CALIFORNIA Health Care Almanac REGIONAL MARKETS SERIES DECEMBER 2020 San Joaquin Valley: Despite Poverty and Capacity Constraints, Health Care Access Improves ▶ While financial performance improved in larger hos- Summary of Findings pitals, some independent hospitals struggled. Several California’s San Joaquin Valley is geographically and eco- smaller hospitals have struggled financially, leading one nomically diverse. Known for rich irrigated farmland and district hospital to close permanently and another to agricultural output, the region is home to Fresno, a city of cede management to a larger hospital system after more than 500,000 residents. Across the region, which spans closing temporarily. Given the large and growing share of the counties of Mariposa, Madera, Fresno, Kings, and Tulare the region’s Medi-Cal population, almost all hospitals play in the San Joaquin Valley, more than 20% of the 1.8 million a significant role in the fabric of the region’s safety net. residents have incomes below 100% of the federal poverty level (FPL). At the same time, there are pockets of affluence ▶ While many physicians continue to practice indepen- in the region, primarily in north Fresno, where providers vie dently in solo or small practices, some are choosing for privately insured and Medicare patients. to affiliate with hospitals. The pace at which physician In 2019, nearly half of the residents in the San Joaquin practices have aligned with hospitals has been slower Valley were covered by Medi-Cal (44%), and 8% were than in other regions. However, the physician practice uninsured. Despite the expansion of the safety net after landscape continues to shift as financial pressures, market implementation of the Affordable Care Act (ACA), including conditions, and demographics all combine to make inde- growth of Federally Qualified Health Centers (FQHCs) and pendent practice less attractive. Rural Health Clinics (RHCs), the San Joaquin Valley continues ▶ FQHCs and RHCs continue to expand across the to face problems with access to care, especially for behavioral region, sparking competitive tensions in some areas. health services, and struggles to recruit physicians and other FQHCs now provide services to more than half of the health care professionals. The COVID-19 pandemic — which region’s Medi-Cal enrollees. Both FQHCs and RHCs are hit the region particularly hard, though later than the rest of working with hospitals to improve care integration and California — has compounded these challenges. access to specialty services for Medi-Cal patients. The region has experienced a number of changes since the previous study in 2015–16 (see page 23 for more informa- ▶ While several hospitals have taken a leap toward tion about the Regional Markets Study). Key developments 1 global risk contracts, the movement toward risk- include: based arrangements for other providers has been slow. Most providers are developing the infrastructure to This paper is one of seven included in CHCF’s 2020 Regional Markets Study. Visit our website for the entire Almanac Regional Markets Series. manage risk-based payment, but the market, particularly worse outcomes if affected individuals contract the virus. for specialty care, remains heavily tied to fee-for-service The regional economy’s heavy reliance on agriculture and (FFS) payment. food processing may have softened the pandemic’s initial economic impact in the region but put workers at higher ▶ Shortages of physicians and other health care pro- risk of contracting and spreading the virus. fessionals continue to plague the region, even with scholarships, loan repayments, and other recruit- Market Background ment incentives. Shortages exist across a range of The San Joaquin Valley is a study in contrasts. Known for its specialties, notably psychiatry (especially pediatric psy- bountiful farmland, the region also is home to the city of chiatry), dermatology, optometry, pain management, Fresno, where more than a quarter of the region’s 1.8 million and orthopedics. The San Joaquin Valley’s relatively low residents live (see Table 1, page 3). About halfway between rankings on a range of quality-of-life measures may Interstate 5 to the west and the Sierra Nevada mountain inhibit recruitment and retention of clinicians. range to the east, Highway 99 runs through the heart of the ▶ Data sharing among San Joaquin Valley providers region, connecting Fresno to the region’s second-largest city remains challenging despite the presence of a health — Visalia, with a population of about 134,000 — to the south information exchange (HIE) serving the region’s two in Tulare County. Just west of Visalia is Hanford, the largest largest counties, Fresno and Tulare. While hospitals Kings County city, with a population of about 53,000. North report participating in the HIE, many outpatient provid- of Fresno, up Highway 99, the city of Madera, in the county of ers reported limited use. Barriers to adoption include the same name, is home to about 61,000 people. Outside of perceived challenges of integrating practices’ electronic these population centers, the region is predominantly rural health record (EHR) systems with the platform and a lack farmland or undeveloped, including Yosemite National Park, of staff resources. which spans Madera and Mariposa Counties. The region’s economy is largely agricultural; nearly 400 ▶ Access to mental health and substance use disor- different crops, ranging from fruits and vegetables to hay der (SUD) services for Medi-Cal enrollees has been and cotton, are grown there. While composing less than 1% improving, though significant gaps in care remain. of the nation’s farmland, the region’s farms supply 8% of the Inpatient psychiatric beds are in short supply. This short- nation’s agricultural output, in a contribution valued at more age may be offset by a new 128-bed inpatient psychiatric than $17 billion annually. Against this backdrop of agricul- facility slated to open in Madera County in 2023. County tural production, more than one in five people (21.5%) in specialty mental health plans in the region have adopted the region had incomes in 2020 below the FPL of $26,200 more holistic approaches to addressing behavioral health for a family of four.2 The share of people in the region living needs, developing partnerships with health plans and in poverty declined 6 percentage points from 2014 but adding new services. remained 50% higher than the statewide average. Moreover, ▶ Health and income disparities, as well as other the Fresno metropolitan area has the second-highest con- sociodemographic factors, have worsened the impact centrated poverty rate — a measure of families living in of the COVID-19 pandemic in the San Joaquin Valley. neighborhoods with a poverty rate exceeding 40% — in the The region’s residents suffer disproportionately from risk nation.3 Median household income in the region, at $52,621, factors, such as obesity and asthma, that can lead to is two-thirds of the statewide median. In the city of Fresno, California Health Care Foundation www.chcf.org 2 legacies of segregation and stark health differences remain TABLE 1. D emographic Characteristics San Joaquin Valley vs. California, 2018 between the more affluent and mostly White residents to the San Joaquin Valley California north and the poorer and mostly Black and Latinx residents POPULATION STATISTICS to the south and southwest. From one zip code to another, Total population 1,786,770 39,557,045 Five-year population growth 3.2% 3.2% life expectancy can drop by 20 years.4 AGE OF POPULATION, IN YEARS While the region’s population grew rapidly following the Under 18 28.6% 22.7% Great Recession, the pace has slowed in recent years. Of the 18 to 64 59.2% 62.9% seven study markets, Latinx residents account for the highest 65 and older 12.2% 14.3% percentage of residents in the San Joaquin Valley — at 56.7%, RACE/ETHNICITY well above the 39.3% statewide average. The region’s popula- Latinx 56.7% 39.3% tion skews young, with nearly 29% of residents younger than White, non-Latinx 29.9% 36.8% Black, non-Latinx 3.7% 5.6% age 18. Educational attainment in lower compared to the Asian, non-Latinx 7.1% 14.7% rest of the state: among San Joaquin Valley residents, 74.3% Other, non-Latinx 2.6% 3.6% hold a high school diploma and 28.1% have college degrees. BIRTHPLACE While these indicators have improved in recent years, they Foreign-born 21.7% 25.5% are still well below the statewide averages of 83.7% and EDUCATION 42.2%, respectively. High school diploma or higher 74.3% 83.7% College degree or higher 28.1% 42.2% Despite sharing in the state’s economic growth prior to ECONOMIC INDICATORS the COVID-19 pandemic, high unemployment (8.1%) remains Below 100% federal poverty level (FPL) 21.5% 12.8% a major challenge, as it was nearly double the statewide 100% to 199% FPL 23.8% 17.1% unemployment rate (4.2%) in 2018. The region also lags on Household income $100,000+ 22.6% 38.0% other quality-of-life measures. The five counties are ranked Median household income $52,621 $75,277 as having among the highest air pollution levels in the state. Unemployment rate 8.0% 4.2% San Joaquin Valley residents benefit from relatively affordable Able to afford median-priced home* (2019) 50.0% 31.0% housing stock: 50% of the region’s households earn enough Sources: “County Population by Characteristics: 2010–2019,” Education by County, FPL by County, Income by County, US Census Bureau; “AskCHIS,” UCLA Center for Health Policy Research (confidence intervals are large for Humboldt County and are included in the table); “Employment by Industry to purchase a median-priced home in the region, a measure Data: Historical Annual Average Data” (as of August 2020), Employment Development Dept., n.d.; and “Housing Affordability Index - Traditional,” California Association of Realtors. All sources accessed 19 percentage points higher than the statewide statistic.5 June 1, 2020. California Health Care Foundation www.chcf.org 3 San Joaquin Valley Reports Worse Health Status than Medi-Cal Dominates Health Insurance Coverage Other Regions The expansion of Medi-Cal under the ACA, along with an The physical health of San Joaquin Valley residents is among improving economy, continued to reduce the share of San the poorest in the state (see Table 2). When compared with Joaquin Valley residents without health insurance. Between averages for all Californians, San Joaquin Valley residents are 2015 and 2019, the uninsured rate declined from 9.6% to more likely to report that they are in fair or poor health, have 8.0% (see Table 3).8 At 44.1%, the proportion of residents with heart disease, or have asthma, in part because of the region’s Medi-Cal coverage is higher in the San Joaquin Valley than in poor air quality, especially in and around the city of Fresno.6 any of the other markets studied and higher than the state- Both the obesity rate, above 41%, and the infant mortality wide rate of 28.7%. The share of people with private insurance rate, at 0.6% of all live births, are about 50% higher than cor- also grew slightly from 33.6% in 2015 to 33.9% in 2019 — still responding rates statewide. 7 well below the rate of 47.7% statewide. Another 14.0% of San Joaquin Valley residents are covered by Medicare, compared TABLE 2. Physical Health Indicators San Joaquin Valley vs. California, 2018 with 15.9% of Californians statewide. San Joaquin Valley California TABLE 3. Trends in Health Insurance, by Coverage Source Fair/poor health 21.5% 18.5% San Joaquin Valley vs. California, 2015 and 2019 Diagnosed with diabetes 11.5% 10.1% SAN JOAQUIN VALLEY CALIFORNIA Has asthma 21.4% 15.7% 2015 2019 2015 2019 Has heart disease 8.2% 6.8% Medicare* 12.8% 14.0% 14.4% 15.9% Preterm births* 9.4% 8.8% Medi-Cal 44.1% 44.1% 29.1% 28.7% Infant mortality rate* 0.6% 0.4% Private insurance † 33.6% 33.9% 47.8% 47.7% Obesity 41.0% 27.3% Uninsured  9.6% 8.0% 8.6% 7.7% *“Preterm and Very Preterm Live Births” (2018), “Infant Mortality, Deaths Per 1,000 Live Births *Includes those dually eligible for Medicare and Medi-Cal. (LGHC Indicator)” (2017), California Dept. of Public Health, accessed September 1, 2020. † Includes any other insurance coverage (excluding Medicare and Medi-Cal). Source: California Health Interview Survey, 2018 data except where noted, accessed January 21, 2020. 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. Health and income disparities, as well as other sociode- mographic factors, have likely worsened the impact of the Four of the region’s five counties participate in Medi-Cal’s COVID-19 pandemic in the San Joaquin Valley (see “After Two-Plan Model, under which a public managed care plan, Delayed Impact, COVID-19 Spreads Rapidly” on page 18). known as a local initiative, competes with a commercial plan. The region’s residents suffer disproportionately from key risk CalViva Health operates the local initiative plan for Fresno, factors, such as obesity and asthma, that can lead to worse Kings, and Madera Counties and subcontracts all services to outcomes if affected individuals contract the virus. Moreover, Health Net, a subsidiary of Centene, a large national plan that the region’s heavy reliance on agriculture and food process- specializes in Medicaid. CalViva covers 71% of the three coun- ing apparently softened the pandemic’s economic impact ties’ 518,000 Medi-Cal managed care enrollees, while Anthem — the unemployment rate increased by a smaller amount Blue Cross, the commercial plan, serves the remainder. in the San Joaquin Valley than statewide — but put many Tulare also operates under the Two-Plan Model, with the workers at higher risk of contracting and spreading the virus. local initiative contracted to Anthem Blue Cross. Unlike other local initiatives, Tulare’s is not overseen by a county health authority; instead, the Tulare County Health and Human Services Agency has a contract with Anthem Blue Cross. California Health Care Foundation www.chcf.org 4 Health Net serves as the private plan and covers about 55% For the one-third of the San Joaquin Valley’s population of the 210,000 Medi-Cal managed care enrollees. Mariposa with private insurance, the major commercial plans are Kaiser, County, where the total population is about 17,500, is part Anthem Blue Cross, Blue Shield of California Promise Health of the state’s regional model for rural areas. Anthem covers Plan, Health Net, and Humana. For Medicare, only 29% of the about 85% of the county’s 4,200 Medi-Cal managed care region’s beneficiaries are enrolled in Medicare Advantage enrollees, while California Health & Wellness, another Centene (MA) managed care plans, compared with 44% statewide. subsidiary, serves the remainder. However, San Joaquin Valley Medicare beneficiaries increas- Covered California, the state’s health insurance exchange, ingly are choosing the MA option, with enrollment growing accounts for a lower share of insurance coverage in the San 5 percentage points since 2014. Kaiser is the dominant MA Joaquin Valley than statewide (see Table 4). Silver plans for plan in Fresno and Madera Counties, accounting for nearly Covered California Region 11 — Madera, Fresno, and Kings 40% and 60% of enrollees, respectively, in each county. In Counties — are only slightly less expensive than the average Mariposa, where Sierra Health is the plan for more than half plan cost statewide, while average incomes in the region of the MA market, Kaiser’s share is 27%. Arcadian Health Plan, are far lower than the state average. Across the Region 11 a subsidiary of national carrier Humana, accounts for 52% counties, Blue Shield of California accounts for most Covered and 57% of the MA market, respectively, in Kings and Tulare Cal enrollees, with Kaiser Permanente — the only other plan Counties. available — covering a minority share. In Region 10, which includes Tulare and Mariposa Hospital Sector Mostly Stable Counties — as well as the counties of San Joaquin, Stanislaus, Geographically segmented, mostly along county lines, the and Merced — average premiums are far higher. In Mariposa San Joaquin Valley hospital market has remained relatively County, Blue Shield holds the dominant share of the Covered stable since the previous study except for the financial strug- California market. In Tulare County, Anthem Blue Cross has gles of several small district hospitals. The region is dominated captured more than 80% of the market, with Blue Shield by five hospitals or systems — Community Medical Centers and Kaiser covering the remainder. According to a recent (CMC), Saint Agnes Medical Center, Adventist Health, Kaweah health care market analysis, the difference in premium costs Delta Medical Center, and Valley Children’s Healthcare. Kaiser, between these two rating regions reflects an underlying which is a dominant player in many markets elsewhere in the difference in health care prices. Routine inpatient and out- state, operates a 169-bed hospital in Fresno and accounts for patient hospital procedures in Region 11 cost less than in only a small fraction of all hospital discharges in the market. Region 10, at least on a wage-adjusted basis.9 There are four district hospitals — one closed in 2018, and TABLE 4. Covered California Premiums and Enrollment, San Joaquin Valley (Regions 10 and 11) vs. California, 2015 and 2019 REGION 10* REGION 11* CALIFORNIA 2015 2019 2015 2019 2015 2019 Monthly premium* (Silver Plan on the exchange for a 40-year-old individual) $299 $502 $315 $387 $312 $454 Percentage of population enrolled 2.2% 2.2% 1.9% 2.4% 3.0% 3.1% *Region 10 includes Mariposa and Tulare Counties, as well as Merced, San Joaquin, and Stanislaus Counties (which are not considered part of the San Joaquin Valley for purposes of this report). For this rating region, the weighted average monthly Silver Plan premium reflects premiums paid across all five counties (since the provided estimate of the percentage of the population enrolled is isolated to Mariposa and Tulare Counties). Region 11 includes Fresno, Kings, and Madera Counties. Source: Blue Sky Consulting Group analysis of data files from “Active Member Profiles: March 2019 Profile” (as of May 31, 2020) and “2019 Covered California Data: 2019 Individual Product Prices for All Health Insurance Companies,” Covered California. California Health Care Foundation www.chcf.org 5 another is managed by Adventist Health — but there are and is the only hospital in Visalia, the region’s second largest no county public hospitals. Given that more than half of the city. Kaweah Delta offers a full range of services, including a region’s population is covered by Medi-Cal or uninsured, Level III trauma center. Medi-Cal accounted for 39% of the most hospitals play a significant safety-net role. Table 5 hospital’s discharges in 2018. summarizes discharges across the region’s hospitals. Major Valley Children’s Hospital. Part of the extensive Valley hospitals and systems in the region include the following: Children’s Healthcare system, the 358-bed Valley Children’s Community Regional Medical Center (CRMC). As the Hospital in Madera is the only children’s hospital in the San region’s largest hospital with 909 beds and the area’s only Joaquin Valley and also serves many central California coastal Level I trauma center and burn unit, CRMC anchors the San counties and the Sacramento area. Medi-Cal accounted for Joaquin Valley safety net, especially for specialty services, 76% of the hospital’s discharges in 2018. and accounts for 52% of Medi-Cal discharges in Fresno The region also is home to several smaller and indepen- County and 43% of Medi-Cal discharges across the region. dent hospitals. They include 106-bed Madera Community Part of Fresno-based Community Medical Center Healthcare Hospital, two district hospitals in Tulare County — 167-bed Network — an independent nonprofit system with two other Sierra View Medical Center in Porterville and 101-bed acute care hospitals, a psychiatric hospital, a cancer institute, Adventist Health Tulare, which was formerly Tulare Regional and several long-term care, outpatient, and other facilities — Medical Center — and, in Mariposa County, an 18-bed CRMC accounts for 62% of all Fresno County discharges and critical access hospital, which is eligible for enhanced pay- 38% of all discharges across the five counties. ments from Medicare and Medi-Cal, operated by the John C. Adventist Health. Part of a system with more than 20 Fremont Healthcare District. hospitals across California, Hawaii, and Oregon, Adventist has three hospitals in the region; the largest is 230-bed TABLE 5. Acute Care Hospitals, by Share of Discharges, San Joaquin Valley, 2018 Adventist Health Hanford in Kings County, followed by Regional County Discharges Discharges 57-bed Adventist Health Selma and 49-bed Adventist Health Fresno Reedley, both in Fresno County. Adventist also leases and ▶ Adventist Health 1.2% 2.0% operates Tulare Regional Medical Center, a district hospital, ▶ Community Medical Centers 37.6% 62.3% which is now known as Adventist Health Tulare. Medi-Cal ▶ Kaiser Foundation Hospital 5.5% 9.1% accounted for nearly 40% of Adventist Health’s discharges ▶ Saint Agnes Medical Center (Trinity Health) 15.9% 26.3% across the region in 2018. Kings Saint Agnes Medical Center. Part of Michigan-based ▶ Adventist Health 6.4% 100.0% Trinity Health, a large Catholic nonprofit health system with Madera ▶ Madera Community Hospital 2.6% 24.4% 92 hospitals and hundreds of other facilities across 22 states, ▶ Valley Children’s Healthcare 8.1% 75.6% Fresno-based Saint Agnes has 436 beds and offers a full Mariposa range of services. In 2018, nearly half (49%) of Saint Agnes ▶ John C. Fremont Healthcare District 0.2% 100.0% discharges were Medicare patients and 33% were Medi-Cal. Tulare* Saint Agnes accounts for about 16% of all hospital discharges ▶ Kaweah Delta Health Care District 18.6% 83.1% in the region. ▶ Sierra View Local Health Care District 3.8% 16.9% Kaweah Delta Medical Center. Operated by the Kaweah *Tulare Regional Medical Center was closed for most of 2018. Source: “Hospital Annual Financial Data - Selected Data & Pivot Tables,” California Office of Statewide Delta Health Care District, the hospital is licensed for 448 beds Health Planning and Development, accessed June 1, 2020. California Health Care Foundation www.chcf.org 6 In part as a result of a slight reduction in beds, the region’s District Hospitals Struggle Financially inpatient occupancy rate increased substantially between While the financial status of most hospitals across the region 2014 and 2018, from 59.4% to 65.7%. The San Joaquin Valley’s has improved since 2014, respondents note that several dis- inpatient occupancy rate is now more than 10 percentage trict hospitals have struggled. Adventist Health now leases points higher than the statewide average. Concurrent with and operates Tulare Regional Medical Center, a district hos- this shift, across the region, hospitals’ financial conditions pital, which closed due to bankruptcy in October 2017, but have improved, with the average operating margin at 6.2% then reopening a year later under Adventist management. in 2018, up from 2.3% in 2014 and well above the statewide The move reportedly strengthened Adventist’s market posi- rate of 4.4% (see Table 6). This increase was primarily driven tion in the southern part of the region, where Adventist also by improved financial performance at the region’s larger hos- operates a hospital in Kings County. Another district hos- pitals (see Table 7). pital, Coalinga Regional Medical Center in southern Fresno County, also struggled financially and closed permanently in TABLE 6. Hospital Performance (Acute Care) San Joaquin Valley vs. California, 2018 late 2018. Respondents noted that weak governance com- San Joaquin Valley California bined with the burden of financing repairs from earthquake Beds per 100,000 population 157 178 damage contributed to Coalinga’s deteriorating financial Operating margin* 6.2% 4.4% performance. Paid FTEs per 1,000 adjusted patient days* 12.2 15 The three other district hospitals — Kaweah Delta, Sierra Total operating expenses per adjusted patient day* $2,696 $4,488 View, and John C. Fremont — had operating margins below *Excludes Kaiser. Note: FTE is full-time equivalent. the regional average in 2018,11 with Sierra View reporting a negative operating margin, declining to –3.29 from in 2018 TABLE 7. O perating Margins at Select Hospitals from 2.35 in 2014. In late 2018, Kaweah Delta and Sierra San Joaquin Valley, 2014 and 2018 View entered into a joint powers agreement that allows the 2014 2018 two districts to remain independent but partner on various Community Regional Medical Center 2.8% 5.4% activities, including purchasing drugs and other supplies, Adventist Health 3.1% 11.9% Kaweah Delta Medical Center 0.1% 4.9% recruiting physicians, and operating clinics. This partnership Saint Agnes Medical Center 2.3% 10.8% has also fostered creation of an integrated delivery network TABLES 6 AND 7: to take global risk-based contracts, known as Sequoia Source: “Hospital Annual Financial Data - Selected Data & Pivot Tables,” California Office of Statewide Health Planning and Development, accessed June 1, 2020. Integrated Health. The district hospitals have attempted to rely on voters to On a per-patient-day basis, net operating expense across finance construction of new facilities that meet state seismic the region’s acute care hospitals is roughly 40% lower than safety requirements. In 2016, voters rejected a bond measure the statewide average. And, according to one recent analysis to finance construction of a new Kaweah Delta hospital to of health care prices across California counties, the average meet 2030 seismic requirements.12 On November 3, 2020, prices for common procedures in the San Joaquin Valley — Mariposa County voters passed Measure N, a 1% countywide even on a wage-adjusted basis — are among the lowest in sales tax to fund a new facility that meets seismic require- the state. 10 ments for the John C. Fremont Healthcare District.13 California Health Care Foundation www.chcf.org 7 Some Hospitals Compete Across the Region Valley Children’s Healthcare includes the Valley Children’s While hospital markets roughly follow county lines, inter- Medical Foundation, which contracts with the two main viewees stressed that patients, especially in the rural outlying groups: Valley Children’s Specialty Medical Group and Valley areas, often travel significant distances and cross county Children’s Primary Care Group. Valley Children’s Specialty boundaries for care. CRMC and Valley Children’s were in Medical Group also provides services at other hospitals in negotiations to collaborate and avoid duplication of neona- the region, such as Saint Agnes. The Valley Children’s Primary tal and pediatric intensive care, but the efforts failed. Instead, Care Group provides primary care, obstetrical care, and the two hospital systems ended their contractual relation- regional hospitalist services. Valley Children’s two medical ship and began to compete for pediatric patients, with CRMC groups added physicians by acquiring eight small pediatric adding neonatal beds and constructing a pediatrics medical practices from 2015 to 2018. ChildNet Medical Associates, an office building.14 To compete for patients, hospitals have IPA with some 300 physicians and pediatric specialists in the enlarged their outpatient primary care and specialty capacity region, also partners with Valley Children’s Hospital. by expanding their medical foundations (see the following Recently, Community Medical Centers established its section), affiliating with FQHCs, or adding RHCs. own medical foundation, Community Health Partners, which includes neurosurgery, pediatric, and oncology Physicians Slowly Align with Hospitals clinics. The medical foundation is part of CMC’s Community In recent years, San Joaquin Valley physicians and practices Provider Network (CPN), described as a physician support have continued to affiliate with hospitals, although the division within CMC. The CPN also contracts with medical pace has been slower than in other regions. Absent strong groups, such as the Central California Faculty Medical Group market forces, such as widespread risk-based payment and (CCFMG), to deliver services to CMC patients and to members high levels of managed care, that tend to spur physician con- of CMC’s health plan, Community Care Health (described in solidation, many primary care physicians, especially in Fresno a later section). According to a regional expert, the creation and Tulare Counties, continue to practice in small groups and of this foundation contributed to contract tensions with the are significantly less consolidated than other counties state- CCFMG, which spilled over in September 2020 and threat- wide. Specialist consolidation in the region is, on average, in ened CRMC’s Level I trauma center accreditation.16 line with the statewide average, although in this context as CCFMG has 230 faculty physicians affiliated with the well, the region’s more populous counties tend to have less University of California, San Francisco School of Medicine’s specialist consolidation. 15 Fresno campus, UCSF Fresno, representing some 65 special- In 2018, Saint Agnes Medical Center created a medical ties, and CCFMG trains 300 medical residents and fellows foundation, Saint Agnes Medical Providers, a corporate sub- each year. CCFMG provides physician services in outpatient sidiary that owns and operates clinics offering numerous centers as well as inpatient care at CMC hospitals and Saint specialty services. The medical foundation partners with San Agnes Medical Center. Joaquin Valley Medical Providers (MedPro), a 700-physican Kaweah Delta established its medical foundation in independent physician association (IPA) serving Fresno and November 2016 and has about 50 physicians and plans to Madera Counties, to deliver integrated services, particularly add staff. The foundation is part of the integrated provider for MA plans. Saint Agnes Medical Center established MedPro network for Kaweah Delta Medical Center and, according to as an IPA in 2011. respondents, will also play a central role in the new Sequoia Integrated Health partnership. California Health Care Foundation www.chcf.org 8 A number of other IPAs operate in the market and provide more than 400,000 Medi-Cal patients in 2018, providing over administrative and contracting support for member prac- 2 million patient visits, an increase of 54% from 2014.17 The tices. LaSalle Medical Associates, an IPA that contracts with all largest FQHC networks include: Medi-Cal managed care plans in the region, cares for about ▶ Family HealthCare Network (FHCN), the largest FQHC 160,000 Medi-Cal members, representing more than 95% in the San Joaquin Valley, includes 36 service sites, pri- of the IPA’s total business in the San Joaquin Valley. LaSalle’s marily in Tulare County, and served more than 266,000 network includes FQHCs, RHCs, and medical groups. patients in 2018. FHCN also operates three clinics under Santé Community Physicians, an IPA with some 1,200 contract with CRMC in Fresno. physicians and nurse practitioners, is responsible for some 100,000 lives from Medi-Cal managed care plans CalViva ▶ United Health Centers of the San Joaquin Valley Health and Anthem Blue Cross, as well as Medicare and com- is based in Fresno and also serves Kings and Tulare mercial plans. Santé is a relative newcomer to contracting for Counties, with 23 sites that served more than 94,000 Medi-Cal managed care lives. Its provider network includes patients in 2018. Santé Health Foundation, FQHCs, LaSalle Medical Associates, ▶ Camarena Health is the only FQHC in Madera County and CCFMG. with 17 sites and served more than 58,000 patients, more FirstChoice Medical Group is an IPA with a network of than a third of the county’s population. some 1,100 physicians in central California providing ser- vices to 8,000 MA and 40,000 Medi-Cal members. FirstChoice ▶ Clinica Sierra Vista has 13 sites in Fresno County, serving was owned by agilon health, whose operating model sup- nearly 54,000 patients. ports IPA administration, risk-based contracting, disease ▶ Valley Health Team has 11 sites in Fresno and one in management, specialty networks, and post-acute care ser- Tulare County, serving some 44,000 patients. vices. A national firm backed by private equity, agilon health purchased FirstChoice in 2016 and through management ▶ Altura Centers for Health, with eight sites in Tulare practices restored financial stability to the IPA. In October County, served 44,000 patients in 2018. 2020, agilon sold FirstChoice to Babylon Health, a global ▶ Aria Community Health Center, with 13 clinics in Kings health technology company. County, served 26,000 patients in 2018. FQHCs Play Major Role in Care Delivery There are several other FQHCs in the region. M.A.C.T. Multiple large FQHC networks operate in the San Joaquin Health Board is an FQHC Look-Alike in Mariposa County, with Valley, providing care primarily to Medi-Cal and uninsured one location. Omni Family Health is a large FQHC network patients as well as to Medicare beneficiaries and people with located largely in Kern County but with two locations in private insurance, including those insured through Covered southeastern Fresno County. San Joaquin Valley Indian California. Most FQHCs serve a single county. However, Health has three clinics in Fresno County. Across the region, several FQHCs have sites across multiple counties, and there are a small number of clinics that are not designated some provide services via mobile clinics. Most FQHCs offer as FQHCs. a range of services, including primary, specialty, dental, and behavioral health care. Across the five counties, FQHCs saw California Health Care Foundation www.chcf.org 9 FQHCs Expand as Medi-Cal Coverage Grows Hospital-FQHC Collaborations FQHCs continue to expand and play a growing role in increas- Respondents noted that several hospitals collaborate with ing access to care in the San Joaquin Valley. The number of FQHCs to provide outpatient services and referrals to inpa- FQHC sites in the region, according to state records, increased tient care. In Madera County, Camarena Health, the county’s from 63 to 85 between 2014 and 2018. Encounter volume sole FQHC, is a referral source for Valley Children’s and Madera and patient visits were also up (see Table 8). In 2018, there Community Hospitals. In Fresno, FHCN took over two out- were 1.14 patient visits per capita at FQHCs in the region, patient clinics on CRMC’s campus, operating the clinics and compared with just 0.51 statewide. Between 2014 and 2018, billing Medi-Cal for services through the FQHC. FHCN con- patient encounters per capita increased by 55%, significantly tracts with the Central California Faculty Medical Group to more than the 28% statewide increase. In part, this growth provide some physicians services at FHCN sites clinics, again is attributable to the ACA expansion, which drove Medi-Cal allowing the FQHC to receive its Medi-Cal cost-based reim- enrollment much higher in 2014 and 2015. This FQHC expan- bursements (discussed more below). sion and increases in FQHCs’ caseload likely eased some of Regional experts believe this relationship serves both the increased service demand due to overall increases in the CRMC and FHCN. CRMC benefits by having outpatient ser- Medi-Cal population in the region. vices available on its campus at no financial risk while also Across the state, the Medi-Cal expansion under the ACA relieving emergency department (ED) crowding and having has reduced the amount of uncompensated care that FQHCs outpatient services available for patients after discharge. provide. Despite this trend, within the San Joaquin Valley, Before developing the relationship with FHCN, CRMC report- average FQHC operating margins decreased between 2014 edly struggled to make its outpatient clinics financially viable. and 2018, from 5.2% to 3.1%. About this decline, a clinic leader Additionally, the clinics provide physician residency training observed that revenues and operating margin increases in locations. FHCN benefits by increasing patient access to 2014 immediately after the ACA expansion were unprec- physicians and residents across a broad scope of specialty edented, but then operating margins declined in subsequent services and improving continuity of care for patients dis- years  as clinics’ capital expenses rose, largely as a result of charged from the hospital. The relationship also allows FCHN building costs. Nonetheless, San Joaquin Valley FQHCs appear an opportunity to recruit physicians to stay in the area after stronger financially compared with FQHCs statewide, which completing residency training. reported an average operating margin of 2.1%. Tensions Between FQHCs and RHCs TABLE 8. Federally Qualified Health Centers San Joaquin Valley vs. California, 2014 to 2018 Along with FQHC expansions, the San Joaquin Valley has SAN JOAQUIN seen continuing growth of RHCs. As of August 2020, accord- VALLEY CALIFORNIA ing to Health Resources and Services Administration (HRSA) Change* Change* 2018 from 2014* 2018 from 2014* data, there were 85 FQHC sites across the five counties and Patients per capita 0.34 55% 0.15 29% 82 RHC sites. RHCs are regulated by the Centers for Medicare Encounters per capita 1.14 50% 0.51 35% & Medicaid Services and, unlike FQHCs, are not required Operating margin 3.1% –2.1% 2.1% –1% to treat uninsured patients. RHCs must be located in a *Reflect the percentage change in patients/encounters per capita, and the absolute change in margins. Notes: Includes FQHC Look-Alikes, community health centers that meet the requirements of the Census-defined “non-urbanized area” as well as in an HRSA- Health Resources and Services Administration Health Center Program but do not receive Health Center Program funding. Patients may be double counted if they visit more than one health center. determined Health Professional Shortage Area (HPSA) or Source: “Primary Care Clinic Annual Utilization Data,” California Office of Statewide Health Planning and Development, accessed June 1, 2020. medically underserved area.18 California Health Care Foundation www.chcf.org 10 While only FQHCs receive supplemental federal grants According to some respondents interviewed for the to serve the uninsured, both types of providers receive cost- study, hospital-affiliated RHCs may have higher reimburse- based reimbursements payments for Medi-Cal patients set ment because their payment rates incorporate the higher by the state Department of Health Care Services (DHCS). operating costs of the parent hospital. Indeed, as based on Medicare also pays FQHCs and RHCs cost-based reimburse- the DHCS data, in each county, hospital-affiliated RHCs tend ment rates. These cost-based rates, known as prospective to receive higher rates than other RHCs and FQHCs. About payment system (PPS) rates, are set prospectively when the half of RHCs in the San Joaquin Valley are operated by hospi- clinic is licensed as a FQHC or RHC. Clinics can choose to tals. Hospitals with affiliated RHCs include the following: have their rates set based on either the clinic’s projected total ▶ Adventist Health operates 41 RHCs offering primary and costs of providing services or according to the average PPS specialty care across Fresno, Kings, Madera, and Tulare rate across three comparable nearby clinics.19 Counties.20 As shown in Table 9, this rate-setting process can lead to highly divergent PPS rates among provider sites in the same ▶ Kaweah Delta operates four RHCs in Tulare County. counties. As of 2018, in four of the five counties in the region, the typical RHC earned more per visit than the average FQHC, ▶ Valley Children’s in Madera County offers primary care, and the most highly compensated clinic in the county — with access to several associated subspecialists, through often by a substantial margin — is typically an RHC. the Charlie Mitchell Children’s Center, an RHC. Respondents stated that many hospitals in the region, ▶ Madera Community Hospital has two RHCs in the county to expand their market reach and outpatient footprint, and a third set to open. have acquired smaller local clinics and physician practices to incorporate into existing or new RHCs. This strategy also ▶ CRMC operates one RHC in Fresno County. reportedly supports hospitals’ ability to integrate services ▶ John C. Fremont Healthcare District operates three RHCs along a continuum of care from inpatient to outpatient ser- in Mariposa County. vices. For hospitals pursuing global risk contracts such as Adventist Health and Sequoia Integrated Health (the inte- Given the region’s continuing challenges with access to grated delivery network of Kaweah Delta and Sierra View both primary and specialty care, the growth of RHCs may district hospitals), RHCs are an essential component. improve access for Medi-Cal enrollees. A clinic respondent TABLE 9. Prospective Payment System (PPS) Rates Per Encounter, Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), by San Joaquin Valley County, 2018 FQHCs NON-HOSPITAL RHCs HOSPITAL-RUN RHC s Non-Weighted Average Highest Non-Weighted Average Highest Non-Weighted Average Highest Fresno $161 $203 $96 $175 $335 $390 Kings $180 $212 $81 $81 $284 $284 Madera $167 $167 $94 $95 $249 $290 Mariposa N/A N/A $86 $86 $186 $230 Tulare $176 $339 $106 $134 $255 $289 *Represent the non-weighted average. Source: FQHC and RHC Current Rates (PDF), California Dept. of Health Care Services, accessed August 1, 2020. California Health Care Foundation www.chcf.org 11 noted that several RHCs use their higher PPS rates to contract through capitated payments to four IPAs, which then use a mix with specialist physicians to provide services to Medi-Cal of capitated and FFS payment arrangements with providers in patients, since non-PPS rates were insufficient to attract spe- their networks. CalViva and Health Net retain responsibility for cialists to see Medi-Cal patients. institutional risk. Among the IPAs, LaSalle, Santé Community Nevertheless, some FQHC respondents view RHCs as Physicians, and FirstChoice have professional risk contracts for direct competitors for Medi-Cal patients and lament RHCs’ Medi-Cal, Medicare, and commercial enrollees. “encroachment” into FQHCs’ service areas. Some respon- While some FQHCs and RHCs may take capitated pay- dents noted that RHCs are “popping up close to FQHCs” in ments from plans and their delegated IPAs, respondents areas that are not very rural. Since Medi-Cal managed care note these payments are not truly risk based, because these plans and their affiliated IPAs include both RHCs and FQHCs clinics receive PPS “wrap payments” for all encounters. Medi- in their provider networks, Medi-Cal enrollees can select Cal managed care plans use “pay-for-performance” payments either as their primary care home or for specialty care, con- with providers to incentivize improvement in quality mea- tributing to competitive tensions between FQHCs and RHCs. sures. One FQHC, Camarena Health, uses this incentive Furthermore, hospitals control where patients go upon dis- revenue to help cover the cost of investing in new initiatives charge and often refer patients to their affiliated RHCs, even if such as case management, health education, and outreach. the patients’ primary care home is at another FQHC or physi- Plans also offer incentive payments to providers to submit cian’s office. clean encounter data with their claims. Regional respondents stated that hospitals have assumed Slow March to Risk-Based Contracting, Though a leadership role in taking global risk contracts. While hospi- Some Hospitals Leap Forward tal revenue from risk arrangements remains a small fraction According to interviewees, adoption of value-based pay- of overall revenues in the region, that revenue has increased. ments, which typically put providers at financial risk for the Overall, from 2014 to 2018, hospital revenue from capitation cost of patient care, is proceeding slowly. Several experts increased from $1.25 million to about $55 million, though noted that plans offer a limited number of insurance product this amount represents less than 2% of total hospital rev- types (e.g., health maintenance organizations, preferred pro- enues. Adventist Health received $17 million in capitated vider organizations) in the region because many providers lack revenue (5.1% of revenues), almost all attributable to Medi- the infrastructure to manage risk. Additionally, in December Cal. Kaweah Delta had the highest percentage of revenue 2017, the state Department of Managed Health Care (DMHC) from capitation ($34 million in 2018, or 5.4% of operating ordered several health plans to end contracts with Employee revenue), almost all attributable to Medicare. Neither Madera Health Systems (EHS) Medical Group. DMHC found that EHS, Community Hospital nor Valley Children’s Hospital takes risk- which received capitated payments, and its management based contracts. services organization, SynerMed, had engaged in profit-moti- Adventist Health, which has a restricted Knox-Keene vated schemes to restrict patients’ access to care.21 license, recently began accepting global risk contracts with CalViva, through its subcontractor Health Net, employs, CalViva for 16,000 Medi-Cal enrollees in all three counties. with primary care providers, a mix of FFS and capitated pay- Adventist Health plans to expand its global risk contracting to ments, or fixed per-member per-month payments, while Medicare Advantage (MA) and commercial plans. Saint Agnes payment for specialty services and hospital care is largely FFS. has applied for a restricted Knox-Keene license to take risk- Health Net delegates financial risk for professional services based contracts with MA plans. Saint Agnes Medical Center California Health Care Foundation www.chcf.org 12 has participated in Medicare’s Bundled Payments for Care Respondents reported shortages across a range of Improvement Initiative for several years. Community Medical specialties, including psychiatry (with a particularly acute Centers has a full-service Knox-Keene licensed health plan, shortage for pediatric psychiatry), dermatology, optometry, Community Care Health (CCH), with about 11,000 commer- pain management, and orthopedics. And need is not limited cial HMO members in Fresno, Madera, and Kings Counties. to physicians: interviewees also stressed the region’s chal- CMC currently accepts risk-based MA contracts and has plans lenges in attracting and retaining physician assistants, nurse to expand its risk-based payment contracting. Two district practitioners, registered nurses, and behavioral health pro- hospitals in Tulare County, Kaweah District and Sierra View, viders such as licensed clinical social workers. have created a corporate partnership to take global risk for The physician shortage in the San Joaquin Valley is MA plans. The corporate entity, Sequoia Integrated Health, particularly acute for Medi-Cal enrollees: of all Medi-Cal has also applied for a restricted Knox-Keene license. managed care plans statewide, CalViva’s network of primary A component of the state’s Medi-Cal 2020 Section 1115 care physicians is the narrowest, at just two physicians per waiver, the Public Hospital Redesign and Incentives in Medi- 2,000 enrollees.23 For various types of subspecialists, Medi-Cal Cal (PRIME) program, began moving participating hospitals patients may have access to only a few physicians in the to adopt risk-sharing arrangements or alternative payment patients’ county of residence. Medi-Cal managed care plans methodologies, such as capitation, in the hospitals’ Medi-Cal are required to meet federal and state standards demonstrat- managed care contracts starting in 2018.22 PRIME provides ing that their provider networks provide adequate access for incentives to move away from volume-driven FFS toward enrollees in a timely manner and within reasonable travel dis- value-based payments. All four district hospitals in the region tances. All Medi-Cal managed care plans in the San Joaquin — Kaweah Delta, John C. Fremont, Sierra View, and Adventist Valley received “conditional” approvals for their provider Health Tulare Regional — participate in PRIME. network adequacy compliance, and each received approvals for “alternative access standards” for some primary and spe- Provider Shortages Still Pose Access Problems cialty care, hospital, pharmacy, and mental health services.24 Shortages of physicians and other health care professionals TABLE 10. Physicians: San Joaquin Valley vs. California, 2020 continue to constrain access to care across the San Joaquin San Joaquin Recommended Valley California Supply* Valley. Of the seven markets studied, the San Joaquin Valley Physicians per 100,000 population† 130.0 191.0 — has the second-lowest overall ratio of physicians, at 130 per ▶ Primary care 46.5 59.7 60–80 100,000 people, compared with 191 per 100,000 people ▶ Specialists 83.3 130.8 85–105 statewide (see Table 10). The region’s specialist ratio is the ▶ Psychiatrists 6.5 11.8 — lowest (83 per 100,000, compared with 131 per 100,000 % of population in HPSA (2018) 92.0% 28.4% — statewide), while the primary care physician ratio (at 47 per * 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 100,000 compared with 60 per 100,000 statewide) exceeds 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 † only the Inland Empire among the markets studied. More patient care per week. Psychiatrists are a subset of specialists. Sources: Healthforce Center at UCSF analysis of Survey of Licensees (private tabulation), Medical Board than 90% of people across the five counties live in HPSAs, 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. which by definition means the supply of primary care physi- cians in the area is inadequate. California Health Care Foundation www.chcf.org 13 A variety of factors contribute to the shortages. The retention is difficult. As one respondent put it, workforce aging of the physician workforce in the San Joaquin Valley “turnover is terrible — if [physicians] are just coming here for has been a drain on the provider supply, a trend affecting the incentives or loan repayment, they take it for a few years all of California and expected to continue in the coming and then move out to Los Angeles or the Bay Area.” years. However, the region also faces distinct disadvantages: The University of California, San Francisco School of for certain pediatric subspecialties, it is difficult to justify Medicine’s Fresno campus trains more than 600 residents hiring physicians in remote areas, where demand for these and rotating third- and fourth-year medical students at clini- narrower skills is lower. One respondent remarked that “it is cal sites across the region.25 The school reports that more horrifying how far away kids have to go” to access pediatric than 50% of residents and fellows remain in the San Joaquin psychiatrists. Perhaps most important, regional experts note Valley following their training. UCSF Fresno’s signature work- that the region’s low rankings across a range of quality-of- force initiative is the San Joaquin Valley Program in Medical life measures reflect an additional challenge to recruiting Education (SJV Prime), which offers education specific to the physicians from other cities or out of state. Even within the health care needs of the San Joaquin Valley along with clini- region, hospital and clinic administrators outside the Fresno cal rotations and further training through the UCSF Fresno metropolitan area noted the difficulty of attracting profes- campus. The program’s 2020 entering class has 12 medical sionals away from that city to more rural areas, given Fresno’s school students, up from four in 2011. higher wages, more highly rated schools, and more urban Still, respondents report that recruiting remains difficult infrastructure and amenities. because of limited financial aid for students, a critical factor Plans and providers report employing a range of strate- for those deciding where to attend medical school. Moreover, gies to attract practitioners from outside the San Joaquin while many medical school graduates who complete their Valley. Some administrators noted the importance of the residency in the San Joaquin Valley remain in the region, it CalHealthCares program, which uses Proposition 56 funds can be difficult to attract residents in the first place, given the to provide loan repayment assistance to physicians and den- lack of a single dedicated academic health center in the San tists who devote at least 30% of their caseload to Medi-Cal Joaquin Valley. Moreover, the UCSF Fresno medical school patients. Additionally, because such a high percentage of program is only for third- and fourth-year students and does the region’s population lives within an HPSA, federal National not offer the full four-year medical school experience. Health Service Corps loan repayment and scholarships are A long-term goal is to have a full four-year medical school available for primary care providers and dentists. CalViva at UCSF Fresno. Recently, the University of California allo- further supports FQHC primary care recruitment efforts with cated some $15 million annually to further develop medical grants to help repay physicians’ student loans, helping to add training at both UCSF Fresno and UC Merced. Most of these 70 primary care providers in recent years. For hospitals, it is resources will support financial aid for students. typically necessary to resort to offering sign-on bonuses and On the workforce development front, the College other incentives to attract clinicians. of Osteopathic Medicine of California Health Sciences Ultimately, many respondents believed, resolving the University, a private, for-profit university in Clovis (in metro- shortage will require developing a homegrown medical pro- politan Fresno), welcomed its first class of 75 students in July fessional pipeline. Even when providers can recruit physicians 2020. Thirty-four percent of the class is from the San Joaquin from outside the San Joaquin Valley, including through H1-B Valley, and the school’s mission is to expand access to care for and J-1 visas for international medical graduates, long-term the region’s underserved population.26 California Health Care Foundation www.chcf.org 14 Other pipeline training programs include the Fresno DRIVE one IPA expert noted that participants may limit data sharing (Developing the Region’s Inclusive and Vibrant Economy) to avoid revealing competitive data. Community Investment Plan, which aims to attract $4.2 Hospitals and clinics tend to instead emphasize adop- billion in economic investment to the region over 10 years tion of new EHR systems, such as Epic, with interoperability to support economic and human capital development. The features that enable data-sharing partnerships or remote bulk of investments through DRIVE will support workforce viewing privileges with other providers. One hospital admin- development, including job training for the underemployed istrator noted that even as the hospital has separate EHR and financial support for various education initiatives. Under connections with some providers, participation in the RHIO the plan, a portion of the funding focused on human capital itself “has not been helpful.” One large clinic network remotely will support training of health care professionals, including accesses hospital EHRs, supplemented by daily reports from investments in UCSF Fresno programs. hospital EDs. In the coming years, San Joaquin Valley officials also hope In the behavioral health sector, respondents character- that increasing the adoption of remote access technologies ized the sharing and use of data to track performance as — which the COVID-19 pandemic has spurred both state- insufficient, compromising the implementation of evidence- wide and nationally — could close the distance between based practices. This situation is the result, in part, of multiple patients and providers and connect more potential students funding streams, archaic billing requirements, and siloed data to medical education. As one clinic administrator noted, the systems. According to independent DHCS quality reviews, potential benefits of telehealth implementation are great- county mental health plans do not optimize the use of EHR est in rural areas, where long travel times are a burden for systems to understand, report, and address issues of access patients and may drive higher appointment no-show rates. and quality of care.28 In addition, behavioral health providers Because telehealth could significantly increase scheduling that contract with the counties report delays and connectiv- flexibility, providers may be able to provide care more effi- ity issues when working with county data systems. ciently without hiring more medical professionals. Behavioral Health Services Improve, but Access Health Information Exchange Underdeveloped Challenges Remain The regional health information organization (RHIO) serving San Joaquin Valley residents not only face more issues with Fresno and Tulare Counties is Manifest MedEx, a platform their physical health but also have a higher prevalence connected to more than 500 health providers and plans in and incidence of mental health conditions and SUDs than the Inland Empire, Los Angeles County, and Orange County, Californians statewide. San Joaquin Valley residents report along with the two San Joaquin Valley counties. Manifest 27 higher levels of mental distress (13.6%) than the statewide MedEx has built a broad user base across its service area, average (11.0%).29 Moreover, the suicide rate is 20% higher including nearly all of the hospitals in Tulare and Fresno than the California average (see Table 11, page 16). While Counties. Despite this growth, the platform’s features, and the San Joaquin Valley has fewer opioid deaths and ED visits free services for physician practices and other outpatient set- than the state as a whole, hospitalizations due to amphet- tings, many local providers reported limited use of the RHIO amine-related overdoses are more than twice the statewide platform. Barriers to adoption shared by respondents include rate. Hospitals are working to address opioid overprescribing perceived challenges of integrating practices’ EHR systems using the statewide Controlled Substance Utilization Review with the platform and a lack of staff resources. In addition, and Evaluation System (CURES) database. Three hospitals California Health Care Foundation www.chcf.org 15 — Adventist Health Hanford, CRMC, and Kaweah Delta — but according to a California Hospital Association study, the participate in the California Bridge program, which addresses region is short an estimated 880 beds.31 In Kings, Madera, and care for persons with opioid use disorders (OUDs) in the Mariposa Counties, there are no inpatient behavioral health acute care setting by prescribing buprenorphine and con- beds for either adults or children and youth. Kaweah Delta has necting patients to community treatment services. Despite an adult inpatient mental health facility, but Tulare County the Bridge program, buprenorphine to address OUDs is has no inpatient beds for children and youth. Consequently, prescribed much less often in the San Joaquin Valley (8.2 pediatric patients needing inpatient services are transferred prescriptions per 1,000 people) than statewide (14.5 pre- out of county, often as far away as Los Angeles. A behavioral scriptions per 1,000 people).30 health leader also noted the insufficient capacity of step- down facilities (e.g., mental health rehabilitation centers) for TABLE 11. B ehavioral Health Measures (age-adjusted per 100,000 people) San Joaquin Valley vs. California, 2018 patients leaving inpatient care. San Joaquin Valley California This perceived shortage of inpatient psychiatric care Suicide 12.3 10.4 may be offset through a plan for Universal Health Services, Opioid deaths 3.05 5.82 a national investor-owned provider of behavioral health ser- Opioid ED visits 17.96 21.44 vices, to build and operate a 128-bed inpatient psychiatric Amphetamine-related overdose hospitalizations 12.1 5.6 facility on the campus of Valley Children’s Hospital in Madera, Source: County Health Status Profiles 2018, California Dept. of Public Health, accessed March 21, 2020; California Opioid Overdose Surveillance Dashboard (2018 figures), accessed November 10, 2020. with a planned 2023 opening date.32 This new facility will serve the entire region and have 24 beds for pediatric patients, rep- Numerous respondents reported that access to mental resenting a 50% increase in regional pediatric beds. health and SUD services for Medi-Cal enrollees has improved in recent years, but significant gaps in care remain. Medi-Cal Medi-Cal Expansion Brings More Benefits splits responsibility for behavioral health services between Respondents agreed that Medi-Cal patients generally have managed care plans, which provide services for less severe better access to behavioral health services since the 2014 mental health conditions (also referred to as “mild-to-moder- ACA expansion. In particular, access to services for less severe ate” conditions) and county behavioral health departments, “mild-to-moderate” mental health conditions, which are a which are responsible for adults with serious mental illness, new benefit and the responsibility of managed care plans, children with serious emotional disturbances, and SUD has improved, but provider shortages hamper access, espe- service needs. County behavioral health departments also cially for children and teens. One observer noted that Mental provide care for uninsured people. Health Network, a Health Net subsidiary, has helped improve access with its provider network. Severe Inpatient Behavioral Health Bed Shortage Some FQHCs are part of managed care plans’ “mild-to- Respondents noted that access to inpatient behavioral health moderate” provider networks and are considered essential services is a challenge in the San Joaquin Valley regardless of providers of mental health treatment. FQHC respondents residents’ source of insurance coverage, and many pointed to noted that they will often provide these services even a shortage of inpatient psychiatric beds as a key factor. CMC without reimbursement from plans because the FQHC may and Kaweah Delta have acute inpatient psychiatric facilities, not be part of health plans’ behavioral health networks. Both and the Fresno County Department of Behavioral Health also Camarena Health and FHCN also use mobile vans to provide has facilities with 16 inpatient beds each for adults and teens; mental health services to hard-to-reach populations. FQHCs California Health Care Foundation www.chcf.org 16 in the region, however, typically do not provide specialty Experts note that mental health plans in the region have mental health or SUD services under contract with county adopted approaches to addressing behavioral health needs behavioral health departments. by integrating and adding new services. Kings, Mariposa, and Tulare Counties are participating in Medi-Cal’s Whole Telehealth Fills Some Gaps Person Care pilots, which coordinate behavioral and physical Given the chronic and often acute behavioral health health care as well as social needs for vulnerable populations. workforce shortages in the San Joaquin Valley, regional Fresno and Tulare Counties have implemented the Drug respondents note that telepsychiatry is heavily utilized by Medi-Cal Organized Delivery System pilot, which provides hospitals and outpatient sites alike to address psychiatric a continuum of care for people with SUDs, many of whom needs. Telepsychiatry use in the San Joaquin Valley preceded have co-occurring mental illness. the expansion of telehealth resulting from the COVD-19 pan- All of the region’s counties described significant initiatives demic. One behavioral health leader interviewed remarked to better serve the homeless, a population that dispropor- that telehealth was a “game changer” and its expanded use tionately suffers from mental illness and SUDs. A behavioral would help mental health plans meet network adequacy health expert noted that the low inventory of affordable requirements. housing exacerbates treatment challenges for people FQHC leadership reported that the pandemic more experiencing homelessness. As Whole Person Care pilot par- than doubled behavioral health services delivered by tele- ticipants, Kings and Mariposa Counties together received health, an innovation that has reduced patient no-show more than $2 million from DHCS to address housing. Fresno, and cancellation rates. In addition, FQHCs reported that care Madera, Mariposa, and Tulare Counties all were awarded coordination for these patients has improved as telehealth grants through the state No Place Like Home initiative, which offers faster referrals, more patient contact, and improved supports permanent housing for people with mental illness communication among providers. who are homeless or at risk of homelessness. Together these counties were awarded over $50 million in 2018 and 2019, County Behavioral Health Departments Partner with with Fresno County receiving some $31 million.33 Other Agencies Specialty mental health and SUD services — for Medi-Cal Counties Face Financial and Capacity Constraints enrollees with more serious conditions — are the respon- Despite recent gains, regional experts were clear that county- sibility of county mental health plans and SUD programs. delivered behavioral health services need improvement. Medi-Cal managed care plans, FQHCs, and some hospi- County financial resources for behavioral health are report- tals praised county behavioral health departments in the edly thin, and mental health plans note difficulties recruiting region and their leadership in building stronger partnerships, staff. While collaboration with Medi-Cal managed care plans improving communication and coordination, and imple- has improved, difficulties remain in coordinating services for menting effective strategies to ease homelessness. Counties enrollees receiving services from different provider networks reportedly have expanded access to behavioral services and moving between the two systems. DHCS recently found through collaborations with local agencies including police that Fresno, Kings, Madera, and Tulare Counties were out of and sheriff departments, the courts, and probation offices. compliance for specialty mental health minimum provider- to-beneficiary ratio and timely access to care requirements and that the counties required corrective action plans.34 California Health Care Foundation www.chcf.org 17 After Delayed Impact, COVID-19 Spreads need for additional personal protective equipment (PPE) Rapidly further strained resources. After a relatively slow start to COVID-19 transmission — As one respondent noted, the pandemic highlighted the compared with the state’s more urban regions — the potential benefits to FQHCs of receiving capitated payments, pandemic spread rapidly through the San Joaquin Valley which provide a constant revenue stream even when ser- over the summer months of 2020, fueled in part by concen- vices and FFS payments decline. By relying on FFS payments trated employment in the agricultural and meat-processing linked to visits, most FQHCs experienced significant declines industries. Experts stated that while the pandemic strained in revenues. On the other hand, one health plan executive inpatient capacity regionally in July 2020, hospitals were able observed, medical groups and IPAs that take capitated pay- to add intensive care unit beds to prevent being overrun. ments will see a financial “windfall” in 2020 given reduced The region’s unemployment rate only increased modestly utilization by patients because of fears of contracting COVID- compared to the statewide increase (Table 12). Medi-Cal 19 in the clinics and offices. enrollment also increased modestly, perhaps reflecting the For behavioral health providers, particularly county already high percent of the region’s population enrolled in mental health plans, the pandemic’s economic impact will the program. likely bring reduced public revenues for services at a time of increased service need. Multiple surveys of patients and TABLE 12. C OVID-19 Impacts: San Joaquin Valley vs. California providers in California and a large study from the Centers for San Joaquin Valley California Disease Control and Prevention (CDC) found significantly UNEMPLOYMENT RATE increased levels of adverse mental conditions, substance use, ▶ Pre-pandemic (FEBRUARY 2020) 9.3% 4.3% ▶ Mid-pandemic (OC TOBER 2020) 9.6% 9.3% and suicidal ideation because of COVID-19.35 MEDI-CAL ENROLLMENT Once the region recovers from the pandemic’s worst ▶ Percentage change 2.9% 4.0% impacts, providers may face more difficulties moving (FEBRUARY TO OC TOBER 2020) CARES ACT, PER CAPITA (SEPTEMBER 2020) forward. Many respondents believed that staff furloughs and ▶ Provider Relief Funds $115 $148 new fears about virus transmission at hospitals and other ▶ High Impact Funds $6 $16 sites may only worsen the region’s severe shortage of health Sources: “Employment by Industry Data,” State of California Employment Development Department; care professionals. Several respondents noted that achiev- “Month of Eligibility, Dual Status, by County, Medi-Cal Certified Eligibility,” California Health and 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. ing quality performance goals and pay-for-performance payments will be compromised by the decline in routine preventive care visits during the peak of the COVID-19 shel- Impacts on Providers ter-in-place orders. San Joaquin Valley providers report struggling with a range of Experts believe the crisis also has potential silver linings impacts — and seizing on a few key opportunities — result- for lasting improvements in care delivery. Most impor- ing from the pandemic. The forced closure of clinical sites tant, as providers throughout the state came to appreciate, during the initial lockdown and deferrals of elective surger- the adoption of telehealth occurred far more rapidly than ies led to a large decline in provider revenues. While offices predicted. Within just a few weeks, according to one respon- gradually reopened and routine service delivery resumed dent, there was a 2000% increase in the use of telehealth, toward the summer and fall, providers, nevertheless, were including a 250% increase in remote treatment for behavioral forced to furlough some staff to reduce financial losses. The health patients. Patients have largely favored this flexibility, California Health Care Foundation www.chcf.org 18 with cancellations and no-shows declining. One clinic leader awarded providers assistance roughly proportional to their noted that they will “have a hard time getting patients to shares of net patient revenue related to Medicare and come back in” to the clinic for in-person appointments Medicaid. Behavioral health providers in the region reported once COVID recedes. Telehealth also has improved access not having as much access to these resources as hoped for. for people with chronic conditions and those living in rural On a per capita basis, the fund provided just over $100 per areas, at least for those with internet access. The lack of suf- San Joaquin Valley resident, well below the statewide per ficient internet service and smart phones are serious barriers capita payment of $128. Because the San Joaquin Valley ini- for some patients to access telehealth services. Furthermore, tially avoided high COVID caseloads, providers received little telehealth is not well suited for patients who benefit from the assistance from the High-Impact relief fund. Statewide, this privacy offered by in-person visits. fund has disbursed nearly $800 million, with the majority More broadly, the magnitude of the testing, treatment, going to Los Angeles County. and prevention challenges posed by the virus reportedly forced a slow but eventually fruitful collaboration among hospitals, clinics, and county health officials, who shared best treatment practices, outlined responsibilities for testing and education and outreach, and coordinated PPE distribution. Mitigation Efforts A range of federal government relief efforts have helped miti- gate the virus’s impact. Under the federal CARES (Coronavirus Aid, Relief, and Economic Security) Act, state and local gov- ernments, as well as providers, were eligible for financial assistance to help combat the virus’s spread. Fresno County received $98 million and, after setting aside $28 million for unforeseen costs, planned to spend $10 million helping providers expand telehealth services, $10 million for educa- tion and outreach, and $10 million for medical services and testing in jails.36 In July 2020, responding to the region’s wors- ening outbreak, Governor Newsom announced an additional $52 million in aid — taken from a total grant of $499 million issued to the state by the CDC — for San Joaquin Valley pro- viders and prevention efforts.37 Finally, under the US Department of Health and Human Services Provider Relief Fund, the region’s hospitals and clinics received nearly $180 million in aid. This program California Health Care Foundation www.chcf.org 19 Issues to Track ▶ Will the San Joaquin Valley be successful in diversifying economically and reducing the large share of people living in poverty? How will expected state budget short- falls driven by the pandemic affect Medi-Cal, which covers almost half of the region’s residents? ▶ Will the larger hospitals and systems continue to perform well financially? Will the financial struggles of district hos- pitals spur more consolidation? ▶ How will physician and hospital alignment evolve as medical foundations take stronger root in the region? Will pressure for providers to take risk-based payment increase? How will providers develop the infrastructure and data analytics to manage risk successfully? ▶ How will competitive tensions over patients and resources between FQHCs and RHCs be resolved? ▶ Will efforts to recruit and retain physicians and other health professionals take hold? Will the region see expan- sion of the UCSF Fresno medical school program to a full four-year program and an increase in trainees? ▶ Will emerging partnerships among county mental health plans, managed care plans, and other county agencies be sustained? How will these partnerships affect those with mental illness or SUDs? ▶ Will telehealth be integrated into delivery of routine care after the pandemic and improve access to care for some services? ▶ What will be the long-term impacts of the COVID-19 pan- demic on the health and socioeconomic disparities in the region? California Health Care Foundation www.chcf.org 20 ENDNOTES 1.Fresno: As Uninsured Rate Falls, Capacity Constraints Grow (PDF), 12. Lewis Griswold, “Visalia Voters Reject Kaweah Delta Hospital Bond,” California Health Care Foundation (CHCF), April 2016. Fresno Bee, May 3, 2016. 2.“Poverty Guidelines,” US Dept. of Health and Human Services (HHS), 13. Election Summary Report (PDF), November 3, 2020, Mariposa County, January 8, 2020. accessed November 21, 2020. 3. Brianna Calix, “Fresno’s Extreme Poverty Puts the City in a Bad Spot 14. Rory Appleton, “Community Medical Centers Announces Pediatric on a National List,” Fresno Bee, April 26, 2018. Expansion,” Fresno Bee, May 9, 2016. 4.Reis Thebault, “Fresno’s Mason-Dixon Line,” Atlantic, August 20, 15. Scheffler, Arnold, and Fulton, The Sky’s the Limit, October 2019. 2018. 16. Yesenia Amaro, “The Fight That Jeopardized Top Care at Fresno 5.California Healthy Places Index, Public Health Alliance of Southern Hospital Appears to End. What We Know,” Fresno Bee, November 3, California, accessed March 10, 2020. 2020. 6.California Healthy Places Index, 2020. 17. FQHCs saw nearly 404,000 Medi-Cal patients in 2018, but because each clinic reports data separately, patients who visited more than 7.California Health Interview Survey, 2018 data except where noted, one clinic would have been double counted. As a result, this number accessed January 21, 2020. represents the maximum number of individual Medi-Cal patients 8. Estimates of the uninsured rate for each region are based on the who visited FQHCs. Census Bureau’s 2015 and 2019 estimates of the uninsured rate 18. MLN Fact Sheet: Rural Health Clinic (PDF), Centers for Medicare & in each county. The estimated share of the population enrolled in Medicaid Services, Medicare Learning Network, May 2019, accessed Medi-Cal is calculated as total Medi-Cal enrollment from California August 6, 2020. Dept. of Health Care Services data as of June 2015 and June 2019 (excluding those dually eligible for both Medi-Cal and Medicare) 19. DHCS, “Initial Rate Setting Application Package (Form DHCS 3106),” divided by the US Census Bureau’s 2018 population estimates, Audits and Investigations, Financial Audit Branch, Federally Qualified aggregated for each region. Similarly, the estimated share of the Health Center (FQHC) Rural Health Clinic (RHC), May 2013, Accessed population enrolled in Medicare is based on Medicare enrollment August 6, 2020. figures for 2015 and 2019  published by the Centers for Medicare 20. “Map Tool,” US Dept. of Health and Human Services, Health Resources & Medicaid Services and US Census Bureau population estimates. and Services Administration, accessed August 6, 2020. The private insurance category also includes all other insurance types and was calculated as the residual after accounting for those 21. California Dept. of Managed Health Care (DMHC), “DMHC Fines 12 who were uninsured, enrolled in Medi-Cal, or enrolled in Medicare. Health Plans $1.9 Million for Improperly Denying Care to Enrollees,” See US Census, ”American Community Survey 1-Year Estimates, press release, December 18, 2019. Table DP03”, accessed June 2020 (for Census Bureau estimates of 22. Lucy Pagel and Tanya Schwartz, The Public Hospital Redesign and total county populations and uninsured rates); Dept. of Health Care Incentives in Medi-Cal (PRIME) Program: Continuing California’s Services, “Month of Eligibility, Medicare Status, and Age Group, Delivery System Transformation (PDF), Harbage Consulting, January by County, Medi-Cal Certified Eligibility,” accessed June 2020 (for 2017. monthly Medi-Cal enrollment totals); and Centers for Medicare & Medicaid Services, “Medicare Enrollment Dashboard,” accessed 23. Managed Care Performance Dashboard Report (PDF), DHCS, June June 2020 (for Medicare enrollment data). 2019, accessed October 1, 2020. 9. Richard Scheffler, Daniel Arnold, and Brent Fulton, The Sky’s the Limit: 24. Medi-Cal Managed Care Health Plans Annual Network Certification Health Care Prices and Market Consolidation in California (PDF), CHCF, Assurance of Compliance Report (PDF), DHCS, July 2019, accessed October 2019. October 1, 2020. 10. Scheffler, Arnold, and Fulton, The Sky’s the Limit, October 2019. 25. About UCSF Fresno (PDF), UCSF Fresno, accessed November 10, 2020. 11. Tulare Regional Medical Center was closed for most of 2018 and so 26. Meet the COM Inaugural Class (PDF), California Health Sciences did not report its financial data to the Office of Statewide Health University, College of Osteopathic Medicine, September 2, 2020, Planning and Development (OSHPD). accessed November 10, 2020. California Health Care Foundation www.chcf.org 21 27. Promises and Pitfalls: A Look at California’s Regional Health Information Organizations (PDF), CHCF, January 2019; Manifest MedEx, “Network: Explore the MX Participant Network,” accessed November 10, 2020. 28. “California EQRO for Medi-Cal Specialty Mental Health Services,” Behavioral Health Concepts, Inc. (fiscal year 2019–2020), accessed September 5, 2020. 29. “California Quality of Life Measures” (data from 2017), County Health Rankings, 2020, accessed June 5, 2020. 30. “California Opioid Overdose Surveillance Dashboard” (2018), CDPH, last updated August 14, 2020, accessed November 10, 2020. 31. California’s Acute Psychiatric Bed Loss (PDF), California Hospital Association, March 28, 2018, accessed November 10, 2020. 32. Tim Sheehan, “The Valley Lacks Mental Health Resources for Kids. This New Hospital Could Help,” Fresno Bee, September 21, 2019. 33. ”No Place Like Home Program,” California Dept. of Housing and Community Development, accessed October 15, 2020. 34. 2019 Annual Network Certification: Mental Health Plan Corrective Action Plan Report (PDF), DHCS, accessed November 10, 2020. 35. COVID-19 Tracking Poll: Views from California Health Care Providers on the Front Lines, CHCF, November 13, 2020, accessed November 17, 2020; Jen Joynt, Rebecca Catterson, and Lucy Rabinowitz, Listening to Californians with Low Incomes: Health Care Access, Experiences, and Concerns Since the COVID-19 Pandemic, CHCF, October 8, 2020, accessed November 17, 2020; Mark É. Czeisler et al., “Mental Health, Substance Use, and Suicidal Ideation During the COVID- 19 Pandemic,” Morbidity and Mortality Weekly Report 69, no. 32 (August 14. 2020). 36. “CARES Act Funding and the Coronavirus Relief Fund,” Fresno County, accessed August 25, 2020. 37. Ana Ibarra, “The New Hot Spot: Newsom Targets Central Valley for $52 Million Coronavirus Aid,” CalMatters, July 27, 2020. California Health Care Foundation www.chcf.org 22 Background on Regional Markets Study: San Joaquin Valley Between March and September 2020, researchers from Blue Sky Del Norte Consulting Group conducted interviews with health care leaders in Fresno, Kings, Madera, Mariposa, and Tulare Counties in the Humboldt San Joaquin Valley region of California to study the market’s local health care system. The market encompasses the Census Bureau’s metropolitan statistical areas of Fresno, Hanford-Corcoran, Madera, Sacramento Area and Visalia. Bay Mariposa The San Joaquin Valley is one of seven markets included in the Regional Area Madera Markets Study funded by the California Health Care Foundation. The purpose San Joaquin Fresno Valley of the study is to gain key insights into the organization, financing, and delivery Kings Tulare of care in communities across California and over time. This is the fourth round of the study; the first set of regional reports was released in 2009. The seven markets Los Inland Empire included in the project — Humboldt/Del Norte, Inland Empire, Los Angeles, Sacramento Angeles Area, San Diego, San Francisco Bay Area, and the San Joaquin Valley — reflect a range of Orange economic, demographic, care delivery, and financing conditions in California. San Diego Blue Sky Consulting Group interviewed nearly 200 respondents for this study with 23 specific to the San Joaquin Valley 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 Len Finocchio, DrPH, principal consultant, and James Paci, JD, MPP, The California Health Care Foundation is dedicated to advancing policy analyst, are with Blue Sky Consulting Group, a firm that helps meaningful, measurable improvements in the way the health care government agencies, nonprofit organizations, foundations, and private- delivery system provides care to the people of California, particularly sector clients tackle complex policy issues with nonpartisan analytical those with low incomes and those whose needs are not well served by 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 San Joaquin Valley region. We also thank Alwyn Cassil of California Health Care Almanac is an online clearinghouse for key data Policy Translation, LLC, for her editing expertise, and members of the Blue and analysis examining the state’s health care system. Sky Consulting Group project team.