Adventist Health, which operates hospitals and health care facilities throughout the North Bay, is pursuing a limited HMO license in an effort to move more toward managed care under the Affordable Care Act.
The Roseville-based system said the move could allow for more control over its patient base, particularly in rural regions, by working more closely with HMOs, instead of competing, possibly expanding its network of payers.
"It allows for us to take on more risk, and the risk for clinical delivery of care," said Jeff Conklin, vice president of payer and network strategies for Adventist Health, which operates hospitals and clinics across California, Oregon, Washington and Hawaii. "Yes, it does enable us to get more revenues, but it's really a lot more responsibility. It's not just a revenue issue. We really believe the ACA is moving all providers to being very talented at providing population care."
Regionally, Adventist Health operates its Northern California Network, which includes facilities in Solano, Napa, Lake and Mendocino counties and an administrative office in Santa Rosa.
The partial HMO license differs from a full Knox-Keene license, like the one Sutter Health obtained recently. A fully licensed health plan can directly market, solicit and enroll subscribers into benefits plans and arrange for health care services for those enrollees.
A limited license does not directly market, solicit or enroll customers, but rather arranges for the provision of services for enrollees of other fully licensed plans, according to Rodger Butler, a spokesman for the Department of Managed Health Care, which oversees all HMOs in the state.
Mr. Conklin said the health system has identified so-called "dual-eligibles" -- patients who qualify for both Medi-Cal and Medicare under a new pilot starting in California next year -- as a potential area where managing more risk could be beneficial.
"Government payers are moving more into managed care," Mr. Conklin said. "We want to be cognizant of what we need to do to take on the appropriate amount of risk with our health plans."
It's not yet clear where Adventist Health would operate any new limited HMO plan. The Department of Managed Health Care requires providers to apply in each county to ensure network adequacy and physician ratios.
One area that could be appealing for Adventist Health, at least initially, is the Los Angeles market, where it operates two large urban hospitals -- Glendale Adventist Medical Center and White Memorial Medical Center -- and where there's a large portion of dual-eligibles.
"The plan in California is for multiple counties to move into a dual pilot," Mr. Conklin said. "And in Southern California, there's about 2,000 dual-eligibles who will move into HMOs."
The health system is exploring similar strategies in other states, but regulations and requirements vary from state to state, Mr. Conklin said.
"We're trying to figure out what we need, where we need it," he said.
Adventist Health's board of directors has signed off on the plan, and the health system plans to file its application with the state by the end of this year.
Mr. Conklin also said Adventist Health has explored establishing accountable care organizations, and may continue to do so, but in the meantime the partial HMO license would serve as a key part of its health care reform strategy.
The faith-based system had net income of $133.1 million in 2012, up 37 percent over 2011 net income of $97.3 million. Total revenues in 2012 were $2.7 billion.