Magazine article Workforce Management

A New Remedy Emerges for Spiraling Health Costs

Magazine article Workforce Management

A New Remedy Emerges for Spiraling Health Costs

Article excerpt

Two years ago Catherine Dodd, director of the San Francisco Health Service System, saw a bleak future for the city's and county's health care costs.

With 105,000 covered lives (i.e., workers and their families), the system's expenses were rising year over year. Municipal budget cuts meant no new hires and covered employees and retirees were just getting older. About 66 percent of workers had elevated body mass indexes, about half were pre-diabetic or diabetic while 12 percent were smokers.

"It's a population just as sick as any employer has," says Dodd, a registered nurse, who decided to make a change.

In her request for proposal to health insurers bidding on the city and county's HMO contract, she included the wish to start an accountable care organization, or ACO. ACOs require payers--i.e., insurers--and health care providers to better coordinate care for members, especially those with the most medical needs, with the goal of improving cost trends and patient outcomes. Providers typically share in savings reaped from better coordinated care and lower costs, and they must meet and maintain quality standards.

Blue Shield of California was the only insurer out of the four finalists bidding for the contract that agreed to launch an ACO, Dodd says. Not surprisingly Blue Shield won the contract.

So in July 2011, the city and county of San Francisco began their two ACOs involving 26,000 employees, dependents and retirees. Results won't be available until the end of the year but preliminary findings are promising, those involved say.

"We've already seen a dramatic decrease in our trends," Dodd says.

For instance, cost trends have been cut in half during the past nine months for one ACO involving city and county employees treated at the University of California at San Francisco, Dignity Health, a San Francisco-based hospital system, and Hill Physicians, a local medical group, Dodd says. …

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