San Diego Business Journal

In 2007, health care leaders in San Diego County expect more legislation geared toward reducing the number of uninsured residents, and many experts disagree about the future growth of health savings accounts and high deductible health insurance plans.

Leaders also predict that reimbursement levels to doctors and hospitals will be based increasingly on performance and quality. Already in December, the U.S. House of Representatives and Senate reached a compromise bill that would eliminate a scheduled 5 percent Medicare rate cut for physicians in 2007 and establish a 1.5 percent increase for doctors who report on quality measures. Doctors will be watching closely what happens with Medicaid reimbursement levels, industry members say.

On the technology front, doctors and executives say interest in using high-tech systems to keep track of information, such as medical records, will increase, but that there will be a continued hesitancy to buy and implement them because of a lack of national standards.

Still others say the biggest issue will be the continued rise in health care costs. Dr. Joseph Scherger, a physician at the UC San Diego Medical Center, predicts "rapid growth" of health savings accounts and subsequent changes in the way consumers seek doctors.

The accounts are typically coupled with an insurance plan that requires consumers to pay high deductibles. The object of these plans, backed by the Bush administration, is to lower overall health care costs by encouraging more conservative spending on health. Money is saved by the consumer in a tax-free account, but opponents say they favor only the wealthy.

U.S. health care spending grew 7.4 percent in 2005 to more than $2 trillion and was expected to grow 7.3 percent in 2006, according to the Centers for Medicare and Medicaid Services.

Leveling Off

From March 2005 to January 2006, the number of people in the United States who were covered by HSAs/high deductible plans more than tripled to 3.2 million, according to the New York City-based Segal Co., a human resources consulting group. But experts say that growth leveled off in 2006.

Scherger, communications director for the San Diego County Medical Society, said if the growth of HSAs starts again, more doctors will likely advertise on TV.

"There's a hidden reservoir of funds all of a sudden," he said, adding that doctors are already beginning to offer more luxury-oriented, concierge-type services , for example, health care in a spalike atmosphere. "If you offer something people really want, they'll pay for it with their tax-free money. It will be interesting to see how the marketplace responds to (HSAs)."

In contrast, Steve Escoboza, chief executive officer of the Hospital Association of San Diego and Imperial Counties, and Chris Van Gorder, CEO of Scripps Health, said the incoming Democratic U.S. Congress could detract from the speedy adoption of HSAs.

In 2003, the federal government approved the use of HSAs in any state. Then, in 2006, Congress passed some guidelines surrounding how much people can save in those accounts. The president has yet to sign the bill, but other changes to the system could be established by a Democratic-led Congress in 2007.

San Diego health care leaders expect the number of Democratic politicians who won locally and nationally in November to also increase the number of proposals for health insurance solutions in 2007.

Determining The State's State

Officials are waiting anxiously to see what promised solutions Gov. Arnold Schwarzenegger will offer for California's more than 6 million uninsured residents in his January State of the State address. In San Diego County, one in five people are uninsured, local health researchers have said.

"Like Massachusetts (which passed a law last year requiring individuals to purchase health insurance), I think California wants to see as many people covered as possible," said Escoboza, whose hospital association is a nonprofit organization that represents more than 35 hospitals and health systems in the region.

Van Gorder, of Scripps, which owns five hospitals in San Diego County, said he thinks a combination payer system would work best where individuals, the government and employers all contribute.

"Health coverage should be available to everybody," he said. "It's in society's best interest. There are probably a number of combinations that will work."

Kamal Muilenburg is executive director at the San Diego Business Healthcare Connection, a nonprofit that works to increase the number of employers offering health benefits and educate consumers.

"Everyone's talking about the uninsured, and I think we're going to see more strategic efforts," Muilenburg said.

Hospitals continue to be concerned as they struggle to find the funds to upgrade facilities to meet state earthquake building regulations. In 2006, the Tri-City Healthcare District failed twice to pass a $596 million bond measure that would have helped it pay for seismic upgrades.

The district is a public entity that manages Tri-City Medical Center, a 400-bed hospital in Oceanside.

Michele Tarbet, CEO of Sharp Grossmont Hospital in La Mesa, did not return phone calls for this story. John Cihomsky, a spokesman for Sharp HealthCare, a health system here that oversees four acute-care hospitals, said Sharp's chief executive officer, Mike Murphy, and the health care system's executive vice president, Dan Gross, were unavailable.