State should delay CareOregon-SCAN merger, urges prominent health care leader

John Santa, a prominent state health care leader and longtime member of the volunteer board overseeing the Oregon Health Authority, said the agency should delay the merger of CareOregon with a rapidly expanding California-based nonprofit called The SCAN Group.

Santa, in a Jan. 25 public comment, urged the state to thoroughly study the transaction’s potential impacts on the Medicaid-funded Oregon Health Plan and the health care delivery systems in Clackamas, Washington and Multnomah counties — while also taking a closer look at SCAN.

He told The Lund Report he spoke only for himself, not for the Oregon Health Policy Board. His concerns are based on having lived through mergers involving the HealthFirst Medical Group and Blue Cross Blue Shield of Oregon.

“Many of those did not work out as hoped,” he said. “Oftentimes the risks of those (mergers) are not appreciated. Everybody looks at the benefits, nobody looks at the risks.”

Santa is particularly worried about the impact on low-income people in the tri-county region around Portland, citing CareOregon’s outsized role there. He also cited the assets and reserves CareOregon built up while serving those people under the Oregon Health Plan.

“CareOregon is the dominant delivery system in this market and any change in its governance or financing runs the risk of destabilizing the care of hundreds of thousands of patients,” he wrote. “Those assets are the community’s assets. They should be available for CareOregon’s members if conditions change.”

In all, CareOregon serves more than 500,000 low-income Oregonians under the Oregon Health Plan — most of them in Clackamas, Multnomah and Washington counties.

On Dec. 12, CareOregon announced with SCAN their desire to combine operations under a new name: HealthRight Group.

The two organizations applied to the Oregon Health Authority for approval of the transaction under the state’s Health Care Market Oversight program, set up by lawmakers to review mergers and make sure they don’t increase costs or hurt access. The application said the merger would benefit Oregonians by pooling the expertise and assets of both organizations and free up more funding to address health disparities and affordability.

Santa, a physician who served as the administrator of the Office of Oregon Health Policy and Research from 2000 to 2003, has also worked in a variety of state and national leadership positions in health care, including as medical director for the national nonprofit, Consumer Reports.

“Oregon has seen many health mergers and acquisitions that resulted in key decision-making processes occurring out of state. I believe the weight of the evidence is that such mergers or acquisitions do not result in positive changes when it comes to costs, health equity, access or quality,” he wrote in his comment. “During the last 5 years we have repeatedly seen the importance of key decisions being influenced or made at community levels or regional levels. Health care is local. This transaction would seem to head in the opposite direction.”

His comments echoed concerns about local control raised by people such as Bob Dannenhoffer, a physician and longtime health executive who now serves as Douglas County’s Public Health Officer. Reforms to the Oregon Health Plan a decade ago were touted as reflecting local decision-making.

Leaders of SCAN and CareOregon told The Lund Report in December that they were expecting such concerns, and that they were confident their two organizations’ mission-focused cultures would ensure no bad outcomes ensue. Eric Hunter, CEO and president of CareOregon, told The Lund Report decisions would continue to be made by CareOregon’s board.

Sachin Jain, a prominent Harvard-educated physician and former Centers for Medicare & Medicaid Services official who serves as CEO for SCAN, said the two were a natural fit, and their joining would support their mission, not erode it. He told The Lund Report that CareOregon funds generated in Oregon would stay in Oregon.

“I think coming together as one increases the likelihood that we’re going to be able to continue to thrive as two different organizations,” he said. “We’re laser-focused on building new clinical care delivery models and bringing those to Oregon.”

If approved, the combined entity would have revenues of $6.8 billion, serve almost 800,000 people in Oregon and California receiving Medicare and Medicaid, and employ about 2,500 people. While CareOregon would remain a distinct entity, it would operate as an affiliate of the larger organization headquartered in Long Beach, California. Hunter of CareOregon would lead HealthRight’s new Medicaid Division.

Santa told The Lund Report his concerns were heightened by CareOregon’s role as a key player in the history of the Medicaid-funded Oregon Health Plan, including the creation of Health Share of Oregon, the state-contracted coordinated care organization that serves low-income people in the greater Portland region.

“I’ve learned to really appreciate CareOregon,” Santa said, crediting the nonprofit’s efforts to tackle health disparities while working as part of Health Share, a collaborative of major players in the greater Portland market. “If CareOregon sneezes, HealthShare gets a cold — maybe gets pneumonia.”

Santa’s were one of two comments received as part of the state’s 30-day review process that began Jan. 12.

You can reach Nick Budnick at [email protected] or at @NickBudnick on Twitter.