The San Diego health care market has long been dominated by four health systems: Kaiser Permanente, Sharp HealthCare, Scripps Health, and University of California San Diego (UCSD) Health. Both Kaiser and Sharp historically have embraced capitated (fixed per-member per-month) payments when they assume financial risk for patient care, a trend now taking hold at Scripps and UCSD. While they compete for patients and market share, providers in the region also collaborate on community-wide issues, including access to care and more recently, the COVID-19 pandemic. Despite significant gains in health coverage, access to care for people with lower incomes, especially for behavioral health services, remains a challenge.

Key factors affecting the local health care market include:

• Health care coverage expansion continues. The 2014 Medi-Cal expansion under the federal Affordable Care Act and the strong (prepandemic) economy helped increase the share of San Diegans with health insurance. More than half of residents have private insurance coverage, and Medi-Cal now covers almost a quarter of the population. Kaiser remains the dominant insurer in the region, reportedly covering 20% of the population.
• Hospital sector remains stable and consolidated. Overall, the region’s hospital sector remains stable, with no changes in ownership in recent years. Both UCSD Health and Kaiser opened new hospitals in 2016 and 2017, respectively, and Kaiser announced plans in early 2020 to build a third hospital in the northern part of the county.
• Medical groups focus on growth. As health systems expand population health strategies, they have increased affiliations with medical groups and independent practice associations. Medical groups also have grown as new physicians and independent physicians nearing retirement opt for employment instead of running their own practices.
• Federally Qualified Health Centers (FQHCs) thrive. San Diego’s 14 FQHCs provide critical access to safety-net services across more than 100 sites in the region. Following the 2014 Medi-Cal eligibility expansion, patient visits per capita increased 40%. Looking to the future, two FQHCs have developed Programs of All-Inclusive Care for the Elderly to serve their patients with complex needs as they age into Medicare.
• County moves to improve access to mental health and substance use disorder services. Access to safety-net behavioral health care is a critical need in the region. The county has launched an initiative to create a behavioral health “hub-and-network” system to connect hospital-based and community-based care to improve care coordination and reduce psychiatric hospitalizations.
• Regional health information exchange (HIE) is at a crossroads. San Diego’s regional HIE serves providers in both San Diego and Imperial Counties. While the region has invested significant resources in HIE, and it enjoys strong support, the system does not have the functionality many participants would like, and it remains underused.

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.

About the Authors

Caroline Davis, MPP, is president of Davis Health Strategies LLC and a Blue Sky Consulting Group affiliate, and Katrina Connolly, PhD, is a senior consultant at Blue Sky Consulting Group. Blue Sky Consulting Group helps government agencies, nonprofit organizations, foundations, and private-sector clients tackle complex policy issues with nonpartisan analytical tools and methods.