Telling the stories that the mainstream media no longer tell.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 4,030 other subscribers

Archives

Categories

Follow me on Twitter

September 2017
M T W T F S S
« Mar    
 123
45678910
11121314151617
18192021222324
252627282930  

Oregon’s healthcare “transformation”: What is a Coordinated Care Organization, and will it save money?

ungovernable

Oregon’s governor has a plan to “transform” the delivery of health care in the state.  At first blush, it seems that the state will jettison its experiment with the Oregon Health Plan that made headlines two decades ago with its rationing of services.

It looks more and more likely, however, that the new plan will look much like the old plan, only without the explicit rationing of service.   Even so, the state has big hopes of saving hundreds of millions of dollars. Toward that end, the governor’s office has been pointing to a new study prepared for the state that says efficiencies associated with a transformation of the Oregon Health Plan could save the state approximately $130 million a year.

In an interview with Dr. Bruce Goldberg, director of the Oregon Health Authority, the Oregonian reports that the Authority is trying to drive down costs and improve quality with what the state calls “coordinated care organizations” (CCOs).  Dr. Goldberg expects to have an analysis of potential cost savings available in January. Even so, the state has already budgeted $239 million in general fund savings as a result of creating CCOs.

CCOs are groups of doctors, hospitals and other caregivers who will be responsible for coordinating all mental, physical and dental care for people covered by Medicaid, the government program for the disabled and poor. The state is designing payments to reward caregivers for keeping members healthy, achieving quality goals, and reducing “disparities.”

While Oregon’s politicians and bureaucrats are hopeful that CCOs can produce cost savings that more than forty years of healthcare reforms could never deliver, no one seems to have a clear idea of what a CCO is and does.  Nor does anyone have a clear view of how a CCO would work in the real world outside of task forces and rule-writing boards.  One thing is clear: Policymakers are steering clear of any association with managed care organizations.  Here is Dr. Goldberg’s description of CCOs from his Oregonian interview:

Managed care was more about managing costs, or limiting care to save money. It wasn’t about how we improved outcomes. Coordinated care is about investing money to improve outcomes and save dollars. It’s about local doctors, hospitals and consumers coming together in a collaborative organization. It’s not about an outside managed care company imposing limits.

Right now we have a system that’s based on production. The more times you get admitted to the hospital, or treated at a doctor office, the more providers get paid. We want to reward providers for improving health.

CCOs and managed care: Same, same, but different

Street merchants in Thailand are famous for saying, “Same, same, but different.” If a tourist remarks, “I just saw this same trinket down the street for a lot less money,” the merchant will inevitably respond, “Same, same, but different.” That means, sure, it’s the same trinket, but its just a little bit different, that’s why the price is higher.

Notice that Dr. Goldberg’s first response is to dump on managed care, which on its face seems to be very similar to “coordinated care.”  (And, remember, managed care was a key component of the original Oregon Health Plan’s goal of saving taxpayer money.)  In particular he dumps on managed care’s objective to “save money.” Nevertheless, one of the “transformation’s” key objectives in creating CCOs is to save the save state hundreds of millions of dollars.  Same, same, but different.

Also notice that Dr. Goldberg says that coordinated care is about “investing money.” In economics, the difference between spending and investment is that one expects to earn a return on an investment.  Thus, it seems that coordinated care is about spending a large sum of money up front in hopes of seeing a stream of cost savings in the future.  It remains to be seen what and where the “investment” will be and whether or not the “savings” will ever show up.

5440 note: Reprinted by permission from our buddy Eric Fruits’ blog, Economics International

Similar posts

No Comments Yet

This site sponsored by:

YOU! Your message could reach thousands of online consumers. Click CONTACT to inquire about advertising rates.

Paid advertisement

  • Washington state House Democrats ask Congress to find a solution to keep DACA recipients here September 22, 2017
    This week, all 50 members of the Washington state House Democratic Caucus sent a letter to Speaker Ryan and Majority Leader McConnell requesting that Congress take action in response to President Trump’s decision to rescind the Deferred Action for Childhood Arrivals program. Washington state is home for nearly 18,000 young people who are able to […]
  • Morning Wire: Reichert for Gov?, Seattle Seahawks, Rep. Joe Schmick September 20, 2017
    The purpose of the Washington State Wire is to provide smart, strategic content with thoughtful brevity. We create original content, and we lean on the good work of others. We see our role as helping you look ahead just a little bit, to better know where the policy, political, and economic landscape is heading. Your […]
  • Public policy, the will of the voters, and the Seattle Seahawks September 19, 2017
    “Across all demographics, the 12s are contagious. It’s for everybody.” In this quote, King County Council member Jeanne Kohl-Welles was reflecting on the role of the Seattle Seahawks as a unifying force for the Seattle community. It may be hard to remember for some, particularly the new fans that winning has recruited over the last […]
  • Black Population Trends September 25, 2017
    Between 2015 and 2016, the total population of the San Francisco-Oakland urban area grew by 13,773 people, but the black population shrank by 5,839, suggesting that Bay Area land-use policies continue to push low-income people out of the region by making housing unaffordable. The Austin urban area, to its shame, saw a decline of 4,439 […]
  • More 2016 Commuting Data September 22, 2017
    People who earn more than $75,000 a year are more likely to ride transit than people in any other income bracket. Most of those high-income transit riders live not in big cities like New York or Chicago but in suburbs of those cities. That information is from table B08119 from the 2016 American Community Survey. […]
  • Housing Affordability in 2015 September 22, 2017
    Today the Antiplanner continues reviewing 2016 American Community Survey data by looking at housing affordability, a common measure of which is median house prices divided by median family incomes, or value-to-income ratio. Median family incomes are in ACS table B19113, while median home prices are in table B25077. To save you time, I’ve downloaded these […]