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In response to a new Medicaid program in California in which a portion of hospitals' reimbursement is tied to performance goals, Santa Clara Valley Medical Center plans to aggressively manage its patients' chronic illnesses.
In response to a new Medicaid program in California in which a portion of hospitals' reimbursement is tied to performance goals, Santa Clara Valley Medical Center plans to aggressively manage its patients' chronic illnesses.

Healthcare Market Profile: San Jose-Sunnyvale-Santa Clara

Pay for performance: San Jose public hospital rolling out new program in preparation for reform


By Linda Wilson
Posted: July 25, 2011 - 12:01 am ET
Tags:

Santa Clara Valley Medical Center is in the midst of a pivotal journey in the 135-year-old organization's history.

The 228-bed public medical center in San Jose, Calif., is one of 19 public hospitals in California implementing a new Medicaid program in which a portion of the reimbursement is tied to meeting performance goals.

The goal of the five-year program, which began in November 2010, is to expand health insurance coverage to low-income people and to improve the quality and efficiency of healthcare services. The program also should help public hospitals prepare for the full implementation of federal healthcare reform in 2014, when many uninsured Californians will be added to Medicaid.

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Through the new program, known as a Section 115 waiver, public hospitals in California can earn up to $3.3 billion in federal funds over five years from a Delivery System Reform Incentive Pool , according to the California Association of Public Hospitals and Health Systems . The waiver also grants a separate pool of federal funds to match county government expenditures to expand Medicaid to uninsured residents.

The new program replaces a waiver program that had been in place from 2005 to 2010.

To qualify for the incentive funds under the new program, Santa Clara Valley developed a five-year plan with 267 specific milestones to measure improvements in patient safety and clinical outcomes, preventive health, expansion of capacity in outpatient clinics and chronic-disease management, among others. Payments from the funds will be based on how well the hospital meets its goals. Between $115 million and $147.5 million in matching funds is at stake each year.

“We are in a different era as far as healthcare and how the money will be parceled out,” says Santa Clara County Supervisor Liz Kniss, also chairwoman of the county board's health and hospitals committee.

The overall intent of the hospital's improvement plan is to move from a focus on treating episodes of acute illness to managing patients' overall health. It is a huge undertaking for a public hospital: “We think about one-third of our patients fall into our system or leave our system based on their insurance status in a given year,” says Linda Smith, CEO of Santa Clara Valley Medical Center.

Meeting the performance goals for the at-risk funding is crucial because the majority of the hospital's patients are on government-sponsored insurance. The payer mix in 2010 was 47% Medicaid, 11% managed-care Medicaid, 16% Medicare, 15% commercial insurance and 11% ability to pay or uninsured.

Overall, the public hospital cared for nearly a quarter, or 22%, of Santa Clara County's residents in 2010, logging 116,746 inpatient days and 824,594 outpatient visits. (Other county residents went to private providers, which include Kaiser Permanente, Stanford Hospital & Clinics, HCA and the Daughters of Charity Health System.)

A key tenet of Santa Clara Valley Medical Center's five-year improvement plan is to aggressively manage patients' chronic illnesses in outpatient clinics because almost half of the medical center's adult patients have at least one chronic disease.

To do so, the medical center plans to either buy or build an electronic chronic-disease registry. The medical center also will create a pilot program in four primary-care clinics to coordinate medical services with the county's mental health and substance abuse services. The pilot project will include specialized training to help primary-care medical providers screen their patients for behavioral-health issues.

Santa Clara Valley also plans to expand the number of adult patients at its primary-care clinics by 52%, from 38,000 patients to 58,000, according to the medical center's written plan. To accomplish this, the medical center will add new clinicians, build its eighth primary-care clinic and improve the way it determines the appropriate caseload for individual providers.

To expand access immediately, Smith added evening and weekend hours at some primary-care clinics. “Because many of our patients are working poor, taking time off work to go see a physician means lost wages,” Smith says.

Through measures to build access, the use of emergency department services among adult patients should decline during the five-year period from 52,000 to less than 20,000, according to the medical center's written plan.

“It is an exciting time to be here and to drive the system toward change, but I wouldn't want to underplay at all how difficult this will be for both of us as a delivery system and for our patients as consumers,” Smith says.


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