Sponsored by Oregon Business

Searching for a Cure

| Print |  Email
Articles - July/August 2014
Friday, July 11, 2014


What with the Cover Oregon debacle, delayed employer mandates and ongoing political gamesmanship, health care reform in Oregon and around the country got off to a rocky start. But behind the Oracle scandal, the enrollment snafus and high-profile health insurance exchange firings and hirings is a health care system slouching toward change.

Oregon Business talked to the doctors, the insurers and the hospital executives on the front lines of “health care transformation,” an ambitious moniker for institutional and policy shifts that can seem, to the layperson, far more incremental than radical.

Many of these changes revolve around the idea of collaborative care,  a  prevention-based model that seeks to organize health care businesses around patient outcomes; the goal is to control costs and make people healthier. Free-market competition and a rethinking of the relationship between employers and health insurance are among other changes under way. It’s a battlefield marked by uncertainty and innovation, along with a deep-seated desire to conquer one of the nation’s biggest challenges: our extraordinarily expensive and inefficient health-care delivery system.

Grand Experiment

In 2012 Gov. Kitzhaber persuaded the federal government to grant Oregon $1.9 billion over five years to help pay for an ambitious health care transformation experiment: to fund 16 “coordinated-care organizations” serving members of the Oregon Health Plan, the state’s financially unsustainable Medicaid program. The philosophy behind CCOs is simple: If health-care providers communicate more effectively around patient care, they will deliver more cost-effective service. Pay these providers a limited amount for each patient — a practice called “capitation” — rather than a fee per service, and you also create an incentive to keep patients healthier.

Technically, the governor’s transformation initiative was limited to the Oregon Heath Plan. But two years later, private-sector providers are following suit. And as the number of CCO-inspired health care organizations increases, the stakes for the governor’s gamble are getting higher. Oregon health care businesses are all asking themselves the same question: Will coordinated care deliver on its promise?

More than 800,000 OHP members now receive care through CCOs, as do about 130,000 public employees covered through the Public Employees’ Benefit Board. Because many private providers are invested in the CCO business — Moda, for example, owns the Eastern Oregon Coordinated Care Organization — the CCO-patient population is catalyzing change system-wide.

Federal reform is also helping spread the coordinated-care gospel. The Affordable Care Act (ACA) prohibits insurers from denying coverage for preexisting conditions. As Ralph Prows, CEO of the new nonprofit insurer Oregon’s Health CO-OP, points out, the new regulations make coordination carriers’ best bet for minimizing risk. “The health plan that’s going to do well is the health plan that manages its sick people well,” he explains. “It’s a totally different game.”

Moda, the Northwest insurance giant, covers employees working for the city of Portland. To reduce expenses, the insurer last year offered the 5% of city employees driving health plan costs the opportunity to participate in a new care-coordination initiative. The result was a 50% drop in ER visits for that population, and Moda is now considering expanding the program.

Providers are adopting similar initiatives. The Portland Clinic, with seven locations and 500-plus employees, recently launched a program in which nurses visit seniors’ homes to consult on accident proofing. The program helps prevent ER visits and lengthy hospitalizations, says Mike Schwab, the clinic’s snowy-haired CEO. And yet under the traditional fee-for-service payment model, there was no system in place to pay for that initiative.

So the clinic pitched insurers new models placing a value on preventive care. “We said, ‘We’re doing these things, and we want to do them for your patients as well; would you pay us differently to do that?’” Schwab says. “We’re moving the change ourselves.”


Bob Dannenhoffer, CEO of Architrave Health 

Over the long term, however, neither Schwab nor anyone else knows whether coordinated care will work as planned. If the savings promised by CCOs don’t materialize, and the state doesn’t limit annual Medicaid spending growth under ambitious caps of 4.4% this year and 3.4% in 2015, the federal grant dollars Kitzhaber secured will disappear, leaving a yawning gap in Oregon’s health budget.

“At least so far, we’ve lived within a sustainable budget,” reports Bob Dannenhoffer, chief executive of Architrave Health, the parent company of the Douglas County CCO, Umpqua Health Alliance. Dannenhoffer says the CCO encourages medical and mental health care providers to integrate treatment of patients with “severe and persistent” mental illness, thereby cutting down on services performed in the emergency room. “It’s an experiment, and not all experiments work,” says Dannenhoffer, referring to CCOs. “But it’s been looking pretty good.”

A state report released in June validates Dannenhoffer’s prognosis, including a finding that in 2013, ER visits by people served by CCOs were down 17% compared with the number of visits in 2011.

Others are more circumspect. Andy Davidson, president of the Oregon Association of Hospitals & Health Systems, predicts the real test for CCOs will come when the surge of federal dollars and new Oregon Health Plan members begins to ebb. “I don’t think you’ll see anybody choking in the first two years of reform, because there’s enough new volume and new dollars in the system to mask the problems,” says Davidson, a former health care policy advisor to U.S. House Whip Steny Hoyer. “But we’ve got to watch carefully at the two- and three-year marks. There’s enormous risk for everybody that’s part of a CCO.”


More Articles

Make the business case, governor

Linda Baker
Thursday, November 05, 2015
aoikatebrownthumbBY LINDA BAKER

Gov. Kate Brown delivered the keynote speech at the Associated Oregon Industries annual policy forum yesterday.  Speaking to a Republican-aligned audience of about 100 business and public policy leaders, the governor was out of her comfort zone.



November/December 2015
Wednesday, October 28, 2015

The world's second-largest wind energy project yields costs and benefits for a sheep-farming family in Eastern Oregon.


Tinker, Tailor, Portland Maker

November/December 2015
Wednesday, October 28, 2015

The artisan generation redefines manufacturing.


5 facts about the teaching profession in Oregon

The Latest
Thursday, October 08, 2015

Based on several metrics, Oregon has one of the lowest performing K-12 education systems in the country. Teacher compensation is part of the problem.


Back in Black

Guest Blog
Friday, November 20, 2015

It’s been a volatile year in equities and heading into the holiday season, it doesn’t look like these market extremes will dissipate.


The death and life of American cities

Linda Baker
Monday, November 02, 2015
housingoldpdx thumbBY LINDA BAKER

The hollowing out of the American city is now a bona fide cultural meme.  Newspapers, magazines and digital media sites are publishing story after story about the morphing of urban grit and diversity into bastions of wealth and commodity culture.


Have a baby and keep a job? It won’t be easy in Portland

The Latest
Friday, October 02, 2015
100115kimblogthumbBY KIM MOORE

Our intrepid (and expecting) research editor finds the child care search involves long waiting lists, costly fees and no certainty of securing a place before she goes back to work.

Oregon Business magazinetitle-sponsored-links-02