In the wake of a blistering report by Orange County’s Grand Jury that raised troubling questions about hospital lobbyists writing controversial changes to the county’s $1.5 billion health plan for the poor and then fundraising for Supervisor Janet Nguyen, a majority of her colleagues Friday said they supported changing the board governance for CalOptima, according to the Voice of OC.
“While not naming names, the report criticizes county Supervisor Janet Nguyen for her role in remaking CalOptima after she joined its board two years ago. Lobbyists from the Hospital Association of Southern California were allowed to rewrite the county’s ordinance that governs CalOptima to give more control to health-care providers “and less to members and organizations representing members,” the report says, without naming the lobbying organization,” according to the O.C. Register.
This withering report could tank Nguyen’s plans to run for the 34th State Senate District in 2014. Here is the Orange County Grand Jury’s report summary:
CalOptima provides healthcare for one out of three children in Orange County. That’s correct!!! One-third of Orange County’s children depend on CalOptima for their healthcare needs. In addition, CalOptima is responsible for the healthcare needs of one in five senior citizens and one in seven Orange County residents. It should also be pointed out that the 427,000 plus Members are either United States citizens or documented aliens. Projections for Membership growth in 2014 when the Affordable Health Care Act takes effect are as high as 27% or 540,000 Members.
In spite of many calling CalOptima ―the Gold Standard‖ or a ―National Model‖ for healthcare, political turmoil threatens the organization, jeopardizing its membership’s access to quality healthcare and potentially putting the entire entity at risk. Over the last 18 months, CalOptima’s leadership team has been decimated by the departure of 16 senior level executives, including the Chief Executive Officer (CEO), Chief Operations Officer (COO), Chief Medical Officer (CMO) and Chief Financial Officer (CFO). Its Board of Directors have experienced unprecedented turnover to the point that the most
tenured Board member has only 20 months experience. The organization has been riddled by internal allegations of misconduct and inappropriate actions. Multiple Board members have been publicly accused of conflict of interest or other misdeeds. In all, the organization has spent more than $520,000 on outside law firms and consumed
countless hours of staff time investigating these allegations.
According to the former CEO, CalOptima is a complicated $1.5 billion entity with a large member base, numerous regulations and challenging funding sources. When California’s budget crisis is added to the mix and with anticipated growth, grappling for slices of the forthcoming $2 billion pie will be fierce. Although the State sets the rates,
CalOptima dictates to the Providers (hospitals, doctors, community clinics, etc.) what is required to retain or grow their slice. It has been a leader in incentivizing physicians to reduce the cost of patient care (example: utilizing surgical centers instead of hospitals) and improve their overall quality of care. However, an ordinance change in December,
2011 by Orange County’s Board of Supervisors has made it possible for Providers to seize control of CalOptima’s Board of Directors from Member organizations and their representatives. One Supervisor voting against the ordinance change was quoted as saying the proposal gave that individual ―heartburn‖, while another dissenter was quoted, ―It’s like having the foxes watch the chicken coop.‖
There is only speculation regarding the future of CalOptima and its Members.
Some of those interviewed believe that having for-profit Providers included in or potentially controlling all decisions, is bad news for Members and Member organizations. Others interviewed believe CalOptima’s $150 million reserves and ownership of a $40-$50 million building are attractive to several of the County’s Board of Supervisors professing a budget crisis locally. Although there would certainly be debate and scrutiny from the California State Legislature, those funds could become discretionary for the Board of Supervisors.
Without CalOptima, the most likely scenario for Orange County would be a Geographic Managed Care system; the model used by San Diego County. In that scenario, insurance companies such as HealthNet, Blue Cross, Molina or Aetna would control healthcare for the County’s neediest. Nationally, those firms have already begun positioning for 2014. Aetna, a large provider of commercial and individual health care plans, merged with Coventry Health Care in August, 2012 in a deal targeting Coventry’s Medicare and Medicaid customers. ―Expect other companies with government exposure to see greater investor interest,‖ wrote a Credit Suisse analyst to his clients recently.
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