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HomeMy WebLinkAbout1984-04-03; City Council; 7691; MEMBERSHIP IN THE SAN DIEGO EMPLOYERS HEALTH COST COALITIONAB# 76 cf I MTG. DEPT. 4/3/84 CM DEPT. CITY P CITY I\ TITLE: MEMBERSHIP IN THE SAN DIEGO EMPLOYERS HEALTH COST COALITION (SDEHCC) w EXIIIEIT I e every component geared t COMMUNITY CARE moting appropriate and effici of services." Group healtl: offering CCN will give patie physicians greater flexibilitj home health care, hospicl management and other cost tive alternatives to hospita The physician payment systc reimburse physicians more ably for time spent examinii diagnosing patients. Out-p care will be encouraged in lie1 patient care when medically priate. In additlon, a service c nation center wi11 be maintai the CCN to make informatior able to patients to become m formed COnSumerS of health ci monitored through a sophisi management information s that will provide all partic with regular reports on hc system is functioning. The CCN itself is organiz, non-profit corporation wi composition of the Board of tors essentia11y the Same as ' the SDCAHC. The CCN prl wi11 be avai1ab1e to a11 se1f-ii emp1oyers as we11 as to a11 ins carriers and third party c administrators. It isexpect€ Blue Cross of California, Aet other major insurers will of CCN to their respective c1 Murphy summed up his asse: of the CCN with the obseri gain bY coming together NETWORK TAKING SHAPE. The Community Care Network (CCN), the nation's first corn- rnunity-based preferred provider organization, is slated to make its debut in June. Employers in San Diego County will be able to of- fer the network of preferred hospitals and physicians to their respective employees as an alternative to the traditional indemnity The CCN is the creation of the San Diego Committee For Affordable Health Care (SDCAHC) which has spent nearly two years designing the system. The SDCAHC is comprised of local major employers, labor representatives, hospitals, physicians and third party payors. Support for the effort has come from the Robert Wood Johnson Foundation, the largest philanthropic organization in the country specializing in health care. The CCN planning phase was also funded in into account the important input of part by major San Diego employers physicians, hospital administrators such as Rohr, PSA, Cubic, Signal and others. Kelly stated that "the Companies, SDG&E and San Diego resulting contracts reflect the blend Trust & Savings Bank. of legitimate concerns and interests The support from the Johnson that is the core of the CCN Foundation was due, in large part, approach." to the community forces which came CCN will distribute its hospital together to develop the CCN pro- contract in March and invite bids gram. One of CCN's basic premises from each hospital in the county. is that all the major participants in together to control health care cost increases. According to George (679) 237-0578 See Page 7for CCN." Murphy, CCN Program Director, "the collaborative effort of health care providers, purchasers and others is at the heart of the Com- munity Care Network." Murphy noted that many preferred provider organizations have been formed throughout California as a result of recent enabling legislation and sug- gested that "none has been subjected to the close scrutiny of all health system participants as has the CCN." Curtis J. Kelly, SDCAHC Chair- man, explained that particular scrutiny was given to the provider contracts. The Committee reviewed, revised and further reworked the type of group health plan. vices. The entire system v the healthcaresystemmust work Inquiries clbout the CCN CGIU be that"everybody hassometl: wiade by calling tile CCN office a1 rehied ediforrul The physician contract will be distributed in April, after additional physician input, and each licensed physician in the county will then be invited to apply to become a CCN provider. It is CCN's goal to attract high-quali ty, cost conscious pro- viders. Local employers will provide financial incentives under their group health plans to encourage employees to use the CCN pro- viders. Cubic's Murphy is quick to point out that the CCN is "not just another preferred provider organization." He stated that "the CCN will be a Dr. Joe Kool, M.D. . . . . . . Proposed New Hospitals . . Newsbriefs . . . . . . . . . . . . . NMR Scanners . . . . . . . . . . Hospital Prices . . . . . . . . . . contracts for months in order to take comprehensive system of care with 0 .MARCH, 15 w HEALTH COSTMONTTOR Sa,? Dit,go, Cali,for>liu THE EDITORS COMMENTARY MINDING OUR OWN BUSINESS 1 t wasn‘t very long ago when a vis- cate the status quo and which u ibly agitated physician approached rhetoric that only blurs the issues. me after a meeting on health care more competitive health care systc costs obviously eager to vent some is, in fact, in the best interest of pr of his anger. With his index finger viders since it represents the la waving a few inches from my nose, gasp before the most dreaded sc he screeched ”you employers should nario - the massive federal regul mind your own business and keep tion of the health care system. Fedt your nose out of health care.” a1 regulation (as represented 1 Rather than take offense at that Medicare DRG‘s) already exists comment, I accepted it as an indica- some extent for hospitals and cou tion of the sensitivity of some physi- established forces in health easily be extended to physicians a cians at the increasing role of for all private sector patients. \ employers-both public and cor- prefer that the heavy hand of go porate-in health care issues. But ernment regulation remain off thc not wanting to miss an opportunity of us in the private sector. But or to repeat a frequent employer mes- the active cooperation among hea. sage, I quickly informed the good care providers and health care pi doctor that health care is very much chases to produce meaningful resu the business of employers. In fact, can fend off this heavy hand. Signj somewhere inexcess of $150 billion cant progress is underway on tl worth of our business. That’s how level in San Diego as represented much American businesses are esti- the San Diego Committee F mated to have paid in 1983 for Affordable Health Care. Employc employee health care programs and in San Diego and elsewhere wa for business taxes which finance very much to work with providt The active involvement of employers in health care issues may very well be one of the major devel- opments in health care in this decade and a development that could pro- duce changes in the health care sys- tem. But whenever a new force enters an industry, the established forceswithinit becomeunderstand- ably nervous. It is the responsibility of employers to make clear to the care-primarily doctors and hospi- tals- that we have absolutely no desire to ”take over” medicine or diminish the quality of health care. We would like, however, for a greater degree of competition to enter the health care system so that informed consumers can utilize the services of competent and cost- effective health care providers. We categorically reject the notion that affordable care and quality care are mutually exclusive. Medicare, Medicaid and other health programs. Projections indi- cate that the per capita cost of health care in the U.S. will rise from $1,216 in 1980 to $3,300 in 1990. Stated simply, health costs have out- stripped the ability of all health care purchasers-whether individual, corporate or government - to pay them. I am often reminded of a very famous scene from the Academy award winning movie ”Network” which pretty much sums up the feel- ing of many health care purchasers. In that scene, the late actor Peter Finch, frustrated at the excesses of the television industry, yelled in fury that ”we’re mad as hell and not go- ing to take it anymore.” For those of us who are employers, we should really be mad at ourselves and not anybody else. We should be mad at our own collective corporate stupid- body else would come along and solve the problem for us. It is only a relatively recent development that employers have accepted the fact that concerted action on their part is needed to address the complex pro- blem of rising health care costs. 2 One of the more difficult tasks of health care purchasers is to convince health care providers that affordable care is also in their best interests. It is discouraging to read publications from medical societies which advo- to control health care costs SO tk we can, in fact, go back to ”mindi our own business.” 7p??Z- Edit ity for actually thinking that some- -,--\-- ~. “Doc, I don‘t think we can bill this as cosmetic surgery.” the full effects of competition can be determined. "If too many beds are higher health care costs for maintain- ing the empty beds," Allgire said. He added that "we should not repeat the mistake of the pre-HSA early 1970's when 1500 beds were built in the downtown area. Many of these beds remain empty and we are still paying for those bad construction decisions. " created, we will all end up paying IdQSpijTAL COST pJCRE)pA5ES ~(-JfgyJpJ~~ TQ QTflpL4&cz g&-L,&J Jg-jIq wTE TF- T\TT San Diego area employers received more bad news last Decembc the California Health Facilities Commission released its new dati health care costs. For the first half of 1983, the general inflation rate I only 1.3% over the first six months of 1982, but the average hospital rose 17.8% for these comparable periods. Patients and third pa * Hewlett Packard, the well-known high technology company based in Palo Alto, has signed a preferred provider contract with El Camino Hospital in Mountain View to serve HP's employees in the "Silicon Valley" area. The 18-month contract was effective February 1, 1984. 0 Arizona businesses are exerting their influence in an innovative man- ner. Frustrated by negotiations with Arizona hospitals to control health care costsr the Arizona business coa1ition is taking & caSe direct1y to the voters. The coa1ition has launched a campaign to Obtain signa- initiative to impose controls on hos- pita1 capital spending. In addition, the initiative wou1d foster statewide health Planning. If sufficient Sig- natures are obtained, the cost con- ktinment Proposa1 wou1d be placed On the ba11ot in November, 1984. The Arizona experience will be closely watched bY California businesses also concerned with hea1th cost containment. The California Council of Employer Health Care Coalitions (the statewide umbrella organization for the 14 local employer coalitions in the state) has written to John Gibbons, Director of the Office of Technology Assessment, expressing care Prospective Payment Assess- ment Commission does not include a 4 tures on a Petition !Or a statewide disappointment that the new Medi- ' LD ON TO YOUR WALLETS - EC he purchase of a revolutionary new scanner by San Diego hospitals Thas raised the concerns of Coalition leaders who fear the expensive machines will not be used in a cost effective manner. The device is known as a Nuclear Magnetic Resonance scanner or NMR. Costing more than two million dollars each, the scanners contain a huge magnet that creates a magnetic field up to 30,000 times as strong as Earth's. The patient lies inside a tube containing the magnet. The mag- netic field causes the body's atoms to emit radio pulses that create images on a computer screen. The technique could locate damaged tissue, tumors and other diseases. The NMR is considered more sophisticated than the tomography scamer. Coalition Chairman Paul Allgire fears that the NMR will be overpur- chased by local hospitals, leading to the under-utilization of each piece of equipment, thereby increasing the unit cost per procedure. "This is a good example of a device which could be shared by several hospitals, rather than each hospital buying its own," said Allgire. He also stated that the advances in technology may make the NMR obsolete in about two years "and then every hospital will rush out once again to buy the latest scanner which will probably cost about four million dollars each by that time." Allgire referred to this phenomenon as the "medical arms race" which contributes to the high cost of health care. Prior to recent legislation, the purchase of expensive equipment such as NMR's required the approval of the local health planning agency, the Health Systems Agency. A bill passed by the state legislature now prohib- its the HSA from determining what hospitals can purchase such equip- ment. An NMR scanner has already been installed in a medical complex near Alvarado Hospital. In addition, the UCSD Medical Center, Mercy and Grossmont Hospitals are developing plans to purchase the scanners. Other hospitals are expected to announce similar purchases in the next scanner currently widely used by hospitals, the CT or computerized few months. HEALTH COS? MOVI?OR Sat) 111 * MAIIC CE ik by Nancy Sullivan, California Chamber of Commerce SENATE TO CONSIDER A.B. 664 Assembly Bill 664, sponsored by Assemblyman Curtis Tucker of LOS Angeles County, would extend the life of the California Health Facilities Commission by 592 hospitals and 1,191 long term tend to downplay the data. eliminating the January, 1986 sunset provision in current law. The Com- A.B. 664 is currently in the ~ mission would otherwise cease to ex- Health & Welfare Committee ist as a result of the sunset provision. favorable recommendation wi A.B. 664 was narrowly passed by it to the Senate floor. The Calj the Assembly in late January. It ferred provider arrangements. The Chamber of Commerce received 41 votes for passage, the employer health care coal bare minimum needed. throughout the state support 664 and a continuation of the facilities in the state. The Commis- sion collects and discloses to the public information about both the cost and utilization of California’s care facilities. This information is particularly important because of re- cent state legislation which permits purchasers to negotiate and contract with health care facilities in pre- Commission‘s cost and utilization data provides purchasers with valu- able background information for the The reaction of the hospital in- dustry during recent years to the Commission’s activity ha: mixed. Some hospitals actua: the Commission’s data in the marketing efforts while othei Business hea1th coa1itions and negotiating and contracting process. mission’s functions. other health care consumers have generally supported the Commis- sion’s monitoring of health care ATIIONS IN HOSPITAL FRI[CES* Avg. Avg. Avg. Avg. Charge Charge Charge Charge Hospital Hospital Per Stay Per Day Per Stay Per Day Year to Date, 1983 CATEGORY A CATEGORY C University $8,544 $1,162 Physician & Surgeons 6,289 338 CATEGORY B El Cajon Valley 6,231 856 Children’s 7,133 1,364 Sharp-Cabrillo 6,137 774 Alvarado 6,480 940 Clairemont 5,774 724 Sharp Memorial 5,904 935 Villa View 5,359 584 Tri-City 4,888 726 Hillside 4,794 702 Scripps-La Jolla 4,769 712 Harbor View 4,785 725 Scripps Clinic- College Park 4,682 833 Green Hosp. 4,503 712 Paradise Valley 4,665 692 Mercy 4,340 704 Cor onado 4,590 352 Grossmont 3,763 561 Scripps- Palomar 3,464 563 Encinitas 4,426 864 Mission Bay 4,083 732 Community 3,901 613 3,840 758 3,125 687 2,720 671 Chula Vista NOTE: A CATEGORY A hospital is a teaching hospital with highly specialized care units. A CATEGORY B hospital specializes in acute care and provides a wide variety of seruices. A CATEGORY C facility is an acute care hospital proiriding routine services. Certain facilities that offer primarily psychiatric care and alcoholism treatment have been omitted from this list. Children’s Hospital’s high expenses result from the complicnted pediatric cases treated. Sharp Memorial’s cost per stay is affected by a large percentage of its patient load in its rehabilitation unit. ’This iiifont!ufio,i has heetl token hu the HSA from puhlzr da!a tlra: 1msp:tuls are rcqu (ivi~~u Hual!h Farti>tws Coinrnrssi&,. Churg~; !dud<, mom. hoard and anrilinry SPI B~,, ~~~~~~l Fallbrook Pomerado This has led to a concern over the those who perform it. Although R.K. cult procedure and takes only about fifteen minutes per eye when per- formed on an outpatient basis, the average charge for the surgery ranges between $1,000 and $2,000 per eye. This exorbitant cost is difficult to justify. motives behind the procedure and is not considered a technically diffi- Health Cost Monitor: OUR PREMIERE ISSUE This newsletter is distributed to more than 3,500 licensed physician in San Diego County. In addition, it is distributed to employers hospital personnel, labor union leaders, insurers, senior citizei organizations and others. Letters are welcomed from readers as well a requests for additional copies (supplies are limited). Editor reserves thi right to abridge all letters. Send them to P.O. Box 81491, San Diego, CL 92138. c MAIiC e fi'i-itLTii COjT IZIO.~'!TOX SLiii Dirx 8 -uIi,fon!iu EDITORIALS A TRIBUTE TO STEVE ROSINSKI In late April, San Diego employ- addressing this complex problem. complexities of the health cai ers will lose one of their most He is rightfully labeled the system are such that employ( articulate and effective spokes- "father" of the employer health interest and involvement i man for affordable healthcare. care coalition movement in healthcareissueswillbeneede Steve Rosinski, recently retired as California. At a time when others for a long period of time. Bi Vice President of Industrial Rela- were pretending that a serious Steve demonstrated to all of 1 tions at Rohr Industriesin Chula problem did not exist, Steve that the task is worthy and tl Vista, will head off to his new founded a fledgling group which obstacles to success are not insu home in northern Idaho to enjoy became The San Diego Employ- mountable. Perhaps his greate: the rural serenity which he ers Health Cost Coalition, the contribution has been his ir cherishes. His many friends and first such coalition in California. fluence on a whole new cadre c colleagues throughout the state Realizing that employers employer leaders throughout th will miss him dearly. throughout the state had to be state who will continue the task Those who have worked with mobi1izedf he trave1ed around the The San Diego Employer Steve in attempting to control the state to he1p estab1ish Other local Health Cost Coalition is proud t cost of health care have been coa1itions- Thanksinlargepart to pay tribute to its founder, Stev amazed at his tireless efforts. his effortsr there are now fourteen Rosinski, and upon behalf of h. Long before health care costs localemP1oyer hea1th carecoali- friends and colleagues througf became a national crisis, Steve tiom in California. out California, express our etei Rosinski realized the need for The task which Steve Rosinski nal gratitude and respect. employers and the business com- began is far from over. He will be munity to take an active role in the first person to admit that the THE CCN- A WELCOME DEVELOPMENT The Community Care Network first half of 1983 from the com- Rather, it is "a community PPO' (CCN) of Sari Diego is a parable period in 1982-more developed in an open proces' community-based preferred pro- than ten times the general infla- which included both purchaser vider organization (PPO) that tion rate. The premiums of many and providers. The developmen will Soon begin the contracting employers' group health plans process was lengthy and at time processwith local hospitals and havebeenincreasingfrom20% to frustrating. But the proces physicians. Scheduled to begin 50% for the past several years. served its purpose in making a1 operations in June, the CCN is Escalating health care costs have participants in the health car1 eagerly awaited by many the attention of both providers system aware of each other'. employers, labor organizations, and purchasers on a local, state legitimate concerns and interests hospitals, physicians and in- and national level. Because the CCN wa: surers. Each of these groups colla- The CCN is a system of man- developed jointly by responsiblt borated in the development of aged health care which recognizes community leaders, it is a PPC CCN. Each is committed to its that issues such as the cost and which will have the most credibi. goal to providing more aiiord- quality of health care are most lity among skeptical health cart able health care in San Diego effectively addressed on a local purchasers. Indeed, all Sar while preserving access and qual- level. The San Diego Committee Diegans can be proud of the CCb ity of care. For Affordable Health Care, the and the process which created it San Diego employers have wit- creator of CCN, has brought The SanDiegoEmployersHealtl nessed the rapid escalation of together the local community Cost Coalition strongly supports health care costs. For example, forces to design the system. The the Community Care Network hospital charges in San Diego CCN is not "a purchaser's PPO" and welcomes its arrival. County rose nearly 18% in the nor is it "a provider's PPO." I I .............................. r _----_--_--__---- -- - - - ., I I HEALTH COST MONITOR i BULKRATE [ P.O. Box 81491 San Diego, CA 92138 ! U.S. POSTAGE PAID ! I SANDIEGO, CA. i I I I PERMITNO. 2577 ; !______________________-~ c? Yes, please keep my name on your mailing list. To receive future issues, send this section containing your name to P.O. Box 81491, San Diego, CA 92738. +&,, c-5- ;“yd<li.GI< P.O. Box 81491, San Diego, CA 9213 Copyright 1984 All Rights Reserved Reprinted materia:c require the written consenl of the edito EDITOR Robert M. Colasanto, PSA EDITORIAL BOARD Paul Allgire, Rohr Industries, Inc. Robert M. Colasanto, PSA Vicki Talley, SDG&E COALITION OFFICERS Paul Allgire, Rohr Industries, Inc. Chair Cynthia Stribling, S.D. Trust & Savings Vice-Chair Cubic Corporation Secretary Richard Rauch, The Signal Companies, Inc. Chief Financial Officer Lin Ball. LAYObT AND GRAPHICS: Ed Passi, TYPESETTING. Betty Sheber. Carol Bennett. 198 Vol. I. Issue No. 1