SANTA BARBARA — As Orange County embarks on a potentially risky $450-million effort to save tax money by revolutionizing health care for 250,000 indigent Medi-Cal recipients, a health official in Santa Barbara County makes a sobering observation.
"Orange County is going to need some damned good management and some damned good luck," Charles C. Bailey said.
Bailey should know, because he is director of fiscal services for the Santa Barbara Health Initiative, the pioneering program that is Orange County's role model. He has journeyed where Orange County is about to go as it overhauls what county officials complain is a cumbersome and inefficient state-funded system that cares for much of the county's poor population.
When the county inaugurates its OPTIMA program in January, 1995, it will be the state's largest county-based, managed-care program for Medi-Cal.
It will closely resemble Santa Barbara's 10-year-old program, which has earned wide praise but also encountered enough problems and criticism to make Orange County take notice.
"It is the only way for a health care system to go," said Bailey, who is convinced that the $80-million-a-year program is worth all the frustration and work.
But that opinion isn't unanimous in Santa Barbara, where the Health Initiative serves only 40,000 people and spent much of its first five years mired in debt.
"When you cut to the financial bottom line, it is no better than the state program," said James Ash, chief executive officer at Santa Barbara Cottage Hospital and a former member of the board of directors of the Health Initiative.
"This is not a magic solution up here, believe me," he said.
What's going right in Santa Barbara?
According to most health officials there, the program has improved the poor's access to basic medicine, emphasizes local control rather than dealing with the state's Medi-Cal bureaucracy and sharply reduces the costly overuse of emergency rooms.
What's going wrong with the program?
Critics say Medi-Cal recipients have a hard time getting specialized medical care because there aren't enough physicians in specialized areas like orthopedics and neurology willing to participate in the program. And there are not enough physicians in general practice in areas where most poor people live.
Yet the program's accomplishments have impressed Orange County enough to borrow the blueprint.
"What has been learned is that (government-funded) managed care can work," said Dr. Marianne Maxwell, project director of Orange County's OPTIMA program. "It can work for the benefit of patients who get better care in terms of continuity and access and it can work better for providers."
Here's how Santa Barbara's and Orange County's health care plans work:
Both are set up as nonprofit authorities with the power to enter contracts with doctors, hospitals, pharmacies, community clinics and others to provide health care services to Medi-Cal patients.
All Medi-Cal beneficiaries at the time they qualify for assistance are assigned to primary care physicians, who are paid a flat monthly fee to attend to the patient's medical needs.
As an incentive for reducing costs under the Santa Barbara program, the primary care physicians receive a bonus if they authorize fewer services such as diagnostic tests, X-rays, drugs and referrals to specialists.
Elsewhere in California, responsibility for contracting for Medi-Cal services is shouldered by the state, which directly reimburses providers who agreed to see Medi-Cal patients on a fee-for-service basis.
Under the traditional state system, many Medi-Cal patients have been unable to find physicians willing to treat them because of widespread dissatisfaction with Medi-Cal reimbursement, paperwork and bureaucracy.
As a last resort, many Medi-Cal patients have been forced to seek routine health care at hospital emergency rooms, at an exorbitant expense.
Most critics agree that what Santa Barbara has done best is to increase access to primary medical care. Many private family physicians and pediatricians would prefer to be paid a set monthly fee than deal with the state billing process.
Another touted advantage of the Santa Barbara system is local control, which enables a board of directors representing providers and consumers to make changes in reimbursement policies to meet local needs, such as adding drugs and treatments that the state doesn't cover.
Physicians who have questions about claims say they can easily contact a decision-maker on the telephone, something that they contend was impossible when working with Sacramento.
Nonetheless, the county-based program has had little success in attracting specialist physicians, who have no greater financial incentive to treat Medi-Cal patients under the Health Initiative than under the old state program.
"I think there are a lot of problems with the system," said Ash, who runs the largest of the county's seven hospitals. "They deny claims and refuse claims as much as any other payer, if not more."
