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.