CHCF has published a series of regional market studies that examine the health care markets in specific regions across California. These studies highlight the range of economic, demographic, and health care delivery and financing conditions in California. They are published as part of the CHCF California Health Care Almanac, an online clearinghouse for key data and analyses examining California’s health care system.