Orange County Voices : COMMENTARY ON HEALTH CARE : County In Good Shape, Will Feel Even Better After Reforms : The growth of HMOs and business community involvement that Clinton has called for is already working here.

President Clinton’s State of the Union address firmly establishes health care reform at the top of America’s agenda in 1994, and due to our excessive health insurance costs and numbers of uninsured residents, this is great news for Orange County.

More good news is that Orange County is well positioned to progress with reform due to the ongoing evolution of our health care market and collaborative efforts occurring over the past year.

An underlying principle of both Clinton’s plan and the main Republican alternative is that “regions” will become responsible for the costs and output of their own health care systems. Both plans call for the coalescing of employers into regional purchasing cooperatives, which means that health care will be priced and delivered on a regional basis.

We will all benefit to the extent that we lower costs, improve quality, decrease our numbers of uninsured and reduce the wasteful use of our health care resources. Our success will depend upon our ability to bring together our employers, hospitals, physicians, health providers, insurers and consumer groups to create the best overall system possible.

We have already made a good start through Business Health Solutions, a project which has brought these constituencies together to work collaboratively toward reform of Orange County’s $10-billion health care system.

The proposed systems of “managed competition” call for managed care delivered through accountable health plans. We are fortunate in that, compared to the rest of the nation, most of us already participate in some form of managed care and a variety of strong health plans (FHP, Cigna, Kaiser, etc.) are well established in our Orange County market.

In addition, the Industrial League of Orange County is working to coalesce employer purchasing power, which will further stimulate our market forces toward creating the most cost-effective health plans possible.

Another initiative by our largest employers to measure the quality and performance of health care providers is also in the works.

Orange County is particularly burdened by a very high level of excess capacity in our regional health care system (over half of our hospital beds are not used), which translates into waste and reduced quality. Last year, Hoag Hospital closed its heart transplant center to improve the efficiency of its cardiac services. We all benefit from such an enlightened step because the cost-effectiveness of our remaining heart transplant center will likely improve due to a higher volume.

Our 10 hospitals in the county offering heart surgery is another problem that needs to be addressed; consolidation will improve the cost-effectiveness of heart surgery here.

The same applies to many other services as well, and we need to encourage consolidation of services by focusing our purchasing on those programs delivering the best combination of quality and cost. Important developments in this regard are the impending consolidation of Mission Hospital into the St. Joseph Health System, and the expansion of physician networks such as Bristol Park.

Another major challenge is to reduce our high levels of cost-shifting (i.e., those who pay for health care also pay for those who do not) by improving access for the poor and the cost-effectiveness of programs that serve them. Orange County’s OPTIMA project, a new health authority set up with these objectives, will begin by reorganizing the $500 million in care delivered annually to county Medi-Cal recipients.

Another development is the Industrial League’s effort to secure equitable treatment for Orange County by the state in the distribution of public funds. We need our fair share of resources to address the basic health needs of our indigent population, and our growing social problems (teen-age pregnancy, gang violence, child abuse, etc.) which translate into higher health care costs.

The acceptance of personal responsibility regarding health care is perhaps the preeminent challenge we will face. Orange County residents enthusiastically consume $10 billion of health care annually, and we are hungry for more.

To constrain expenditures, we first need to take better care of ourselves. The Orange County Wellness Coalition is working to develop a communitywide effort to reduce smoking, prevent injuries, improve nutrition and exercise, and encourage a wide range of other prevention activities. The Orange County Employer Health Coalition has also developed guidelines which call for workplace-based wellness programs and incentives for healthy lifestyles.

We also need to encourage the rational use of our limited health care resources, and reduce our demand for expensive health care services that have little or no value.

We have gotten used to asking for such services because they have been offered and someone else was paying. We now need to understand that we all pay, and that wasted resources cannot be applied to real needs.

Several important efforts to address this issue are developing in Orange County, and they will need our personal commitment to succeed. An example is the development of a program being designed to assist those facing terminal illness with objective, expert advice on alternatives to futile, expensive and often painful, debilitating treatments.

Our progress will continue to depend upon our ability to work together. We are fortunate that our leading health providers are more than receptive--insistent is a better term--to reorganized incentives that reward cost-effectiveness, including the shedding of excess capacity. They are eager for members of the business community to act in their capacity as purchasers to drive reform of the health care system.

We are also fortunate that our business community is stepping up to this challenge and taking actions that will benefit us all.