CALIFORNIA HEALTH CARE COALITION
3450 SACRAMENTO STREET, #503
SAN FRANSCISO, CALIFONRIA 94118
PHONE 510-663-4071, FAX 415-563-1015
www.cahealthcarecoalition.org

Exploding health care costs and spending continue to create serious problems for California employers, workers, unions and consumers. Five straight years of double-digit premium increases have reduced profits, undermined wages and pensions, strained budgets and health systems, and hurt the overall economy.

The conventional explanation for rising health care spending is increased utilization of medical services and products by an aging population, combined with steady advances in our technological capacity to diagnose and treat disease. Increased use, in turn, means higher spending and premiums. Some also assert that third party insurance payments make health care consumers care insensitive to the costs. As a result, we are said to be driving up spending by our indiscriminate use of health care services.

Such explanations are highly misleading. They obscure the substantial role of prices in driving up U.S. health care spending. They also ignore widespread and medically unjustified variation in health care utilization, quality of care, and patient outcomes -- variation that is immensely costly in both human and financial terms. Volumes of research show that the utilization of medical services is driven by such “supply-side” factors as the number of hospital beds or the per capita distribution of medical specialists in a given community. The research also shows that effective treatments are vastly underutilized, a substantial percentage of patients are subjected to medical treatments that are either unnecessary or contraindicated, and up to 100,000 preventable deaths occur each year in hospitals due to medical error.

Despite a vigorous national discussion of these problems, scant progress has been made in improving performance reporting or provider accountability. We continue to fly blind as purchasers and consumers – lacking even the most basic comparative information on provider performance, and opposed by the industry when we seek to obtain it. The result is a financing system that equally rewards high and low quality providers. Even as the number of uninsured and underinsured grows and cuts in federal, state and local health care programs are made, we collectively spend billions of dollars annually on care that is ineffective, delayed or unnecessary.

The California Health Care Coalition (CHCC) is dedicated to working toward effective solutions to rising costs and the adverse pressure they place on wages, benefits, health access and quality of care. Our goal is to achieve maximum value for health care dollars by holding health plans and providers accountable for the efficient provision of high quality patient care.

Three premises underlie our strategy. First, shifting health care costs to the users of care will do little to address the basic “supply-side” problems of excessive charges and poor quality care. Second, health plans alone are unable to assure quality and stabilize costs. Third, the industry has consolidated and so must purchasers. We cannot be an effective force for health reform without first organizing ourselves in the healthcare marketplace.

Working in alignment with CalPERS, we are implementing the following strategy:

Ø Educate plan participants, elected officials and the general public. Intensive education campaigns are needed at the community level in order to raise awareness that the quality and costs of health care vary dramatically from provider to provider. Community understanding and support is essential to achieve real improvements in provider performance and accountability.

Ø Establish and apply performance standards for hospitals and physicians. The burden of proof must shift to high cost institutions to demonstrate that their higher charges or premiums are justified by special circumstances or better patient results.

Ø Negotiate directly with health care providers, plans and intermediaries on cost, quality and transparency issues. Contracts should establish full financial transparency and performance accountability, with providers required to provide detailed cost, utilization and outcome data. These data are needed to determine whether rates are justified and treatments are appropriate and effective.

Ø Restructure networks to include only those who are able and willing to meet our cost, quality and reporting standards. Providers who are unable or unwilling to meet CHCC performance standards will risk elimination from our networks. We can no longer tolerate inappropriate, ineffective and inefficient care.

Ø Promote competition in local health care markets and eliminate the anti-competitive business practices of consolidated provider systems. Hospital conglomerates and other provider systems should not be allowed to require inclusion of all facilities in their network as a condition for accessing any one of them

Ø Support and promote industry-wide performance reporting and information disclosure standards. Purchasers and patients need timely, reliable data comparing hospitals and physicians on quality and cost-efficiency. We cannot reliably compare hospitals on cost and quality unless the comparisons are based on a common set of performance measures that are fully and freely disclosed from a reliable third party entity.