CHW Partners on Innovative CalPERS Pilot

Catholic Healthcare West, Blue Shield of California, and Hill Physicians Partner to Reduce Costs, Improve Quality

San Francisco, CA - April 22, 2009 - This afternoon, the California Public Employees' Retirement System (CalPERS) approved a new pilot program in Sacramento that aims to reduce costs while improving healthcare quality. The program, led by Blue Shield of California, Hill Physicians Medical Group and Catholic Healthcare West, which operates the local Mercy hospitals, will deliver comprehensive healthcare services to CalPERS members using a "virtual integrated model" of care.

The health plan, hospital system, and medical group will be partnering to share information and coordinate care more directly. The three organizations' incentives will all be aligned to improve quality, cost and service. The pilot project will begin in calendar year 2010.

"This is right in line with our strategic vision to be a leader in providing best-in-class, quality, and sustainable health benefit options for our members and employers," said Rob Feckner, CalPERS Board President. "In the short-term, we're aiming to reduce our cost and improve delivery of health care in the Sacramento region. If successful, we hope to positively impact health outcomes and costs for more of our members over the long-term."

Disease management, pharmacy, improved communication and palliative care are all slated to play a role in this pilot, which is still in the earliest stages of development. Each partner has agreed to contribute to cost savings and to be at financial risk for any variance from the pilot's targeted cost reduction goals. The pilot's objective is to build a delivery model that takes cost out of the local delivery system.

"We created this pilot because it's critical for healthcare entities to challenge assumptions and to examine smarter ways of providing and paying for care," said Juan Davila, Senior Vice President of Network Management for Blue Shield of California. "Our mission dictates that we always strive to provide our members with high quality, affordable care, and we believe that this pilot will help us fulfill that mission."

The pilot will help reduce costs and improve quality for all CalPERS members in Sacramento, El Dorado and Placer counties. "We believe the partnership among the three of us will foster a more integrated way of sustaining high levels of clinical quality while also making more efficient use of our resources to achieve measurable cost savings," said Steve McDermott, Chief Executive Officer, Hill Physicians Medical Group.

CalPERS members will benefit from the immediate cost savings as well as the service enhancements provided by the three organizations. "As California's largest private hospital provider and as an organization long committed to creating a more just health system, CHW is proud to participate in this pilot," said John Wray, Senior Vice President, Managed Care for Catholic Healthcare West. "We all have a responsibility to do what we can to make health care more accessible and affordable."

The Sacramento community was selected because it is a market with a significant number of CalPERS members. Catholic Healthcare West and Hill Physicians Medical Group have substantial presence in the greater Sacramento area, and therefore, it is a place where changes implemented by the parties could make a tangible difference in healthcare trend for CalPERS members. Results of the pilot project will be monitored and shared regularly with CalPERS.

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