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California Achieves $345M in Cost Avoidance Through Federal Clinical Practice Initiative

Analysis  |  By Christopher Cheney  
   August 22, 2019

Practice transformation networks engage 9,800 physicians who serve 5.9 million patients in The Golden State.

In California, state leaders, healthcare organizations, and business groups have reported significant benefits from a federally funded clinical practice initiative, including $345 million in cost avoidance.

Under the Centers for Medicare & Medicaid Services' Transforming Clinical Practice Initiative, grants totaling more than $52 million were awarded to three practice transformation networks in California over the past four years. The primary goals of the federal initiative are to increase the value of U.S. healthcare through improved quality and reduced costs across the country.

In addition to the $345 million in cost avoidance, the initiative has generated impressive results in California:

  • 67,000 avoided emergency room visits
  • 57,000 avoided hospitalizations
  • 750,000 patients have achieved improved health outcomes—including 26,000 diabetics improving HbA1c control—or benefited from improved processes of care such as treatment with enhanced clinical guidelines

Transformation network trio

With support from the federal funding, Golden State healthcare stakeholders formed three practice transformation networks, with 9,800 physicians serving 5.9 million patients.

1. Pacific Business Group on Health's Practice Transformation Initiative: In partnership with the Integrated Healthcare Association and the Center for Care Innovations, PBGH formed the Practice Transformation Initiative, which features 1,900 clinical practices. About 90% of the practices are primary care clinics with one or two clinicians.

The Practice Transformation Initiative includes a train-the-trainer model to promote peer-driven technical assistance and a practice coaching model to develop technical skills. In the practice coaching model, practices hire facilitators or reassign existing staff to lead training efforts in areas such as quality improvement and change management.

2. Southwest Pediatric Practice Transformation Network: CHOC Children's Hospital and Rady Children's Hospital-San Diego engaged more than 200 clinical practices in Orange and San Diego counties that serve about 1.2 million children. The children's hospital effort focuses on a common operational framework, performance improvement strategies, and evidence-based best practices.

The Southwest Pediatric Practice Transformation Network targets 14 quality and utilization metrics for six common pediatric conditions: acne, acute gastroenteritis, bronchiolitis, asthma, community-acquired pneumonia, and headache. Clinical guidelines for the conditions were disseminated to pediatric clinics, including building the guidelines into the electronic medical record systems of large physician groups. New decision support tools and standard order sets also were established at clinics.

Coding best-practice training was provided for pediatric office visits such as encounter submissions, office workflows, and clinical documentation improvements.

3. Los Angeles Practice Transformation Network: L.A. Care Health Plan led an effort to help Los Angeles County clinicians improve care for diabetes and depression, transform practices, and lower costs.

L.A. Care's Los Angeles Practice Transformation Network provides onsite and remote assistance to support treatment of patients at high risk for hospitalization, facilitate transitions to community-based care settings after acute hospitalizations, promote medication reconciliation, and boost medication management. Improvements achieved include a 79% boost in suicide risk assessment for children.

Payer player

Several factors contributed to the positive impacts of the Los Angeles Practice Transformation Network efforts, L.A. Care CEO John Baackes told HealthLeaders:

  • Community partnerships closed the loop on community referrals and enabled warm handoffs to organizations that help patients address social factors that impact health such as food security, transportation, and housing.
  • Robust utilization of healthcare information technology tools improved the validity and integrity of data exchanges and risk stratification, including near real-time notifications.
  • Fostering a culture of quality improvement such as improved staff engagement clearly defined and assigned care team responsibilities, which helped drive improvements in patient health.
  • Disease-specific care was promoted through patient education and chronic disease self-management training such as the Diabetes Empowerment Education Program.

Cost avoidance was significant, he said. "We saw reduced utilization in all types of admissions for patients diagnosed with diabetes, depression, or both. That includes inpatient admissions, emergency room visits, and 30-day readmissions. We had 45,000 avoided emergency room visits and 19,000 avoided hospital admissions. That resulted in $136 million in savings."

There were several components that contributed to reduced emergency room visits, Baackes said.

"We can attribute the reduction in ER utilization and the associated cost savings to better patient engagement with primary care, risk stratification, improved care coordination, integration of physical and mental health within the medical home, and value-based payment programs. Specifically, we saw increased provider adherence to evidence-based care guidelines for both preventive care and chronic disease management."

Healthcare IT tools such as integrated population health management solutions and admission, discharge and transfer (ADT) messages also helped reduce ER visits and hospitalizations, he said. "These tools helped to drive improved patient outreach and delivery of appropriate care services. We were able to identify so-called frequent flyers, those members who had repeated readmissions. That led to targeted care management delivery and reduced admissions."

Christopher Cheney is the CMO editor at HealthLeaders.


The Centers for Medicare & Medicaid Services' Transforming Clinical Practice Initiative provided grants totaling more than $52 million in California.

The federal funding supported three practice transformation networks led by healthcare providers, payers, and business groups.

Significant reductions in healthcare utilization were achieved, including 67,000 avoided emergency room visits and 57,000 avoided hospitalizations.

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