It was not that long ago that health care in Sonoma County was a troubled landscape.
In the aftermath of the 2001 collapse of Health Plan of the Redwoods, the county's largest HMO, many local hospitals and doctors battled each other for insured patients who had not yet been swallowed by fast-growing Kaiser Permanente.
Shrinking government reimbursements were forcing doctors to abandon their private practices and sign up for an employee's paycheck from Kaiser or Sutter Health. District hospitals searched for a lifeline that could help them stay afloat.
To be sure, many of these problems still exist, but health care experts say a new era is about to begin — one of greater competition among the local health care giants and more choices for individuals.
Two weeks ago, a Sacramento-based HMO known as Western Health Advantage announced that was entering the North Bay market by partnering with a regional network of hospitals and physicians in Sonoma, Napa and Marin counties. The insurance plan is expected to compete head-to-head with Kaiser on cost and quality when it begins selling coverage plans in the North Bay next year.
At the same time, Sutter Health, which runs Sutter Medical Center of Santa Rosa, announced that it had filed for a state license that would allow it to sell its own health plan.
These moves — most immediately the arrival of Western Health Advantage — take place on the eve of full implementation of President Barack Obama's health care overhaul.
While the verdict is still out on whether Obama's Patient Protection and Affordable Care Act will solve the country's health care crisis, the medical industry is nevertheless gearing up for major changes in 2014. These include launching health insurance exchanges, the expansion of Medicaid, individual and employer mandates and the prohibition of insurance discrimination based on pre-existing conditions.
Dr. Walt Mills, a Kaiser family practice doctor and the new president of the Sonoma County Medical Association, said the president's health care overhaul and health care economics are combining to drive the system toward a more vertically integrated and patient-centered model. That means both medical providers and health plans are increasingly expected to produce results: healthier patients.
"If somebody ends up in the emergency room because they didn't have access to high-quality primary care in a medical home, that's of no value" to the local community, Mills said.
In Sonoma County, newcomer Western Health Advantage has just teamed up with Santa Rosa Memorial Hospital and district hospitals in Petaluma, Healdsburg, Sonoma Valley and Sebastopol. These hospitals have recently aligned with a growing North Bay affiliation of physicians and hospitals called Meritage Medical Network.
Launched about 16 years ago, Western Health Advantage was formed by UC Davis Health System, Dignity Health (the former Catholic Healthcare West) and NorthBay Healthcare System. The HMO was established in response to medical providers seeking more control of the health care marketplace, which was controlled by large, for-profit HMOs, said Garry Maisel, president and CEO of Western Health Advantage.
The Meritage Health Network and its affiliated health care organizations will be the contracted providers for Western Health Advantage HMO members who live in Sonoma, Napa and Marin counties.
Maisel said his HMO plan will be priced very competitively, comparable to Kaiser Permanente in both cost and quality. Western Health Advantage currently has 93,000 members as of Sept. 1 and Maisel said he expects the number of members to grow by several thousand once it begins offering its plan in the North Bay next year.
David Hodges, vice president of Vantreo Insurance Brokers in Santa Rosa, said he has worked with Western Health Advantage in the Sacramento Valley, where the HMO is an extremely competitive player. He said the new HMO plan "will beat Blue Shield rate-wise" and compete directly with Kaiser.
"I really like Blue Shield, but right now employers are looking to lower cost and Western Health should be able to do that, similar in cost to Kaiser," Hodges said.
The HMO plans to sell its insurance plans through the California Health Benefit Exchange, Maisel said.
On Sept. 14, the same day Western Health Advantage announced it would be coming to Sonoma County, Sutter Health announced that it had filed an application with the California Department of Managed Care for a Knox-Keene license to offer a Sutter-operated and sponsored health plan. Sutter said it expects its HMO products to initially become available in the greater Sacramento area and the Central Valley in early 2014.
"It's a logical place to start," Sutter Health spokeswoman Karen Garner said in an email. "We hope to expand into other parts of our service area — including Santa Rosa."
Garner said the Knox-Keen license would give Sutter greater flexibility that would allow the Sutter network to participate in "new care delivery" models, including the accountable care organization, or ACO, structure being promoted by the Affordable Care Act.
An ACO is loosely defined as a network or system of hospitals and doctors who share the responsibility of providing quality care while controlling health care costs. The closest thing to an ACO in the North Coast is Kaiser Permanente.
Sutter Health previously operated its own HMO, Omni Healthcare, but sold it in 1999. Since then, Sutter has become a much more integrated organization, gained more experience in care management and developed strong partnerships with doctors groups, Garner said.
She said Sutter's evolution in a new era of accountable care "creates the right timing for Sutter Health to take this step."
Hodges, the Santa Rosa insurance broker, said Western Health Advantage's partnership with Memorial Hospital would be a "force to be reckoned with." And with Sutter's new HMO offering and the launch of the state health insurance exchange in 2014, local residents are going to have more health care options.
"More choices is always better," he said.
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