Since the Affordable Care Act (ACA) was enacted, more and more people have become insured. In California, the creation of the Covered California health care exchange and the expansion of Medi-Cal have given millions more people access to health care coverage. There’s one major positive outcome health care providers agree on – people are seeking care earlier and more frequently, leading to better diagnoses and management of chronic health problems.


But the ACA has also caused issues for health care providers – particularly for hospitals – and has exposed a glaring lack of access to primary care in California.


Growth Under Covered California And The Affordable Care Act

“The numbers speak for themselves that Covered California has had a positive impact on making healath insurance accessible to more people,” Joel Yuhas, president and CEO of Dignity Health St. Mary Medical Center, told the Business Journal. During the open enrollment period for 2015, a total of 1,408,362 Californians signed up for health plans through the state health care exchange, he said. For 2016, Covered California had 1,572,974 new enrollees.


Under the ACA, Medi-Cal expanded in 2014 to cover one in three Californians. “When you look at our number of uninsured that we see at this hospital, I would say 10 years ago our uninsured rate could have been as high as 10% in the hospital. Today it’s really down to like 2%,” Yuhas said. Because St. Mary takes care of many people in underserved communities, much of this growth has been due to the Medi-Cal expansion, he noted.

Joel Yuhas, president and CEO of Dignity Health St. Mary Medical Center, said silver and bronze level plans available through Covered California are “catastrophic” for hospitals and patients due to high out-of-pocket costs for procedures. (Photograph by the Business Journal’s Larry Duncan)


“In family medicine, we’ve seen a surge of newly insured patients, many of who have not seen a physician in years, sometimes decades,” Dr. Jay Lee, a family medicine physician and the associate medical director of practice transformation for MemorialCare Medical Group, wrote in an e-mailed response to the Business Journal. The chief complaint of new patients is, “I haven’t seen a doctor in a long while,” he added.


“In my 10 years at MemorialCare, I can’t recall a time when we’ve been more clinically busy both in the ambulatory [outpatient] setting and in the hospital,” Lee continued. “And based on my experience as immediate past president of the 9,000-member California Academy of Family Physicians, the busyness is the new norm for primary care offices up and down our state,” he wrote.


In the same e-mail, John Bishop, CEO of MemorialCare’s three Long Beach hospitals, wrote that he is “thrilled” that because more people are insured they aren’t waiting to seek care until their condition worsens.


“From an overall provider standpoint, it has been a very good thing,” John Molina, CFO of Long Beach-based Molina Healthcare, said. “If you look at the hospitals, what we’ve seen in Long Beach and in other geographies, the additional expansion of Medi-Cal and the ability to have people get insured who couldn’t be covered before has greatly reduced uncompensated care.”


In addition to providing health plans through Covered California, Medi-Cal and Medicare, the company also operates health clinics, which have been “very busy” since the implementation of the ACA. They’ve been so busy, in fact, that the company continues to open new clinics, including an upcoming new location on Atlantic Avenue in Long Beach’s 6th District.


The increase in insured Americans has spurred growth for Molina Healthcare, which has nationwide operations, and other health care providers. “To give you a sense, I know we’ve more than doubled the employment across the country because of the ACA – I’d say probably up to 150%,” Molina said.


In Long Beach, Molina Healthcare has expanded its footprint. “We’ve got the Molina towers. We also have a few floors over at the World Trade Center. We have the two buildings at 6th [Street] and Pine [Avenue], and we have a building up at Hughes Way. That’s not including the clinics we have here in Long Beach,” he said.


To prepare for health care reform, MemorialCare Health System has been growing its local footprint for a decade, according to Bishop. “Years ago – well before ACA – MemorialCare began preparing for health care’s transformation by building, expanding and adding physician practices, ambulatory surgery, urgent care, medical imaging and other outpatient centers,” Bishop wrote. “Recently, we partnered to offer kidney dialysis centers as well throughout the region and expect to see tremendous growth in outpatient services.”


MemorialCare’s effort to “embark on a practice transformation model” to achieve the “triple aim” of the ACA – better care, experience and value – has opened up new opportunities for the provider, according to Lee.


“I believe the ACA has accelerated our ability to build capacity for practice transformation – manifested by our success in securing Accountable Care Organization contracts with health plans, the government and now the new Boeing contract to care for its employees and families,” Lee said. In mid-June, MemorialCare announced that it was chosen to provide health care services through a special plan to most of Boeing’s Southern California employees [refer to separate story in this edition].



While health care providers lauded the expanded access to care created by the ACA, there have been issues associated with the rapidly increasing number of insured patients.


“While the ACA is critical for insuring more Americans, the primary care infrastructure isn’t sufficient or sufficiently reimbursed at this time,” Bishop wrote. “Too many of the newly insured also have not yet identified a primary care physician or have challenges finding one.”


His colleague echoed this observation. “While the expansion of coverage is critical to patient health and family well-being (one in three Californians are covered by Medi-Cal),” Dr. Lee wrote, “it has also exposed the primary care workforce shortage and accelerated the need to modernize and build infrastructure for moving away from fee-for-service reimbursement towards value-based care.”


Yuhas said the shortage of primary care physicians is “profound” in Long Beach. As a result, St. Mary Medical Center has seen an increase in patients accessing primary care services via its emergency department. Bishop made the same observation with respect to MemorialCare’s hospitals.


“Our hospital emergency department currently has 23 beds, and we’re working on a plan to expand to 47 beds in the upcoming years,” Yuhas said. “And all that is borne about by additional demand for primary care services and for emergency care services at our hospital.”


MemorialCare has a “long-standing” program that helps patients in the emergency room find primary care providers, Bishop noted.


Molina said some universities and even health care providers are creating new medical schools to train more doctors and meet growing demand for primary care. University of California, Riverside is one such school, he noted. “It’s going to be really challenging over the next 20 years to make sure we have enough doctors and mid-level practitioners to take care of everybody,” he said.


The health plans offered through Covered California are also putting financial stress on hospitals, including St. Mary, according to Yuhas. “Our experience is that a lot of people who are accessing care under Covered California plans are choosing the lower [tier] bronze and silver plans that are more affordable but are essentially catastrophic,” he said.


“When you really have something serious that needs to be done, they have very high out of pocket co-insurances and co-pays,” Yuhas said of these plans. “What happens is that people are not always able to afford to pay their co-insurances and co-pays, and as they are unable to pay them, they end up translating to an increased amount of bad debt for a hospital,” he explained. “So we have seen an increase in our hospitals’ bad debt reserves as a result of the Covered California program.”


When asked what the strategy is to deal with this dilemma, Yuhas responded, “I don’t know that we have one.” But it’s not just St. Mary that is unsure of how to approach the situation. “I don’t know that hospitals have a plan B for mitigating bad debt associated with bronze and silver plans and the high deductibles,” he said. “It’s incumbent on hospitals to continue to work with our legislators to understand the impact of health reform and how that translates to the ability of hospitals to deliver care.”


“One of the things we’ve seen some of our competitors do is they really increase the out-of-pocket costs in order to have the premiums lower,” Molina observed. “Our preference is that people buy the silver plans because the bronze plans are designed to have high deductibles,” he said of his company’s health plan offerings. “We want to keep it affordable for them. But I can see how that might be a problem for some of the hospitals on the procedure side.”