CALIFORNIA Health Care Almanac REGIONAL MARKETS SERIES DECEMBER 2020 Inland Empire: Increasing Medi-Cal Coverage Spurs Safety-Net Growth per capita in the region is still only half the statewide Summary of Findings average. A sprawling region of more than 27,000 square miles, the Inland Empire of Riverside and San Bernardino Counties ▶ Many physicians practice independently in solo or is a study in geographic contrasts, with urban population small practices. Throughout the region, a large share of centers in the west and rural, sparsely populated areas to care is delivered by these physicians. However, the physi- the east. The region has enjoyed continued population and cian practice landscape is shifting as financial pressures, employment growth, although it continues to be poorer and market conditions, and demographics all combine to less healthy than other parts of California. In recent years, make independent practice less attractive. Additionally, the Affordable Care Act (ACA) has continued to play a large many younger physicians increasingly prefer the stabil- role in shaping the Inland Empire’s health care sector, with ity of an employment relationship and are drawn to the increased Medi-Cal coverage decreasing the share of unin- region’s larger providers, including Kaiser, FQHCs, and sured people and spurring growth of Federally Qualified larger medical groups. Health Centers (FQHCs). Small group or solo physician prac- ▶ The region’s hospital market remains unconsoli- tices remain common in the region; however, the landscape dated. San Bernardino and Riverside Counties have is shifting. Throughout the Inland Empire, provider shortages among the lowest levels of hospital market concentration remain a pressing concern, although new medical schools in California, although countywide measures can mask may increase physician supply.1 the extent of hospital concentration, as some hospitals The region has experienced a number of changes are dominant in their local submarkets. There have been since the previous study, in 2015–16 (see page 21 for more no mergers or significant changes to hospital market information about the Regional Markets Study). Key develop- shares over the past several years, although several hos- ments include the following: pitals have closed pediatric units. Kaiser Permanente, ▶ The number of FQHCs and patient visits continues to with about a quarter of the regional market in terms of grow, bolstering the safety net. As new FQHCs opened covered patients, operates an integrated delivery system in the region, the number of FQHC patient visits more with a health plan, hospitals, and its own network of phy- than doubled, from just under 500,000 in 2014 to more sicians and continues to be a major player in the market. than 1.2 million in 2018. Nonetheless, the number of visits This paper is one of seven included in CHCF’s 2020 Regional Markets Study. Visit our website for the entire Almanac Regional Markets Series. ▶ Inland Empire Health Plan (IEHP), the region’s largest communities to the west. New medical schools in the Medi-Cal managed care plan, drives pay-for-perfor- region, coupled with incentives to encourage newly mance (P4P) initiatives for Medi-Cal providers. IEHP minted physicians to practice in the area, may help miti- provides coverage to nearly 9 in 10 Medi-Cal enrollees in gate this challenge in the future. the region — equivalent to more than a quarter of the region’s total population — and contracts with more Market Background than half of the region’s primary care physicians and The Inland Empire is a sprawling two-county region, span- roughly 40% of specialists. The plan’s dominant role in the ning the borders of Los Angeles and Orange Counties in the Medi-Cal market provides significant leverage to engage west to Arizona and Nevada in the east. The region is home hospitals and physicians in incentive programs using to more than 4.5 million people, split roughly between data to drive performance improvement. Riverside County in the south and San Bernardino County in ▶ Efforts are still being developed to embrace tech- the north. nology and data analytics to improve outcomes Most people live in the larger cities, south of the San and lower costs. Interoperability challenges stemming Bernardino Mountains and east of the Santa Ana Mountains. from the use of multiple electronic health record (EHR) Farther east are the more sparsely populated mountain and systems, as well as staffing and financial constraints, espe- high desert regions. The federal government owns 80% cially among the region’s many smaller practices, hinder of the land in San Bernardino County, including Mojave adoption of quality improvement efforts. The relative lack National Preserve, and a substantial portion of Riverside of data sharing among the region’s hospitals and physi- County. Communities in the region’s denser suburban core cians may also slow efforts to improve care and increase are generally higher income than the cities and towns such efficiency. as Hesperia and Barstow dotting the mountains and high desert. ▶ Much of the innovation surrounding integration of Before the COVID-19 pandemic, California’s economic behavioral and physical health care in the region has expansion was especially pronounced in the Inland Empire, occurred in the Medi-Cal program and among safety- where the unemployment rate fell by almost half, from 8.1% net providers. IEHP has supported several behavioral in 2014 to 4.5% in early 2020 (see Table 1, page 3). The drop health integration efforts; many FQHCs in the region in the unemployment rate coincided with the region’s signifi- offer integrated behavioral health care; and both county cant population growth. As the Los Angeles area continued departments of behavioral health are pursuing integra- to add jobs and new housing failed to keep pace, people tion efforts. Nevertheless, access to behavioral health moved to the Inland Empire. As a result, the populations services remains an important issue in the region. of both Inland Empire counties have grown faster than the ▶ The region continues to struggle with recruiting statewide average, with the region’s population growing primary care clinicians and specialists. Compared 5.5% over the past five years and 12.7% over the past decade. with other California regions, the Inland Empire has fewer The Inland Empire’s Latinx population continues to grow primary care and specialty physicians per person, with more rapidly than that of other races/ethnicities, and Latinx even greater disparities in the Inland Empire’s eastern residents now account for just over half the population of areas compared with the more densely populated the two counties — a share that is more than 10 percentage California Health Care Foundation www.chcf.org 2 TABLE 1. D emographic Characteristics points greater than the Latinx share of the statewide popula- Inland Empire vs. California, 2018 tion. Notably, despite the large Latinx share of the immigrant Inland Empire California population statewide, a large proportion of the Inland POPULATION STATISTICS Total population 4,622,361 39,557,045 Empire’s Latinx residents were born in the United States: 26% Five-year population growth 5.5% 3.2% of California residents but only 21% of Inland Empire resi- AGE OF POPULATION, IN YEARS dents were born outside the United States. Under 18 25.7% 22.7% Even as the region’s population grew and the unemploy- 18 to 64 61.2% 62.9% ment rate fell, in other respects the region’s economy has 65 and older 13.1% 14.3% lagged behind the state’s economy. More Inland Empire RACE/ETHNICITY Latinx 51.6% 39.3% residents live in poverty and fewer earn more than $100,000 White, non-Latinx 31.5% 36.8% annually compared with Californians generally. Thirty-five Black, non-Latinx 7.1% 5.6% percent of Inland Empire residents have a college degree, Asian, non-Latinx 6.8% 14.7% compared with 42% of Californians statewide. The region Other, non-Latinx 3.0% 3.6% is home to a relatively high number of construction, ecom- BIRTHPLACE merce wholesaler, and transportation jobs.2 And per capita Foreign-born 20.6% 25.5% incomes remain less than two-thirds of the California average. EDUCATION High school diploma or higher 83.6% 83.7% Other quality-of-life metrics also show San Bernardino College degree or higher 34.9% 42.2% and Riverside Counties trailing other California regions. The ECONOMIC INDICATORS two counties have relatively high pollution levels; both Below 100% federal poverty level (FPL) 13.7% 12.8% rank in the bottom quartile on this metric, according to the 100% to 199% FPL 19.9% 17.1% California Healthy Persons Index.3 To some extent, these pol- Household income $100,000+ 30.5% 38.0% lution levels are the result of the region’s heavy reliance on Median household income $65,512 $75,277 automobile travel. Many residents work outside their county Unemployment rate 4.5% 4.2% Able to afford median-priced home (2019) 44.9% 31.0% of residence, and Inland Empire commute times, which Sources: “County Population by Characteristics: 2010–2019,” Education by County, FPL by average more than 30 minutes, are the longest in Southern County, Income by County, US Census Bureau; “AskCHIS,” UCLA Center for Health Policy Research; “Employment by Industry Data: Historical Annual Average Data” (as of August 2020), Employment California.4 Relative to other counties in Southern California Development Dept., n.d.; and “Housing Affordability Index - Traditional,” California Association of Realtors. All sources accessed June 1, 2020. and the San Francisco Bay Area, there is limited access to public transit, with fewer than 5% of residents living within a half mile of a major transit stop.5 Inland Empire Residents Report Poorer Health Relative to Californians Generally Across a range of both physical and behavioral health metrics, the Inland Empire’s residents report poorer health relative to Californians generally. Nutrition is a significant concern, according to both local physicians and survey data. The region’s obesity rate is 10% higher than the statewide California Health Care Foundation www.chcf.org 3 rate, and the incidence of diabetes is fully 20% higher (see TABLE 2. Trends in Health Insurance, by Coverage Source Figure 1). More people in the Inland Empire report experi- Inland Empire vs. California, 2015 and 2019 encing frequent mental distress compared with Californians INLAND EMPIRE CALIFORNIA 2015 2019 2015 2019 generally, and more reported needing mental health treat- Medicare* 13.2% 14.5% 14.4% 15.9% ment but not receiving care.6 Perhaps as a result, the suicide Medi-Cal 33.5% 33.1% 29.1% 28.7% rate in the region exceeds that of California more generally.7 Private insurance † 43.9% 43.5% 47.8% 47.7% Uninsured  9.4% 8.9% 8.6% 7.7% FIGURE 1. P hysical Health Indicators Inland Empire vs. California, 2018 *Includes those dually eligible for Medicare and Medi-Cal. † Includes any other insurance coverage (excluding Medicare and Medi-Cal). Reporting fair/poor health Source: Calculations made by Blue Sky Consulting Group using data from the US Census Bureau, the Centers for Medicare & Medicaid Services, and the California Department of Health Care Services. 19.9% 18.5% Overall, health insurance coverage in the region is domi- Diabetes/pre-diabetic (adults only) nated by two players: IEHP, which covers about one-fourth 18.2% of the region’s population through the Medi-Cal program, 15.9% and Kaiser Permanente, which covers an additional quarter Asthma of the population, primarily in the commercial and Medicare 16.7% markets.9 15.7% Most coverage for Medi-Cal enrollees is provided under Obesity (adults only) the Two-Plan Model, with care provided by one public 30.6% plan and one private plan. IEHP, the public plan created 27.3% by Riverside and San Bernardino Counties, covers 89% of Preterm birth rate managed care enrollees (about 1.3 million people); Molina 9.5% ■ Inland Empire Healthcare, the private plan, covers the remaining 11% of 8.8% ■ California enrollees. The plans’ market shares have remained relatively Sources: “AskCHIS,” UCLA Center for Health Policy Research; “Preterm and Very Preterm Live Births,” California Department of Public Health. Both sources accessed June 1, 2020. stable in recent years, although enrollment for both plans has grown as Medi-Cal eligibility expanded.10 Fewer Inland Empire Residents Have Private Health Insurance Most Inland Empire Medicare beneficiaries are enrolled Because of the expansion of Medi-Cal under the ACA, as in generally lower-cost Medicare Advantage (MA) plans.11 well as improving economic conditions before the COVID- Statewide, MA accounts for 44% of beneficiaries, while nearly 19 pandemic, the number of Inland Empire residents going 59% of Inland Empire beneficiaries opt for MA. Kaiser covers without health insurance declined significantly in recent 31% of MA enrollees, with UnitedHealthcare (19%) and SCAN years. The uninsured rate prior to the pandemic stood at Health Plan (12%) also accounting for significant market just 8.9% — compared with 7.7% statewide — largely as a share. result of increases in the Medi-Cal program, which covers 1 Although Kaiser’s total enrollment has increased as in 3 people in the region (see Table 2).8 The region continues the region’s population has grown, its market share has to sustain a lower-than-average rate of private insurance and not changed significantly over the past several years. higher-than-average rate of Medi-Cal coverage, despite the Nevertheless, Kaiser continues to play a dominant role in the significant job growth noted previously. region, effectively competing for patients and new providers California Health Care Foundation www.chcf.org 4 and adding capacity through a planned hospital expansion, The region’s hospital market remains relatively stable, with new clinics, and a new medical school. no mergers or significant changes in hospitals’ market shares Kaiser also has a large share of Inland Empire enrollment over the past several years, although several hospitals have on the state’s health insurance exchange, Covered California, closed pediatric units. Respondents noted that, particularly with just over one in four enrollees choosing Kaiser. Other among hospitals, more traditional payment methods prevail, large regional players in this market include Health Net, with with most hospitals in the region reluctant to take on financial more than 40% of enrollment, followed by Blue Shield of risk. Most physicians in private practice caring for Medi-Cal California, with almost 24% of enrollment. 12 patients reportedly receive fixed per-member, per-month Overall, the share of Inland Empire residents enrolled payments for their professional and related services, under in Covered California plans is smaller than the share of the system known as capitation, as well as P4P incentives, Californians generally enrolled in those plans (see Table 3). which account for a significant share of revenue. According And while premiums in the Inland Empire are less expen- to interviewees, some larger organizations have assumed full sive than the statewide average ($408 for a silver plan policy risk, primarily in the Medicare Advantage market, but also for compared with the statewide average of $454), a recent anal- some commercial payers. ysis suggests that the region’s wage-adjusted average silver plan premium is in fact more expensive than the statewide Independent Physician Practices Are Common average, given the region’s lower incomes.13 In addition, both Data suggest the Inland Empire’s primary care and specialty inpatient and outpatient procedures in the Inland Empire’s care provider landscape remains relatively unconsolidated hospitals are, on a wage-adjusted basis, relatively less expen- compared with the rest of California, with many indepen- sive than in other regions, perhaps in part because of the dent physicians in solo or small group practices delivering hospital market’s lack of consolidation.14 care throughout the region. More physicians in the Inland Empire than in the state as a whole practice in settings that TABLE 3. Covered California Premiums and Enrollment Inland Empire (Region 17) vs. California, 2015 and 2019 are not owned or controlled by hospitals or health systems; REGION 17 CALIFORNIA this disparity is somewhat more pronounced among primary 2015 2019 2015 2019 care physicians (see Table 4). Within the Medi-Cal market, Monthly premium (Silver Plan on the $278 $408 $312 $454 more than 40% of all physicians who contract with IEHP do exchange for a 40-year-old individual) Percentage of population enrolled 2.3% 2.3% 3.0% 3.1% so directly and not through an independent practice associa- Source: Blue Sky Consulting Group analysis of data files from “Active Member Profiles: March 2019 tion (IPA) or medical group.15 Profile” (as of May 31, 2020) and “2019 Covered California Data: 2019 Individual Product Prices for All Health Insurance Companies,” Covered California. TABLE 4. P hysicians in Practice Owned by a Hospital or Health System Inland Empire vs. California, 2019 Provider Trends Primary care physicians Specialists Data suggest a relatively large share of care in the Inland Inland Empire 31% 47% California 43% 53% Empire is delivered by independent physicians in solo or Source: Blue Sky Consulting Group calculation of population-weighted regional and state averages small group practices. According to interviewees, this land- from Richard M. Scheffler, Daniel R. Arnold, and Brent D. Fulton, The Sky’s the Limit: Health Care Prices and Market Consolidation in California, California Health Care Foundation, October 2019. scape is evolving, as small practices struggle to recruit new clinicians and more care is delivered by FQHCs, while larger medical groups continue to expand their reach in the region. California Health Care Foundation www.chcf.org 5 As a result of the large number of independent practices, investments can be difficult for small practices to absorb. In the Inland Empire ambulatory care sector remains relatively addition, many younger physicians increasingly prefer an unconcentrated. Riverside County’s primary care market employment relationship and are therefore drawn to Kaiser, is the second least concentrated of 58 counties statewide, FQHCs, and larger medical groups. Although the region while San Bernardino County’s market is the 12th least con- has not witnessed significant growth in the hospital-based centrated.16 The region’s specialist markets also are relatively medical foundation model, which has led to consolidation unconcentrated when compared with the rest of California; of primary care providers in other regions, the combination Riverside has the third-lowest and San Bernardino the fourth- of increasing financial and demographic pressures may con- lowest market concentration in the state. tinue to propel growth away from solo and small practices The large number of independent providers and practices toward larger organizations. offers a range of choices to residents and autonomy for provid- These market forces may benefit some of the region’s ers but, according to interviewees, may also slow innovations largest IPAs and medical groups. OptumCare, through that are taking hold in other markets across the state, partic- its subsidiaries PrimeCare and North American Medical ularly with respect to the use of data to drive performance Management (NAMM) California, provides care for approxi- improvement and clinical integration. The region’s geography, mately 440,000 assigned patients in the commercial, as well as its physician shortage (see Clinician Shortages on MediCare, and Medi-Cal markets (or roughly 10% of the page 13), may prevent competition among providers neces- region’s insured population). PrimeCare is the largest IPA in sary to spur these changes. As one administrator put it, “there the Inland Empire. Together with NAMM, PrimeCare has a are pockets with low access, and providers haven’t had to network of approximately 650 primary care providers and innovate because they’re the only game in town.” takes full risk for MediCare Advantage and some commer- Although care delivery has long been dominated by cial enrollees. PrimeCare and NAMM have continued a steady small, independent practices, respondents note this land- expansion in the region over the past several years, including scape may now be shifting as financial pressures, market the 2016 acquisition of the Inland Faculty Medical Group, a conditions, and demographics all combine to put pressure large IPA serving Medi-Cal enrollees. Other recent additions on solo and small practices. While increasing use of quality include the Empire Physicians Medical Group in the Coachella improvement incentives can help to improve patient out- area; San Bernardino Medical Group, an 18-physician mul- comes, use of these incentives also has increased pressure tispecialty medical group with locations in San Bernardino on independent practices to better track and utilize data in and Fontana; and the Riverside Physician Network, with 60 clinical practice. According to several medical group leaders, primary care physicians.17 these practices must not only compete with FQHCs and their Other major physician organizations primarily serving more generous reimbursement rates for Medi-Cal patients commercially insured patients include Beaver Medical but also invest in adoption and use of EHR systems and data Group, with about 220 physicians, and Riverside Medical analytics needed to qualify for most P4P incentives. One Clinic, with 135. Beaver additionally owns EPIC Management, small medical group manager noted having “to scrape and which provides administrative, information technology (IT), fight to stay in business” amid the financial pressures and and management support to Beaver and eight other medical competition from FQHCs. groups. EPIC Health Plan, a subsidiary of EPIC Management, Interviewees noted that without the economies of scale covers more than 70,000 commercial enrollees (or about 4% offered by a large medical group or network of FQHCs, these of the Inland Empire’s privately insured population), taking California Health Care Foundation www.chcf.org 6 on global financial risk and contracting with primary and reassigned nearly 275,000 patients to other providers. The specialty care providers and hospitals on a capitated and fee- region’s FQHCs covered nearly 400,000 Medi-Cal lives (about for-service basis. 1 in 4 Medi-Cal enrollees) as of 2020, with Borrego Health, The region has also participated in a handful of account- Riverside University Health System (RUHS), and SAC Health able care organizations (ACOs) formed by the major System among the largest providers. commercial health plans. Blue Shield of California’s Trio ACO network, established in 2016, now includes both PrimeCare FQHC Expansion and Beaver, as well as several other smaller physician groups According to respondents, among the most notable recent and many regional hospitals. PrimeCare has similarly part- Inland Empire trends is the rapid growth of FQHCs. In recent nered with national carrier Aetna to establish Aetna Whole years, the number of FQHC patient visits, or encounters, more Health in the Inland Empire. As of 2018, the partnership’s than doubled, increasing from just under 500,000 in 2014 to payment model included incentives tied to quality, effi- more than 1.2 million in 2018 (statewide, there were about ciency, and patient satisfaction. one-third more FQHC patient encounters per capita during Outside of the Inland Empire’s urban core, the affiliated this period).20 FQHCs now provide primary care for roughly Choice Medical Group (CMG), Horizon Valley Medical Group, one-third of the region’s total Medi-Cal population. and Choice Physicians Network are responsible for more FQHCs are eligible for enhanced Medi-Cal payments, than 40,000 people in the high desert area, including 20,000 student loan repayment programs, and federal operational Medi-Cal enrollees. Another larger provider in the region and capital grants.21 Growth in the region’s FQHCs was driven is the Heritage Provider Network (which also covers other in part by the expansion of FQHCs from neighboring counties, areas across Southern California). Its affiliates, Heritage Victor such as San Diego–based Borrego Health, which now has 17 Valley Medical Group, with 45 primary care providers, and health center locations across Riverside and San Bernardino Desert Oasis Healthcare, with 67, serve the high desert and Counties and accounts for roughly half of all non-county-run Coachella Valley areas.18 FQHC patient visits, and Neighborhood Healthcare, which Aside from the independent physicians contracting started in Escondido and now has four Inland Empire loca- directly with IEHP — who collectively provide care for nearly tions and accounts for 6% of all non-county FQHC visits. half of all IEHP members — other large Medi-Cal providers in SAC Health System, with a half dozen locations across the the region include the Inland Faculty Medical Group, Alpha Inland Empire (as well as mobile health and dental units), Care Medical Group, and Kaiser. The Inland Faculty Medical accounts for nearly 10% of all non-county FQHC encounters Group includes 239 primary care providers and 230,000 in the region and boasts more than 35 unique specialties. Medi-Cal enrollees (or about 15% of the region’s Medi-Cal The county-run clinic systems also continue to provide a sig- population).19 Alpha Care Medical Group provides care for nificant share of primary care services to the Inland Empire’s nearly 165,000 IEHP Medi-Cal enrollees (or about 13% of low-income residents. RUHS operates 12 FQHCs across IEHP’s enrollees). Kaiser is another large Medi-Cal provider, Riverside County that together saw nearly 63,000 patients with 110,000 members; Kaiser provides Medi-Cal coverage in 2019.22 San Bernardino County operates four FQHCs that under an IEHP subcontract while limiting Medi-Cal enroll- served more than 10,000 patients. The growth of FQHCs rep- ment to previous Kaiser members or family members. The resents a significant expansion of the Inland Empire’s safety Medi-Cal provider landscape saw a shift in 2018 when IEHP net, historically an area of concern for the region. terminated its contract with Vantage Medical Group and California Health Care Foundation www.chcf.org 7 Despite the recent FQHC expansion in the Inland Empire, acquisition of and successful competition for patients with on a per capita basis, the number of FQHC visits per person independent practices. As one observer noted, FQHCs are in the region was half the state average, up from one-third of “Hoovering up private practices” across the region. the state average in 2014 (see Table 5). Hospital Finances Improve; Market Remains TABLE 5. Federally Qualified Health Centers Inland Empire vs. California, 2014 to 2018 Unconsolidated INLAND EMPIRE CALIFORNIA According to OSHPD data, the Inland Empire is served by 38 Change* Change* hospitals, including county hospitals in both Riverside and 2018 from 2014* 2018 from 2014* Patients per capita 0.07 91% 0.15 29% San Bernardino, as well as investor-owned, nonprofit, and dis- Encounters per capita 0.26 137% 0.51 35% trict hospitals. Twelve hospitals are independent, accounting Operating margin –5.7% 0% 2.1% –1% for nearly 30% of all discharges, with the remaining hospi- *Reflect the percentage change in patients/encounters per capita, and the absolute change in margins. tals belonging to smaller local systems, such as Loma Linda Notes: Includes FQHC Look-Alikes, community health centers that meet the requirements of the Health Resources and Services Administration Health Center Program but do not receive Health Center University Health, or larger statewide or national networks, Program funding. Patients may be double counted if they visit more than one health center. Source: “Primary Care Clinic Annual Utilization Data,” California Office of Statewide Health Planning and such as Kaiser Permanente and Universal Health Services. Development, accessed June 1, 2020. The hospital sector in the Inland Empire remains relatively Moreover, an analysis of data from the Office of Statewide unconcentrated when compared with other markets across Health Planning and Development (OSHPD) shows that California. And according to several measures of market FQHC operating margins in the Inland Empire remained flat share — licensed bed days, discharges, and outpatient visits between 2014 and 2018, despite a reduction in care pro- — hospital market concentration in the Inland Empire has vided to uninsured people. In 2014, 6% of FQHC patients not changed markedly in recent years. None of the region’s received free care, with an additional 29% paying a sliding fee hospitals has merged with or acquired other hospitals in the based on income. In 2018, these groups accounted for 1.5% region over the past several years, and no hospital or system and 13.5%, respectively, of the FQHC patient population. In accounts for more than 13% of all discharges. A commonly spite of the reduction in care for the uninsured, expenses per used measure of market concentration shows San Bernardino encounter increased during this period along with revenues, County and Riverside County as having, respectively, the leaving operating margins unchanged from 2014. second- and third-lowest levels of hospital market concen- The growth of FQHCs and other health centers in the tration of all California counties, behind only Los Angeles.23 region likely stems in part from the ACA’s Medi-Cal expansion, Given the region’s geography, however, assessing con- given that FQHCs predominantly serve Medi-Cal patients, centration based on each system’s share of the total regional and this regional growth mirrors the larger statewide trend. market may overstate the degree of fragmentation, because Respondents note that FQHC growth in the Inland Empire some hospitals are dominant players in their submarkets. may also be driven in part by the underlying characteristics For example, Tenet Healthcare Corporation, which operates of the provider landscape — notably the relatively large three hospitals in the more sparsely populated eastern half share of care for Medi-Cal patients provided by indepen- of Riverside County, accounts for only 9% of all Inland Empire dent medical practices. The relatively small share of care discharges but a far larger percentage of those in the local previously delivered by health centers, along with the finan- area (hospitals in the city of Riverside are more than an hour’s cial struggles of independent practices serving Medi-Cal drive away). Similarly, for a large portion of San Bernardino patients, may have facilitated FQHC expansion through both County’s high desert community, Barstow Community California Health Care Foundation www.chcf.org 8 Hospital is the only hospital outside of Victorville, which hospitals accounted for 12% of total discharges in 2018, is more than 30 minutes to the south. While not isolated including nearly 28% of all commercial payer discharges. geographically, Loma Linda University Medical Center is Observers note that these metrics may understate Kaiser’s a prominent academic medical center and, as one of the total market coverage, however, given Kaiser’s preventive area’s two Level I trauma centers, provides a large amount health focus, which aims to reduce patients’ reliance on hos- of advanced specialty care. Nevertheless, the region has not pital care. Kaiser has plans to expand acute inpatient capacity experienced the consolidation of hospitals into large systems from the current 94 beds to an eventual 460 beds at Kaiser’s that has characterized the rest of the state. Moreno Valley location in Riverside County.27 The region’s largest hospitals and hospital systems Universal Health Services (UHS), a large investor- include the following. owned hospital system with acute care facilities in seven Loma Linda University Medical Center serves as states, operates four hospitals in the region, including three a key safety-net provider. The wider hospital system, with in the southwestern corner of Riverside County. UHS has more than 1,100 licensed beds spread over six hospitals, experienced the largest increase in hospital market share accounted for 13% of the region’s overall discharges and in recent years and is now the third-largest system in the 16% of Medi-Cal discharges in 2018. Loma Linda operates a region, accounting for 10.5% of acute care discharges in children’s hospital with 343 beds, including 84 in its neonatal 2018, up from 7.5% in 2014. UHS’s Temecula Valley location intensive care unit. The children’s hospital is adding a new added a 28,000-square-foot wing in 2018 with space for car- tower in 2021, which will offer a children’s cardiovascular diovascular and neuroscience services.28 UHS also operates a lab and pediatric emergency department (ED). Loma Linda’s psychiatric hospital at the western edge of the Inland Empire, main site includes one of the region’s two Level I trauma providing nearly one-third of the region’s psychiatric beds. centers. Also part of the system is a separate surgical hospi- Dignity Health, which is part of a large multihospital tal, as well as a behavioral medicine center, which provides system operating in 21 states, operates Community Hospital both inpatient and outpatient behavioral health services.24 In of San Bernardino and St. Bernardine Medical Center and addition to the hospital system, Loma Linda provides finan- serves as the region’s other key nonprofit safety-net provider. cial support to SAC Health System, an FQHC that runs clinics The two hospitals account for 7% of total discharges and in six locations and is among the largest teaching health 11% of Medi-Cal discharges. St. Bernardine’s is home to the centers in the country.25 The relationship between Loma Inland Empire Heart & Vascular Institute. Linda and SAC Health System dates to 1960, when university Riverside University Health System–Medical staff and students founded the Social Action Corps as part- Center, the county hospital for Riverside, and Arrowhead time volunteers and offered temporary medical clinics in the Regional Medical Center (ARMC), the county hospital for community. The two have partnered to provide pediatric San Bernardino, together account for only 11% of total acute care at Loma Linda University Children’s Health–Indio clinic, discharges but play a key safety-net role, providing 19% of and in 2016 SAC Health System established a new facility Medi-Cal discharges. RUHS’s medical center, which fits under at the university’s campus in San Bernardino, which is also a broader county umbrella that also includes 12 FQHCs as home to a health professionals training program.26 well as the county Departments of Behavioral Health and Kaiser operates four hospitals in the Inland Empire’s Public Health, recently opened a new 200,000-square- urban core and surrounding suburbs — in the communi- foot medical office building for primary care and specialty ties of Ontario, Fontana, Riverside, and Moreno Valley. Kaiser groups.29 RUHS also expanded its ED and became a Level I California Health Care Foundation www.chcf.org 9 trauma center.30 RUHS’s FQHCs care for roughly 95,000 IEHP- continuing obstacle, likely worsened by financial pressures assigned Medi-Cal enrollees. ARMC offers a Level II trauma from the COVID-19 pandemic. Some of the region’s larger center and burn center and provides primary care services hospitals, however, are reportedly better positioned. Both through four family health clinics. county hospitals were previously rebuilt to comply with state Although the region’s population has continued to grow, seismic standards. Loma Linda University Health is nearing hospital capacity remained relatively stable between 2014 completion of a new Medical Center tower and a Children’s and 2018, with hospitals’ staffed bed count increasing by just Hospital tower. Kaiser, with its newer facilities, is also gener- 1%. More recently, however, Parkview Community Hospital, ally well positioned, as is St. Bernardine Medical Center, which purchased by AHMC Healthcare Inc. in 2019, expanded its has undergone seismic upgrades. ED from 13 to 41 beds, and Riverside Community Hospital added more than 100 beds at a new seven-story patient Stronger Financial Performance tower as well as 14 ED beds. Redlands Community Hospital 31 According to OSHPD data, in the year prior to the COVID-19 is tripling the size of its ED by adding 12 beds, critical care outbreak, Inland Empire hospitals were enjoying much stron- rooms, and a dedicated psychiatric care space. And more 32 ger financial performance than in previous years. Along with capacity is expected, as Kaiser plans an expansion in Moreno rising employment and health insurance coverage, hospital Valley from 94 to 460 beds. Although the number of hospital profitability during 2014–2018 improved. Across all hospitals beds has increased only modestly, the region’s hospital occu- in the region, the average operating margin rose from –0.2% pancy rate remains similar to the statewide average (with the in 2014 to 2.2% in 2018 (statewide margins improved from exception of beds for psychiatric patients, which are in short 2.5% to 4.6% over this period, as shown in Table 6). supply in the Inland Empire). TABLE 6. Hospital Performance (Acute Care) These hospital expansions have been accompanied by a Inland Empire vs. California, 2018 series of pediatric unit closures over the past several years. Inland Empire California Most recently, Riverside Community Hospital administra- Beds per 100,000 population 158 178 tors announced the November 2020 closure of the hospital’s Operating margin* 2.3% 4.4% Paid FTEs per 1,000 adjusted patient days* 15 15 pediatric unit, stating that the move was the result of declin- Total operating expenses per adjusted patient day* $3,088 $4,488 ing patient volumes. This announcement followed several *Excludes Kaiser. similar closures, including at Kaiser Permanente Riverside Note: FTE is full-time equivalent. Source: “Hospital Annual Financial Data - Selected Data & Pivot Tables,” California Office of Statewide Medical Center, Corona Regional Medical Center, and St. Health Planning and Development, accessed June 1, 2020. Bernardine Medical Center, which also stemmed from low patient volumes and a desire to lower costs. Although these Several factors may help explain this trend. First, largely closures may mean that children are treated at facilities that because of the expansion of Medi-Cal under the ACA, hos- are better able to specialize in pediatric inpatient hospitaliza- pital losses attributable to providing uncompensated care tion, some pediatricians have expressed a concern that their decreased, with this category accounting for only 1.4% of patients may need to travel farther to receive care. all visits in 2018, down from 6.7% in 2014. (This decrease According to respondents, meeting state seismic stan- was less pronounced statewide, with the rate falling from dards remains a consideration for area hospitals, as it does 4.9% to 1.8%.) Second, serving Medi-Cal patients grew more for hospitals statewide. Among the region’s smaller hospi- profitable. While hospitals reported that Medi-Cal managed tals, accessing capital to make needed improvements is a care visits remained, on net, a financial drain (with expenses California Health Care Foundation www.chcf.org 10 exceeding net patient revenue), the average payment competing plans and accompanying incentive schemes). shortfall per discharge fell dramatically. For traditional fee- Still, IEHP’s efforts at implementing data-informed practices for-service Medi-Cal patients — who account for 14% of all may be complicated by the region’s size and large number of discharges and 18% of net patient revenues — net patient independent practices. revenues per patient day increased substantially. In recent years, IEHP has implemented several quality improvement initiatives — in addition to its global pay-for- IEHP — Strong Market Position Amplifies performance program. For example, IEHP incentive payments P4P Initiatives encouraged hospital participation in the region’s health IEHP, the region’s largest Medi-Cal managed care plan, covers information exchange (HIE), Manifest MedEx, which is now nearly 9 in 10 Medi-Cal patients in the Inland Empire — widely used by virtually all hospitals in the region. IEHP also equivalent to more than a quarter of the region’s population. implemented a shared-saving pilot that enabled participat- With more than 1.3 million members and more than 6,000 ing primary care providers to earn up to 60% of any savings network providers, many respondents noted that IEHP is a IEHP realized in paying for referred services, including hospi- dominant force in the Inland Empire health care landscape. tal visits.33 Most recently, IEHP has started assigning patients The health plan’s strong position reportedly offers consid- to providers based on the provider’s clinical performance, erable leverage in negotiating contracts with the region’s with more effective providers rewarded with additional hospitals and other providers. However, IEHP’s leverage is patient assignments. tempered by the relative lack of providers, especially in the region’s eastern areas, where many hospitals and providers Using Data to Drive Performance Improvement are “must haves” for IEHP to maintain an adequate provider The use of data to improve patient outcomes and lower network. Interviewees noted that this combination of bal- costs has been gaining ground in the region and across the anced market forces and consensus among providers that state. In the Inland Empire, many providers participate in at IEHP is a “good partner” in delivering care to the region’s least some forms of data sharing, whether through use of a Medi-Cal population results in generally positive relation- shared EHR system; participation in the region’s health infor- ships between IEHP and the provider community. mation exchange, Manifest MedEx; or delivery of care in an By its own estimate, IEHP has contracts in place with integrated system such as Kaiser or RUHS. more than half of the region’s primary care physicians and roughly 40% of specialists. Interviewees noted that IEHP has Data Sharing Increases Across Region significant leverage in encouraging providers to utilize data Formed in 2017, Manifest MedEx has made inroads in estab- to drive performance and implement new quality improve- lishing connections among hospitals, health centers and ment programs. IEHP reports paying most primary care clinics, and providers. IEHP encourages hospital participation providers on a capitated basis, with additional payments in through its hospital P4P program, which includes financial the form of performance-based quality improvement incen- incentives to share data through the platform. As a result, tives comprising 10% to 25% of Medi-Cal revenue. For many nearly all hospitals in the region now provide event notifi- physicians, IEHP is the sole Medi-Cal plan with which they cation (admission, discharge, and transfer, or ADT) data. The contract; as a result, earning P4P incentives is reported to be region is also home to the Inland Empire Health Information somewhat simpler in the Inland Empire because only one Organization, a nonprofit designed to connect providers plan’s rules must be followed (unlike counties with many to Manifest MedEx and coordinate data sharing and use California Health Care Foundation www.chcf.org 11 of population health analytics. IEHP is funding an effort to administrator noted, the “HIE is still a work in progress with incentivize independent practices to migrate to one of a lots of holes left to fill.” For some practices, the IT complexity small set of cloud-based EHR systems that would be inte- and cost of linking their EHR system to Manifest MedEx are grated with Manifest MedEx. prohibitive. For others that do participate, the additional task In addition to use of the HIE, interviewees noted that of regularly accessing and utilizing the available data requires partnerships between community providers and hospitals, staff training and changes in workflow that some perceive as at least where they share a common EHR system, are further too costly or burdensome. Even for larger medical groups or driving improvements in data sharing in the region. For health centers, truly integrating and using data to improve example, RUHS shares a common EHR system, Epic, across care requires that offices hire new staff to monitor metrics, its flagship hospital, 12 FQHCs, and other sites across the track referrals, and ensure that patients are following treat- county, including Loma Linda University Medical Center and ment plans. Physicians and support staff must undergo SAC Health System. Users of Epic can gain access to patient additional training, and the new operating procedures records within the same EHR system using functionality become a part of the routine workflow only over time. known as Care Everywhere. San Bernardino County’s hospi- To address some of the challenges associated with data tal, ARMC, will also reportedly transition to Epic in the future, sharing, some larger medical groups and IPAs in the region furthering the potential for information sharing among report employing dedicated data teams to collect and providers. process internal data and work with partner providers and Health plans are also reportedly playing a role in col- hospitals to collect and share information. Some of these in- lecting and disseminating information, offering gap-in-care house data teams collect and process patient records in a reports to providers and information about patient prescrip- largely manual process — “chart scrubbing,” as one provider tions and specialist visits, among other types of information. called it — to ensure information is available to monitor For example, IEHP provides gap-in-care reports directly to patient care. Tools developed by these organizations to coor- all primary care providers, whether they work directly with dinate across a broad range of hospitals and specialists in the the health plan or contract through an IPA. IEHP also pro- region include stationing case managers in hospitals and vides information on prescriptions and other data through using hospitalists to coordinate and deliver care to hospital- the member health record that is attached to eligibility ized patients and help keep primary care providers informed verifications performed on the IEHP secure provider portal. about their hospitalized patients. Even at larger institutions, Finally, the trend toward care delivery through larger medical administrators noted that data analytics initiatives are still in groups and integrated systems may offer more providers the their early stages and that more must be done to build out support of dedicated IT teams and access to integrated EHR the teams responsible for incorporating data into routine systems, which observers expect to improve access to and clinical practice. use of patient data. Data sharing in the region may be further hampered by the fragmentation in the region’s hospital and ambulatory Challenges Remain care sectors. This fragmentation contributes to the wide array Interviewees noted that, despite progress on data sharing of sometimes siloed EHR systems used across the region, in the region, participation is primarily concentrated among which may not be integrated with information from the HIE hospitals and some large medical groups, with far less partic- or have the capacity to communicate with EHR systems used ipation among smaller independent practices. As one clinic by other practices. Smaller practices in the region are also less California Health Care Foundation www.chcf.org 12 likely to participate in larger EHR systems such as Epic that IEHP has launched several initiatives to improve behav- allow for data sharing with other users on the same system ioral health care integration, including complex care (as well as offering HIE integration with the EHR system). management teams to aid patients with physical, behav- ioral, social, and environmental needs. One such effort is Behavioral Health the Behavioral Health Integration Complex Care Initiative Behavioral health care, which includes both mental health (BHICCI), a partnership between 30 local health centers and and substance use disorder services, remains an important clinic sites and IEHP, with a goal of improving Medi-Cal enroll- issue throughout the region, with one observer noting that ees’ health outcomes by providing care management and “behavioral health is a huge challenge.” More Inland Empire care coordination for physical and behavioral health needs residents report experiencing frequent mental distress com- across multiple providers and health care systems.35 pared with Californians generally, and more Inland Empire IEHP and the San Bernardino County Department of residents needed but did not receive mental health treat- Behavioral Health have also explored ways to better inte- ment.34 In line with the region’s general lack of access to grate physical and behavioral health services, while Riverside specialty care, the Inland Empire is home to only eight psychi- County operates an integrated system consisting of its hos- atrists per 100,000 residents, the second-lowest ratio across pital, outpatient clinics, and behavioral health department the seven study markets. In addition, people with behavioral (as well as the public health department). With all of these health needs often suffer from poorer physical health and service providers reporting to the same leadership, the may also lack access to adequate physical health care ser- county seeks to improve integration across specialties and vices. Interviewees noted that, in response, many providers improve patient care. in the region, including many FQHCs, have sought to inte- grate physical health and behavioral health care services. This Clinician Shortages transformation has been slower to take hold among many of According to almost all respondents, access to care con- the region’s independent providers, and access to psychiatric tinues to be a significant issue in the Inland Empire as the services remains a daunting obstacle. region consistently struggles to recruit both primary care Respondents note that much of the innovation surround- clinicians and specialists, as well as other health care profes- ing behavioral health care in the region has occurred in the sionals. Indeed, one observer said that the region “will never Medi-Cal program. For most Medi-Cal enrollees needing be able to bridge the gap in workforce shortage,” noting that nonspecialty services (that is, those with lower-acuity condi- “the region is already behind and the population is growing.” tions), coverage is administered by their managed care plan, While many factors contribute to recruitment difficulties, while county behavioral health departments are respon- respondents note that competition with more geographi- sible for adults with serious mental illnesses and children cally attractive neighboring regions, such as Los Angeles, with serious emotional disturbance. Some FQHCs in the Orange, and San Diego Counties with their greater access to region offer integrated behavioral health care (generally for the beach, cultural amenities, and educational and employ- lower-acuity conditions) from a behavioral health provider ment opportunities for clinicians’ family members, likely located within a physical health clinic. In addition, IEHP has contributes to the challenge. The access challenges caused been encouraging the integration of behavioral health with by lower numbers of clinicians are exacerbated by the Inland routine clinical care. Empire’s sprawling geography, resulting in long patient travel times for care, especially specialist visits. Observers California Health Care Foundation www.chcf.org 13 are optimistic that the recent introduction of new medical Survey data confirm that residents can struggle to access schools may help mitigate this challenge in the future. care. Nearly 25% of Inland Empire residents reported that they are “never” able to schedule a doctor’s appointment Inland Empire Faces Severe Physician Shortage within two days, compared with 15% of people statewide. According to analysis conducted for this study by the Access remains a challenge in the Medi-Cal population as University of California, San Francisco, the Inland Empire well, with nearly 29% of Medi-Cal patients reporting that has fewer primary care and specialty physicians per 100,000 they had not had a routine checkup within the previous 12 residents than other California regions. The region has just months, compared with 23% statewide. Access to specialists 42 primary care physicians per 100,000 residents, compared is more challenging for the region’s Medi-Cal patients: 26% with 60 statewide, and just 83 specialists per 100,000 people, reported having their insurance turned down by a specialist, compared with 131 statewide (see Table 7). Moreover, even compared with 20% of Medi-Cal patients statewide.36 these metrics obscure significant intraregional disparities in Among providers participating in this study, there is wide- health care access. There are far fewer physicians per capita spread skepticism that the region will ever substantially fill in the Inland Empire’s eastern regions than in more densely this gap by recruiting doctors from other regions. California’s populated communities near the counties’ western borders. larger cities are perceived as offering more amenities and Based on designations by the Health Resources and Services better practice opportunities for more highly specialized Administration, nearly 30% of the region’s population lives physicians, which makes recruitment, particularly in the within a Health Professional Shortage Area (HPSA). The largest region’s eastern areas, difficult. As a result, those seeking to of these is the Hemet–San Jacinto area, 35 miles southeast of recruit physicians emphasized the importance of develop- the city of San Bernardino. The others are in the mountains ing the Inland Empire’s local medical student pipeline and or high desert and include Adelanto/Victorville, Hesperia, tapping personal connections to attract friends and acquain- Joshua Tree, Colton, Barstow, and Canyon Lake. In addition, tances to work in the region. Data from the Bureau of Labor because of both the geographic spread and lower average Statistics also shows that physician salaries for some special- incomes, the travel required to access care in the region can ties are higher in the region compared with nearby areas present a significant barrier. According to respondents, those such as Los Angeles and San Diego, suggesting that recruit- living in the eastern part of the region may have to drive two ing challenges may have driven up physician pay rates.37 or more hours to receive care from certain specialties. In addition, IEHP’s Provider Network Expansion Fund (NEF), established in 2014, awards $30 million to attract phy- TABLE 7. Physicians: Inland Empire vs. California, 2020 sicians and midlevel practitioners to the Inland Empire. The Recommended Inland Empire California Supply* NEF pays 50% of a recruited physician’s salary for one year, Physicians per 100,000 population † 125.3 191.0 — up to $100,000 for a primary care physician or $150,000 for ▶ Primary care 41.5 59.7 60–80 a specialist.38 IEHP reports that, to date, NEF has led to the ▶ Specialists 83.3 130.8 85–105 recruitment of more than 300 physicians and midlevel practi- ▶ Psychiatrists 8.2 11.8 — tioners.39 IEHP also developed a $40 million scholarship fund % of population in HPSA (2018) 29.6% 28.4% — to help health care professionals reduce school debt. *The Council on Graduate Medical Education (COGME), part of the US Department of Health and Human Services, studies physician workforce trends and needs. COGME ratios include doctors of osteopathic medicine (DOs) and are shown as ranges above. Physicians with active California licenses who practice in California and provide 20 or more hours of † patient care per week. Psychiatrists are a subset of specialists. Sources: Healthforce Center at UCSF analysis of Survey of Licensees (private tabulation), Medical Board of California, January 2020; and Health Professional Shortage Area (HPSA) data from Shortchanged: Health Workforce Gaps in California, California Health Care Foundation, July 15, 2020. California Health Care Foundation www.chcf.org 14 New Medical Schools May Lessen Physician Shortages the medical school seeks to retain physicians in the region According to respondents, while an aging workforce threat- by providing opportunities for physicians to partner with ens to further limit health care access, the arrival of new the school — for example, through a faculty appointment or medical schools may mitigate this trend, although additional through the pursuit of continuing medical education. residency programs also may be needed to help retain addi- California University of Science and Medicine tional graduates in the local area. The region’s largest medical (CUSM), San Bernardino County: Founded as a private, school, founded in 1909, is Loma Linda University School of nonprofit medical school with ARMC serving as its teach- Medicine, which graduated 140 students in 2020. Many grad- ing hospital, CUSM’s first class entered in 2018, and the 2020 uates remain in the Inland Empire to practice. entering class is expected to have 120 students. CUSM “aims The following recent and upcoming medical school to provide opportunities to individuals from low-social-eco- openings in or close to the region may help to expand the nomic status; Inland Empire residents; and first-generation Inland Empire physician pipeline: college students.” Fourteen percent of students are Inland University of California, Riverside (UCR) School of Empire residents.42 Medicine, Riverside: UCR’s first class of 40 students gradu- Keck Graduate Institute (KGI), Claremont: Located ated in 2017. Later classes have included 50 students, and in Los Angeles County near the western border of San recent funding increases approved as part of the state’s Bernardino County, KGI has not yet accepted its first class but, 2020–21 budget increased funding by $25 million, which as of 2018, had secured funding to establish a new medical will allow the school to increase the size of each incoming school just miles from the Inland Empire’s western border. class to 125 students. The school’s mission is to improve 40 Noting the number of HPSAs for primary care in the region, the health of the people of the “Inland Southern California” the school’s vision, in part, is to “increase population health, region, with a focus on innovative health delivery programs improve access to quality care, and lower healthcare cost. . . . designed to treat the underserved. The school also seeks We can effect systemic healthcare change — first within the to train physicians who will remain in the region. Of UCR’s San Gabriel Valley and Inland Empire areas, and then state- incoming class, roughly 50% previously resided in or have a wide and nationally.”43 family connection to the Inland Empire. Kaiser Permanente Bernard J. Tyson School of In part because of UCR’s scholarship incentives, 25% of Medicine, Pasadena: Located 50 miles from San Bernardino, recent graduates chose to remain in the Inland Empire for Kaiser’s first class, which entered in fall 2020, had 50 students. their residency, and 70% remained in Southern California. The school will waive tuition for all students entering prior to The school has actively sought to encourage this behavior 2024, with additional grant aid available for those with dem- through incentive programs. Roughly 30 students currently onstrated need. receive the Dean’s Mission Award, which covers two years of all required university fees. In exchange, graduates must prac- tice for at least 30 months as a primary care physician in the Inland Empire or Imperial County. The First 5 Riverside schol- arship covers four years of university fees, with the graduate obligated to practice as a pediatrician in the region for five years following graduation.41 In addition to these programs, California Health Care Foundation www.chcf.org 15 Early Experience with COVID-19 TABLE 8. COVID-19 Impacts: Inland Empire vs. California According to respondents, the outbreak of COVID-19 in Inland Empire California March 2020 (occurring as the interviews and data collection UNEMPLOYMENT RATE ▶ Pre-pandemic (FEBRUARY 2020) 4.0% 4.3% for this report were underway) swiftly reversed the financial ▶ Mid-pandemic (OC TOBER 2020) 9.0% 9.3% gains made by hospitals in the preceding years and resulted MEDI-CAL ENROLLMENT in the temporary shuttering of many health centers and ▶ Percentage change 3.8% 4.0% smaller physician practices. Moreover, the region’s relatively (FEBRUARY TO OC TOBER 2020) CARES ACT, PER CAPITA (AUGUST 2020) less healthy and poorer population is more vulnerable to ▶ Provider Relief Funds $92 $148 both the health effects and the economic fallout caused by ▶ High Impact Funds $16 $16 COVD-19. According to interviewees, however, there have Sources: Employment by Industry Data,” State of California Employment Development Department; “Month of Eligibility, Dual Status, by County, Medi-Cal Certified Eligibility,” California Health and been some silver linings, with increasing adoption of tele- Human Services, Open Data; and “HHS Provider Relief Fund,” Centers for Disease Control and Prevention. CARES Act data accessed August 31, 2020; all other data accessed September 30, 2020. health and a renewed focus on the social determinants of health potentially offering long-lasting health benefits after the pandemic subsides. Providers Face Ongoing Financial Pressures In May 2020, Riverside and San Bernardino were each Respondents noted that while nearly all physician practices directly allocated more than $400 million from the federal and health centers faced revenue losses as COVID-19 forced government under the CARES (Coronavirus Aid, Relief, and them to reduce in-person visits, providers relying predomi- Economic Security) Act. The counties reportedly spent the nantly on fee-for-service payment have fared worse than majority of this funding on further preparation for the pan- others (although additional reimbursement from Proposition demic — including additional medical supplies and personal 56 funds available to Medi-Cal providers may have alleviated protective equipment, construction of temporary facilities, some financial pressure). Providers who rely on up-front cap- testing, contact tracing, and financial assistance to hospitals itated payments, which continued even in the absence of — while much of the remainder was used to assist small busi- in-person medical visits, have been better able to maintain nesses.44 While the pandemic drove up unemployment rates their revenue as patient visits declined. On the other hand, across the state, its impact on the Inland Empire’s economy as nonessential visits, such as annual physicals, were halted was less than in other regions, with an unemployment rate for weeks or months, providers reported substantial worries that peaked at 14.3% in June, less than the statewide 15.1% about whether health plans will relax quality metrics needed rate (see Table 8). to earn P4P incentives. Interviewees noted that although claims-based revenues decreased while lockdown orders were in effect, Medi- Cal providers received a boost from IEHP. Under the plan’s Physician Specialist Compensation Program, established in May 2020, physicians received up to 90% of the difference between the claims paid during the pandemic and the claims paid during the same period in 2019. IEHP introduced a similar relief measure for hospitals. Some commercial health plans also implemented initiatives to support providers in the California Health Care Foundation www.chcf.org 16 pandemic. For example, Blue Shield of California provided While providers seem confident that telehealth is here advanced payments to providers and financing guarantees to stay, concerns remain that the easing of restrictions on to help them weather the pandemic.45 use of and payment for these services adopted during the CARES Act relief funds, administered through the US pandemic may not be preserved in its aftermath. In addi- Department of Health and Human Services, further mitigated tion, telehealth may not always reduce provider costs, to the the pandemic’s financial impact. The county-run hospital extent that a telehealth visit takes longer than an in-person systems were major beneficiaries, together receiving more visit or requires a second, in-person visit as a follow-up after than $70 million of the $343 million distributed to hospitals a telehealth visit. and other providers throughout the region. Exacerbation of Provider Shortages Telehealth Gets a Boost Across the state, the pandemic resulted in the delay of routine As in other markets, the pandemic forced a rapid transition appointments and elective procedures. As clinics and hospi- in the Inland Empire toward use of telehealth services for tals fully reopen, respondents note that the Inland Empire’s patients’ primary, specialty care, and behavioral health needs. providers — already stretched thin by one of the lowest Responding providers were generally supportive of this ratios of physicians to residents in the state — may find it added flexibility, although some smaller providers reported difficult to meet pent-up demand, as patients seek to sched- technical challenges associated with adding this capability. ule the visits that had been delayed. Interviewees believe Interviewees noted that telehealth may be particularly useful safety-net providers may bear the brunt of this impact, to the for behavioral health, even for the specialty mental health extent Medi-Cal rolls increase as the region’s unemployment population served by county behavioral health departments. rate rises. Though adoption had been slowed before the pandemic as Fear of the virus could exacerbate the clinician shortage a result of concerns that this population might have diffi- in other ways as well. As health center, physician practice, culty with telehealth, observers generally believe that both and hospital revenues fell during the initial wave of lock- patients and providers have adapted well to telehealth, downs, many health workers were laid off or furloughed. with one sign being lower “no-show” rates as fewer appoint- As providers reopen, some administrators noted that filling ments are missed by patients. Some providers reported that vacant positions could be difficult, given the infection risks they had already begun to develop the needed capacity for faced by frontline staff. telehealth because of the region’s historic difficulties with recruiting providers; this head start helped to facilitate the transition during the pandemic. Interviewees noted that given the long travel times faced by Inland Empire patients, telehealth may be particu- larly important going forward. Following an initial transition period, some FQHCs were reporting that patient loads had climbed back to 60%–70% of pre-COVID-19 levels. Moreover, many specialist consultations do not require in-person visits. California Health Care Foundation www.chcf.org 17 Issues to Track ▶ How will the physician landscape evolve? Will the ten- dency of physicians to move from solo and small group practices to larger medical groups or FQHCs accelerate in the wake of financial pressures exacerbated by the COVID-19 pandemic? ▶ Will the hospital market move toward consolidation in the face of increasing cost pressures? If so, will consoli- dation increase economies of scale, give hospitals more leverage to negotiate higher payments from commercial insurers, or both? ▶ Will FQHC expansion continue and improve access to care for lower-income people and those with Medi-Cal cover- age? Will telehealth play a larger role going forward in expanding access to specialty care, especially in the more rural, less affluent eastern areas of the Inland Empire? ▶ Will Manifest MedEx, the region’s HIE, make inroads with providers, especially smaller physician practices, in over- coming obstacles to greater EHR system interoperability to harness the power of data analytics to transform clini- cal practice and improve outcomes and lower costs? ▶ Will efforts to integrate physical and behavior health ser- vices improve care coordination and ultimately health outcomes? ▶ What will result from the region’s strategy of growing its own physicians through the opening of multiple new medical schools? As new medical school graduates enter practice, will opportunities in the Inland Empire outweigh potentially more attractive practice options elsewhere? ▶ How severe will the economic consequences of COVID- 19 be for the region? How will safety-net services and initiatives fare in an era of budget cuts? California Health Care Foundation www.chcf.org 18 ENDNOTES 1. Information presented in this report is based on publicly available 12. “Active Member Profiles,” Covered California, accessed June 2020. data sources as well as interviews with more than 20 local health care 13. Richard M. Scheffler, Daniel R. Arnold, and Brent D. Fulton, The Sky’s experts in the Inland Empire region. the Limit:Health Care Prices and Market Consolidation in California 2.“Employment by Industry Data,” California Employment (PDF), California Health Care Foundation, October 2019. Development Dept., accessed July 2020. 14. Ibid. 3.California Healthy Places Index, Public Health Alliance of Southern 15. Meeting presentation (PDF), America’s Physician Groups (APG) and California, accessed September 30 , 2020. Inland Empire Health Plan (IEHP), March 25, 2019. 4.“Average One-Way Commuting Time by Metropolitan Areas,” US 16. Scheffler, Arnold, and Fulton, The Sky’s the Limit. Census Bureau, accessed September 30, 2020. 17. “Riverside Physician Network Joins PrimeCare, Adding More Trio 5.“Walkable Distance to Public Transit,” California Health and Human Provider Options for Your Inland Empire Groups,” LISI, October 7, Services Open Data Portal, accessed September 30, 2020. 2019. 6.2019 data from AskCHIS, UCLA Center for Health Policy Research, 18. “Physicians & Providers,” Heritage Victor Valley Medical Group, accessed November 12, 2020. accessed on September 30, 2020. 7. Blur Sky Consulting Group analysis of California Dept. of Public Health, 19. Supplemental Report, IEHP, August 2020. “County Health Status Profiles 2019,” accessed on September 30, 2020. 20. As also noted in Table 5, encounter data are available only for non- county clinics. Including Riverside and San Bernardino Counties’ 8.Estimates of the uninsured rate for each region are based on clinic systems in this tally would increase the number of encounters. the Census Bureau’s 2019 estimate of the uninsured rate in each county. The estimated share of the population enrolled in Medi-Cal 21. “Health Center Program Look-Alikes,” Bureau of Primary Health Care, is calculated as total Medi-Cal enrollment from California Dept. of Health Resources & Services Admininstration, accessed July 2020. Health Care Services data as of June 2019 (excluding those dually 22. “Health Center Program Data,” Health Resources & Services eligible for both Medi-Cal and Medicare) divided by US Census Administration, accessed August 2020. Bureau 2019 population estimates, aggregated for each region. Similarly, the estimated share of the population enrolled in Medicare 23. A market’s Herfindahl-Hirschman Index (HHI) is equal to the sum of is based on Medicare enrollment figures for 2019 published by the the market share of each firm multiplied by 100 and squared. For Centers for Medicare & Medicaid Services and US Census Bureau instance, a market with two firms, each with 50% of the market, population estimates. The private insurance and all other insurance would yield an HHI of 502 + 502 = 5,000. A market with four firms, types category was calculated as the residual after accounting for each with 25% of the market, would yield an HHI of 252 + 252 + 252 + those who were uninsured, enrolled in Medi-Cal, or enrolled in 252 = 2,500. The HHI ranges from zero to 10,000, with higher scores Medicare. See US Census, American Community Survey 1-Year indicating higher levels of concentration. Estimates, Table DP03, accessed June 2020 (for Census Bureau 24. Community Benefit Report — 2019 (PDF), Loma Linda University estimates of total county populations and uninsured rates); Dept. Health, 2019. of Health Care Services, “Month of Eligibility, Medicare Status, and Age Group, by County, Medi-Cal Certified Eligibility,” accessed 25. Community Benefit Report — 2016 (PDF), Loma Linda University June 2020 (for monthly Medi-Cal enrollment totals); and “Medicare Health, 2016. Enrollment Dashboard,” Centers for Medicare & Medicaid Services 26. Sheann Brandon, “Loma Linda University Children’s Health–Indio (CMS), accessed June 2020 (for Medicare enrollment data). Celebrates One-Year Anniversary,” Loma Linda University Health, 9.Supplemental Report, IEHP, August 2020. March 14, 2019; Janelle Ringer, “New Healthcare Residents Get an Up-Close Look at San Bernardino County,” Loma Linda University 10. Managed Care Performance Monitoring Dashboard Report (PDF), Health, June 25, 2019. Dept. of Health Care Services, January 2020. 27. Robert Chevez, “Proposed Expansion of Kaiser Permanente,” 11. “Medicare Enrollment Dashboard,” CMS, accessed October 2020. Moreno Valley City News, April 2, 2020. California Health Care Foundation www.chcf.org 19 28. 2019 Community Profile (PDF), Temecula Valley Hospital, 2020. 44. Memorandum, “Acceptance of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Funding, Budget Establishment, 29. “RUHS Begins Construction on Surgery Center, Medical Offices,” and Administration, All Districts,” Executive Office of County of Patch, March 21, 2018. Riverside, May 19, 2020. 30. “RUHS Medical Center Opens New Emergency Department Beds,” 45. “Blue Shield of California Offers Financial Support to Healthcare InlandEmpire.US, June 29, 2019. Providers in Response to COVID-19 Crisis,” PR Newswire, April 6, 31. “Parkview Hospital Emergency Department Expansion,” Tilden- 2020. Coil Constructors, accessed August 2020. 32. “Redlands Community Hospital Completes Phase One of Emergency Department Expansion,” Inland Empire Community News, January 28, 2019. 33. Meeting presentation (PDF), America’s Physician Groups (APG) and Inland Empire Health Plan (IEHP), March 25, 2019. 34. 2018 data from AskCHIS, UCLA Center for Health Policy Research, accessed August 1, 2020. 35. For additional information on the BHICCI, see Todd P. Gilmer et al., “Evaluation of the Behavioral Health Integration and Complex Care Initiative in Medi-Cal,” Health Affairs 37, no. 9 (September 2018). 1442–9 36. 2018 data from AskCHIS, UCLA Center for Health Policy Research, accessed August 1, 2020. 37. 2018 data from the US Bureau of Labor Statistics, accessed November 11, 2020, show that the average annual salary across family medicine, internal medicine, and pediatrics in the Riverside– San Bernardino–Ontario area was $250,617, compared with $172,450 in the Los Angeles–Long Beach–Anaheim area and $239,493 in the San Diego area. 38. Program Description — Provider Network Expansion Fund (PDF), Inland Empire Health Plan, May 2019. 39. “Innovation and Quality Performance,” Inland Empire Health Plan, accessed August 2020. 40. “State OKs $25M to Double UCR Medical Students,” UC Riverside News, June 30, 2020. 41. “Scholarship Opportunities,” University of California, Riverside School of Medicine, accessed August 2020. 42. Program brochure (PDF), California University of Science and Medicine, accessed August 2020. 43. Welcome to the KGI School of Medicine (PDF), Keck Graduate Institute School of Medicine, accessed August 2020. California Health Care Foundation www.chcf.org 20 Background on Regional Markets Study: Inland Empire Between January and August 2020, researchers from the Blue Sky Del Norte Consulting Group conducted interviews with health care leaders in Riverside and San Bernardino Counties in the Inland Empire region of Humboldt California to study the market’s local health care system. The Inland Empire is one of seven markets included in the Regional Sacramento Markets Study funded by the California Health Care Foundation. Area The purpose of the study is to gain key insights into the organization, Bay financing, and delivery of care in communities across California and over Area time. This is the fourth round of the study; the first set of regional reports San Joaquin was released in 2009. This is the first time the Humboldt/Del Norte region was Valley included in the study. The seven markets included in the project — Humboldt/ Del Norte, Inland Empire, Los Angeles, Sacramento Area, San Diego, San Francisco San Bernardino Los Inland Empire Bay Area, and the San Joaquin Valley — reflect a range of economic, demographic, care Angeles delivery, and financing conditions in California. Riverside Orange Blue Sky Consulting Group interviewed nearly 200 respondents for this study with 21 specific to the San Diego Inland Empire market. Respondents included executives from hospitals, physician organizations, community health centers, Medi-Cal managed care plans, and other local health care leaders. Interviews with commercial health plan executives and other respondents at the state level also informed this report. The onset of the COVID-19 pandemic occurred as the research and data collection for the regional market study reports were already underway. While the authors sought to incorporate information about the early stages of the pandemic into the findings, the focus of the reports remains the structure and characteristics of the health care landscape in each of the studied regions. ▶ V ISIT OUR WEBSITE FOR THE ENTIRE ALMANAC REGIONAL MARKETS SERIES. ABOUT THE AUTHORS ABOUT THE FOUNDATION Matthew Newman, MPP, is principal and co-founder of Blue Sky. James The California Health Care Foundation is dedicated to advancing Paci, JD, MPP, is a policy analyst with Blue Sky Consulting Group, a firm meaningful, measurable improvements in the way the health care that helps government agencies, nonprofit organizations, foundations, delivery system provides care to the people of California, particularly and private-sector clients tackle complex policy issues with nonpartisan those with low incomes and those whose needs are not well served by analytical tools and methods. the status quo. We work to ensure that people have access to the care they need, when they need it, at a price they can afford. CHCF informs ACKNOWLEDGMENTS policymakers and industry leaders, invests in ideas and innovations, The authors thank all of the respondents who graciously shared their and connects with changemakers to create a more responsive, patient- time and expertise to help us understand key aspects of the health care centered health care system. market in the north coast region. We also thank Alwyn Cassil of Policy California Health Care Almanac is an online clearinghouse for key data Translation, LLC, for her editing expertise, and members of the Blue Sky and analysis examining the state’s health care system. Consulting Group project team.