A New Vision for California’s Healthcare System: Integrated Care with Aligned Financial Incentives

Abstract

In 2012, the share of California's Gross State Product consumed by healthcare was 15.4%, and approximately 50% of healthcare spending went to care for 5% of the population.To address such cost challenges as well as to improve quality of care and patient outcomes, a group of California's private and public sector healthcare leaders, with academic and analytical expertise provided by the University of California, Berkeley's School of Public Health, came together in a collaboration known as the Berkeley Forum for Improving California's Healthcare Delivery System.This Report lays out the Forum's Vision: A rapid shift towards risk-adjusted global payments and coordinated care provided in large, integrated systems.Furthermore, the Forum supports the implementation of seven initiatives, such as the greater use of patient-centered medical homes and palliative care, as well as increased physical activity.Together, these initiatives are estimated to reduce healthcare spending in the state by $110 billion (or $800 per household per year) between 2013 and 2022.These savings would bend the cost curve, reducing the expected share of Gross State Product consumed by healthcare, from the estimated 17.1% to 16.5% in 2022.