Leadership Letter

Alameda Alliance for Health differs greatly from the organization it was on

January 1, 1996. We opened our doors that day with a small staff, one health coverage

program, and two members. Ten years later, the Alliance has 90,000 members,

four health coverage programs, and 130 employees. Through the years, we have

enhanced services to our members, broadened our community partnerships, and

strengthened our relationships with local health care providers.

We’ve also confronted many challenges. At times, these challenges appeared

overwhelming, but we addressed them with expertise, innovation, and the same

determination that is at the foundation of the Alliance. Most recently, the Alliance

dealt with fi ve years of operating defi cits. In a period of climbing medical costs,

we took bold steps to manage these expenses throughout the organization. From

2004 to 2006, we instituted a number of cost-management strategies focusing

on operations, medical management, and provider agreements. For example,

we initiated intensive care management of targeted patient groups, primarily

members with chronic illnesses and the growing senior and disabled populations,

and utilized available social services to reduce these patients’ medical expenses. We

established regular meetings with Alliance providers to learn about and respond

to their concerns, include them in our decision-making processes, and strengthen

our relationships with them. We also increased efforts to reach out to community

advocates who work with senior and disabled populations to seek effective medical

management alternatives and service considerations. All these measures helped to

reduce our expenses while improving quality services, and, in the fi scal year ending

June 30, 2006, Alameda Alliance for Health emerged from the fi ve-year period of

operating losses.

Thanks to the collective efforts of our Board of Governors, management and staff,

providers, and community supporters, we have achieved impressive results over the

last ten years. We have also evolved into a mature organization with a solid track

record for supporting Alameda County’s safety net system and providing health care

services to underserved populations in our community. We are not only committed

to fulfi lling our mission, but eager to take on the future, to expand our products

and services, and to reach more Alameda County residents.

Ingrid Lamirault Michael Mahoney

Chief Executive Offi cer Chair, Board of Governors

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Alameda Alliance for Health StaffSummer 2006

Alameda Alliance for Health StaffSummer 2006

Passion Drives the Alliance

Alameda Alliance for Health is accountable to the community and driven by its

social mission as a public entity. The Alliance was established by the Alameda

County Board of Supervisors to serve low-income Alameda County residents and

play a vital role in the county’s health care safety net system.

Although part of the county’s public health care system, the Alliance is an

independent, not-for-profi t organization. Throughout its fi rst decade, the Alliance

thrived on innovation, demonstrating agility in its capacity to take calculated

risks, to learn and grow, to evolve with changing needs and opportunities. Today,

the Alliance resolves to operate on proven business principles, seek continuous

improvement, learn from its mistakes, and rely on objective results to judge

its performance.

The organization emphasizes the values of communication and collaboration. Staff

members take personal responsibility to understand and embrace the Alliance’s

mission. The Alliance’s Board of Governors and management employ a leadership

style that aims to solve problems, achieve common goals, dismantle organizational

barriers, and cultivate effective working relationships. This philosophy extends

beyond Alliance staff to their relationships in the community. Collaboration with

providers, elected offi cials, health care advocates, and many other community

stakeholders has been vital to the organization’s success. And it always will be.

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The Beginning

In 1993, California’s Department of Health Services reformed its Medi-Cal program

by moving 3.2 million Medi-Cal recipients from fee-for-service plans to managed

care. The department presented the concept of the “Two-Plan” model, which

would establish two local health plans—a county-developed plan and a commercial

plan selected through a bidding process. Competition, the state reasoned, would

improve the delivery of managed care and provide better protection for vulnerable

populations. The state chose twelve counties to pioneer the new model. Alameda

County was among them.

The county created a steering committee led by Shahnaz Nikpay, Ph.D., and Health

Care Services Agency Director Dave Kears. They hired consultants, conducted a

feasibility study, and coordinated meetings with key stakeholders—hospitals,

physicians, community groups, and potential members–and hired staff to develop

the Alameda County Local Initiative.

Alameda Alliance for Health would be the only health plan created for and by the

people of Alameda County—and the fi rst Two-Plan model to begin operations in

the state. Stakeholders recognized that it would mean fundamental changes to the

delivery of Medi-Cal services. Potential members worried about keeping their own

doctors, while doctors were concerned about losing patients. Alliance founders

were also anxious. Would providers sign on? Would members join the Alliance?

“Since this was a model proposed by the state with no precedents, everyone

wondered how this experiment was going to unfold,” says former Alliance CEO

Irene Ibarra. “There was a lot of pressure to make sure it would meet everyone’s

needs, and also concern over moving so many families into a managed care plan

with new benefi ts, a new health plan card, and a new family physician. It was

important to our existence to answer the public’s concerns about the unknown.”

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Community residents attend a meeting in Berkeley to celebrate the launch of Alameda Alliance for Health. Alliance founding employee Nina Maruyama is at the podium. From left: Michael Mahoney, Dr. Shahnaz Nikpay, and Dave Kears.

To alleviate the growing anxieties, the Alliance needed to implement the plan

as quickly as possible. The planning process was expensive and, until it started

generating revenue, the organization had a fi nancial imperative to begin operations.

The group worked with a focused purpose, establishing positive relationships with

the county’s physicians, community clinics, and hospitals. Physicians on the Board

called their colleagues, assuring them that the Alliance would be reliable. Critical to

the Alliance’s success, a large network of providers, who had personal relationships

with patients, ensured that enrollees would be able to keep their previous providers

or choose from a wide selection of other providers throughout the county.

The very aspect that caused anxiety, however, was also the organization’s key advantage:

It was new. It could invent itself, create an organization that would be dedicated to the

community. Alliance founding CEO Dave Kears shared his vision, which articulated

the organization’s essential philosophy. “Why should we be just another HMO?”

Kears would ask his colleagues. “Let’s be a health plan that makes a difference!” With

creative leadership and resolve, the team was determined that Alameda Alliance for

Health would be the fi rst of the Two-Plan counties to “go live.”

On January 1, 1996, the Alliance began operations, the fi rst local health plan

under California’s “Two-Plan” model. The Alliance enrolled more members than

its competitor, which began operations six months later.

Entering its second decade, the Alliance continues to be true to its original

philosophy: to be a health plan that makes a difference.

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Serving the Underserved

Alameda Alliance for Health serves 90,000 Alameda County residents who

choose from more than 1,700 doctors, 140 pharmacies, 29 community health

centers, and 15 hospitals. Offering four health programs and additional services

for its members, the Alliance routinely evaluates member satisfaction and

monitors quality through focus groups, random telephone surveys, the annual

Health Plan Employer Data and Information Set (HEDIS), and the Consumer

Assessment of Health Plans. The Alliance also makes signifi cant investments in

staff development, ensuring that employees understand the latest health care

innovations and information.

The Alliance is strongly committed to providing culturally and linguistically

appropriate services. In fact, the U.S. Department of Health and Human Services

selected the Alliance as the only health plan nationally to be the subject of a case

study for the application of Culturally and Linguistically Appropriate Services

(CLAS) standards. Implementing these standards, the Alliance provides interpreter

services for members and providers, free of charge. Many network doctors speak

a variety of languages, and the Alliance offers providers free cultural and linguistic

training. The Alliance translates all member materials into a number of languages,

member service representatives help members in several languages—including

Spanish, Cantonese, Mandarin, and Vietnamese—and telephone interpreters assist

members with other language needs.

The Alliance also invests in health education for members, providers, and the general

community. To promote healthy lifestyles, the Health Education Department provides

free videos, DVDs, group interventions, and printed materials in many languages.

State and federal funds jointly support three of the programs the Alliance offers:

Medi-Cal, the Healthy Families Program, and Alliance Group Care (which is also

funded with county support). For children who do not qualify for public health

programs because of immigration status or income, the Alliance offers coverage

through Healthy Kids, which is supported by county and philanthropic funds.

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Alameda Alliance for Health Programs

Medi-Cal

Medi-Cal is a federal- and state-funded health insurance program for low-income

families and children, persons with disabilities, and seniors who qualify for help.

The program provides primary, acute, and long-term care. There are no premiums

or co-payments for lowest-income benefi ciaries.

Healthy Families Program

The Alliance began serving children through the Healthy Families Program in 1998.

The program provides low-cost health coverage to California children up to age

nineteen, whose family incomes are too high to qualify for Medi-Cal, but are below

250 percent of the federal poverty level (about $41,500 for a family of three). Benefi ts

include health, dental, and vision coverage. The Alliance is the Community Provider

Plan in Alameda County. As the Community Provider Plan for the Healthy Families

Program, the cost is $4 to $12 per child, with a maximum of $36 per household per

month. Members pay co-payments (usually $5) for most services. Maximum out of

pocket cost per family for co-payments is $250 per benefi t year.

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Alliance Membership by Program*

Medi-Cal 75,013

Healthy Families 7,986Group Care 4,420Healthy Kids 1,050Total Members 88,469

*Alliance Eligibility Data, June, 2006

Alliance Members by Ethnicity*

African-American 25,085Hispanic 25,066Other Asian and Pacifi c Islander 10,831Caucasian 9,037Chinese 6,269Other 6,161Vietnamese 6,020

*Alliance Eligibility Data, June, 2006

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Alliance Group Care

In 2001, the Alliance launched Alliance Group Care, an employer-sponsored plan that

provides affordable and comprehensive health care coverage to In-Home Supportive

Services (IHSS) workers in Alameda County. The Alameda County Public Authority

for IHSS workers, SEIU Local 616, Alameda County Health Care Services Agency,

Alameda County Social Services Agency, and the Alliance collaborated on Alliance

Group Care. State and federal funds with Alameda County funding that include

Tobacco Master Settlement funds support the program. Alliance Group Care

provides medical, dental, and vision coverage. Members’ monthly cost is $8 to $15,

with co-payments of $5 for most services. There are no co-payments for preventative

care, pregnancy and maternity care, and inpatient hospital services. To qualify for

the program through the Public Authority, IHSS workers must be paid for two

consecutive months and for an average of forty-fi ve hours in those two months.

Healthy Kids

In October 2005, the Alliance established the Healthy Kids Program to provide

comprehensive medical, vision, and dental care to uninsured children. To qualify

for the program, children must be under age nineteen, live in Alameda County,

be ineligible for public programs, and have a household income up to 300% of

the federal poverty level ($49,800 for a family of three). Healthy Kids covers all

children who meet eligibility criteria, regardless of immigration status. Premiums

are $10 per child per month and co-payments range from $5 to $15. There are

no co-payments for preventative care, family planning, and inpatient hospital

care. Generous grants from The California Endowment, California HealthCare

Foundation, Alameda County Tobacco Settlement funds, First 5 Alameda County,

and First 5 California support Healthy Kids.

Healthy Kids programs are a vital component of Children’s Health Initiatives

(CHIs) across the state. CHIs are a nationally recognized model for health coverage

expansion and systems change, including streamlining enrollment into public

programs, maximizing resources and coordinating with public health coverage

programs, and cultivating broad-based partnerships to support children’s coverage

expansion. Currently 22 counties operate Healthy Kids programs, and ten more

are in development. The Alameda County Children and Families Health Insurance

Task Force serves as the Advisory Group for the Alameda County CHI.

Alliance Members by Language*

English 50,634Spanish 18,091Chinese Languages 7,858Vietnamese 5,014Other Non-English 3,782Other Asian and Pacifi c Islander Languages 1,746Farsi 1,344

*Alliance Eligibility Data, June, 2006

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Leadership and Governance

An independent Board of Governors, appointed by the Alameda County Board of Supervisors, provides the Alliance with diverse perspectives and extensive expertise to ensure that the organization meets its commitments. Alliance Board meetings are open to the public, as required by law for a public entity. Affi rming the organization’s dedication to community collaboration, the Alliance welcomes, encourages, and responds to public input, at Board meetings as elsewhere.

The Board is comprised of fourteen seats, including physicians, hospital directors, clinical providers, consumers, a county supervisor, labor representatives, pharmacist, and the Alliance CEO. This composition provides a high level of public health care management expertise, as well as input from various stakeholders with diverse interests.

Michael Mahoney serves as current Board Chair. As President and CEO of St. Rose Hospital in Hayward, Mr. Mahoney has worked in hospital administration since 1982, and served as the fi rst Chair for the Alliance Board of Governors from July 1994 through June 1996. He also serves on the Hayward Chamber of Commerce Board of Directors and the Hayward Rotary Club Board of Directors.

Overseeing overall management of Alameda Alliance for Health, Ingrid Lamirault serves as Chief Executive Offi cer. Selected in December 2003, Lamirault brought signifi cant experience in public health care as well as expertise in health system strategic planning, policy development, and other functional areas.

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*Two Alliance member seats are currently vacant.

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2006 Alameda Alliance for Health Board of Governors

Ingrid LamiraultAlameda Alliance for Health CEO, ex offi cio

Linda Price, MDAlameda County Medical Center

Jane Garcia, CEO, La Clinica de La Raza, Alliance Board Vice ChairCommunity Clinic

Gail Steele, Alameda County Board of Supervisors, District 2County Board of Supervisors

Michael P. Mahoney, CEO, St. Rose Hospital, Alliance Board ChairHospital

Wright Lassiter, III, CEO, Alameda County Medical CenterHospital

Damita Davis-Howard, Executive Director, SEIU Local 535, Immediate Past Alliance Board ChairLabor

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Marty Lynch, CEO, LifeLong Medical CareMember At Large, Health Care Expert on Seniors and Persons with Disabilities

Charlie Ridgell, Assistant Director, Hospital Division, SEIU United Healthcare Workers WestMember At Large, Labor

Pamela Gumbs, Pharm.D., Pharmacist, United/Royal Medical PharmacyMember At Large, Pharmacist

John Norton, MD, Sinkler Miller Medical Association and Alameda-Contra Costa Medical AssociationPhysician

Julian Raymond Davis, Jr., MD, East Oakland Pediatrics Medical Group, Inc., Immediate Past Alliance Board Vice-ChairPhysician

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2006 Alameda Alliance for Health Committees

The Alliance recognizes the value of the diverse perspectives and interests of its stakeholders, from providers and plan members to health care advocates and other community participants. Vital to the organization’s ability to attain its goals, the committees listed below play an important role in the Alliance’s governance structure and strategic planning.

Community Advisory Committee

Comprised of health care professionals and community advocates, this committee advises the Alliance on policy decisions related to educational, operational, and cultural competency issues for people who speak a language other than English.

Finance Committee

This committee addresses issues and makes recommendations to the Board regarding rate structure, budget, fi scal strategy and policy, fi nancial projections, investment, selection of banks and depositories, and other fi nancial matters.

Health Care Quality Committee

Fourteen members, primarily physicians, discuss issues pertaining to quality of care. This committee documents quality of care reviews and designs and supervises follow-up action to improve care. Monitoring the provision and utilization of services, this committee addresses any quality concerns regarding accessibility, availability, and continuity of care.

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Member Committee

The Member Committee advises the Alliance on issues related to programs, health education materials, and member-related publications. This group offers recommendations to the Board and participates in establishing Alliance public policy.

Peer Review and Credentialing Committee

This physician panel considers issues and makes recommendations to the Board regarding provider credentialing and recredentialing, patient safety events, peer review, and provider-related grievances and complaints.

Pharmacy and Therapeutics Committee

Comprised of physicians and pharmacists, this committee reviews matters related to therapeutic drugs and certain medical supplies, and makes policy recommendations to the Board. This committee seeks to ensure patient access to a quality-driven, cost-effective drug benefi t.

Strategic Planning Committee

The Strategic Planning Committee reviews business policies, recommends strategic direction for the Alliance, and weighs program expansions and development of new business lines.

Utilization Management Committee

A subcommittee of the Health Care Quality Committee, the Utilization Management Committee approves and oversees the Utilization Management program. The Committee provides guidance on policy decisions, medical necessity criteria, studies, and improvement activities. It also reviews the results of improvement activities and studies, including the Health Plan Employer Data and Information Set (HEDIS) performance measures.

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Making a Difference in the Community

Believing that healthy families build healthy communities, Alameda Alliance for

Health has invested in numerous initiatives in Alameda County, interacting with

the community in several ways.

In 1998, the Alliance launched its Community Health Investment Fund (CHIF),

through which it partnered with other health care organizations to expand services to

underserved populations. Supporting important and innovative community programs,

the Alliance awarded more than $4.5 million in CHIF grants through 2002.

The organization also established the Alliance Community Team (ACT), which

encourages Alliance employees to serve the community. Through ACT, Alliance staff

members have donated thousands of pounds of food to the Alameda County Food

Bank, collected coats for homeless people in the county, supported the American

Red Cross with blood donations, contributed toys through Toys for Tots, raised

funds to combat diabetes, and volunteered with many other charitable endeavors.

Program Initiatives

The Alliance works closely with the county’s Public Health Department and

community organizations to better serve its members and improve the community’s

health. For example, the health plan contracts with the Asthma Start program, a

county public health project, to provide case management for families with an

asthmatic child. In addition, the Alliance has been an active participant in two

asthma quality improvement initiatives. The fi rst is a countywide asthma database

that provides various aggregate and individual level reports. The reports assist

providers in identifying and following-up on patients, monitoring medication use

and misuse, and assessing the success of medical interventions. The second initiative,

Asthma Tools and Training Advancing Community Knowledge (ATTACK), is

designed to improve asthma management within the primary care setting. This

initiative includes training of clinicians and non-clinicians in private medical

offi ces and community clinics to increase their scope of practice and expertise in

asthma. Nine of the Alliance’s provider practices have participated in this program

impacting almost 2,000 Alliance members (children) with asthma.

The Alliance is pleased with the success of an initiative for high risk care

management through a contract with Healthways (a nationally recognized care

enhancement company). The program involves highly trained nurses delivering

intense care management programs to members at risk for hospitalizations. Using

this type of medical intervention is not unique for health plans as an approach

for improving health for high risk members. However, what is unique is the

Alliance and Healthways partnership to include a strong focus on identifying and

addressing social and psychological challenges that make patients more susceptible

to a growing dependence on the medical system. The care management nurses

help patients by coordinating their medical care and assisting them to strengthen

interdependence with family and friends, stimulating mental capabilities, and

encouraging community involvement and purpose.

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The Alliance Health Education Department participates in many local activities,

such as promoting the Bay Area Immunization Registry, sharing expertise with

the Fetal Infant Mortality Review Community Action Team, working with the

Breastfeeding Taskforce, and contributing data and expertise to the Perinatal

Substance Abuse Taskforce.

Community Partnerships

Alameda Alliance for Health reaches out to the community by working with many health care organizations and advocates in the county. Among other endeavors, activities include:

• Participating in the Alameda County Children and Families Health Insurance Task Force, which also serves as the Advisory Group for the Alliance’s Healthy Kids program;

• Serving on the Access to Care Collaborative;

• Participating in the Alameda County Health Coverage for Children Coalition;

• Working with the California Children’s Health Initiatives Coalition;

• Contributing to Alameda Health Consortium’s Health Resources and Information Forum, a training program for Social Services Agency eligibility workers;

• Joining efforts with the Community Health Councils/Covering Kids and Families Statewide Coalition;

• Serving on the Steering Committee for the American Lung Association on Oakland Kicks Asthma;

• Working with the Child Health and Disability Prevention Provider Training Collaborative;

• Teaching in the Ambulatory Care asthma classes at Children’s Hospital and Research Center Oakland;

• Participating in the Health Care Sector Committee of the Healthy Eating – Active Living grant project;

• Planning with the Ethnic Health Institute’s Advisory Committee and the Asthma Subcommittee;

• Leading the Oakland Berkeley Asthma Coalition;

• Contributing to The Pediatric Diabetes Coalition of Alameda County;

• Participating in the Alameda County Committee on Children with Special Needs;

• Contributing to and developing the implementation strategy for the Oakland Unifi ed School District’s Wellness Policy;

• Providing community health education programs through public schools and community-based organizations;

• Working on La Clinica de La Raza’s Pediatric Obesity Subcommittee; and

• Partnering in enrollment events with community-based and faith-based organizations throughout Alameda County.

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Challenges Become Opportunities

The costs of delivering comprehensive health care have continued to rise over the

years while fi nancial resources remained limited. The Alliance faced budget shortfalls,

experiencing operational losses for fi ve consecutive fi scal years. But, during this period,

a most signifi cant asset continued to sustain the Alliance: a solid commitment to

making a difference in the community.

Working with its Board and staff, the Alliance instituted several measures to manage

costs. The organization’s turnaround strategy included four primary initiatives:

formulating administrative effi ciencies to reduce operating costs, renegotiating

provider rate contracts, eliminating fi nancially unsustainable programs, and improving

medical management practices.

Reduce Operating Costs

The turnaround plan called for the organization to shift some of its resources,

reallocating them to establish specifi c expertise in critical areas: pharmacy, medical

management, fi nance, and compliance and government relations. In addition,

management improved claims processing and eliminated operational ineffi ciencies

to decrease overhead costs.

Renegotiate Provider Contracts

Recognizing the organization’s importance to the community, many providers

cooperated with Alliance initiatives to improve its performance and, indeed, its

viability. Through contract changes, physicians, hospitals, pharmacies, and other

providers made substantial contributions to the Alliance’s fi nancial turnaround.

Eliminate Unsustainable Programs

In 2000, the Alliance launched Alliance Family Care. Another fi rst by a local

California health plan, this program expanded coverage to the uninsured in

Alameda County. Regardless of immigration status, Alliance Family Care covered

low-income children and parents who lacked employer-sponsored insurance and

did not qualify for public health care programs. The Alliance raised external funds

from statewide foundations and local sources for Alliance Family Care, which, at

its peak, covered more than 7,500 children and their parents. Due to high demand,

increasing program costs, and limited funding, however, Alliance Family Care

operated at a loss. Committed to helping this population, the Alliance subsidized

the program with funds from its own reserves for fi ve years, but the program was

still too expensive and, in the end, it was unsustainable.

Alliance First Care, a program for individuals seeking affordable coverage, also

proved unsustainable and closed in June 2005.

To minimize the affect of these changes and contribute to policy efforts that support

coverage expansion for children, the Alliance secured funds to launch its Healthy

Kids program in October 2005. The program provides coverage to uninsured

children in low-income families who do not qualify for public programs due to

immigration status or income.

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Improve Medical Management

The Alliance updated its information systems to provide leadership with

comprehensive and accurate information regarding the factors underlying increasing

expenses. With appropriate tools to defi ne and clarify the issues, medical management

devised solutions, enacting innovative changes to improve medical management and

reduce ineffi ciencies in delivering quality care to Alliance members.

Accomplishments Measure Success

In the end, what had begun as a signifi cant test became not just a fi nancial

turnaround, but also an opportunity. With a strong commitment from its providers,

stakeholders, members, and community partners, the Alliance has emerged stronger,

smarter, and better prepared to realize its vision.

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Financial Facts 1996-2006

Ten-Year Financial Performance

Alameda Alliance for Health’s fi nancial performance was positive from 1996

through 2000. This allowed the plan to build equity and introduce new managed

care products. By Fiscal Year (FY) 2001, the plan began experiencing annual

operating losses (see Figure 1). The losses were due to rising medical expenses

and fl at premium payments from the plan’s largest payor (Medi-Cal), and losses

in two product lines that did not reach projected fi nancial targets and were being

subsidized by plan reserves. The Alliance Board of Governors and management

team instituted several measures to manage costs beginning in FY 2004 that

eventually resulted in a successful fi nancial turnaround.

In 2003, Mercer Government Human Services Consulting studied the fi nancial

viability of Medi-Cal participating health plans using projections of fl at or

declining capitation rates. The study indicated that as a whole, the plans would

show improved performance, but projections of fi nancial viability were less positive.

According to the study:

“…if revenue growth continues to lag behind medical expense trends, the Medi-Cal

participating health plans whose primary membership is Medi-Cal members will

begin to fall out of compliance with California’s Tangible Net Equity (TNE)…”

Mercer Government Human Services Consulting, “The Impact of California’s

Fiscal Crisis on Medi-Cal Plans,” report prepared for the Medi-Cal Policy Institute,

Oakland, CA, September 2003.

Using Reserves for Good Works

While the Alliance was building its reserves, those funds were viewed as a community

asset. It was at this time that the Alliance disbursed funds to support initiatives

that strengthened Alameda County’s health care system and improved community

health. This was possible because, as demonstrated in Figure 2 below, the plan’s

reserves were more than adequate to meet the State’s fi nancial requirements for

viability known as Tangible Net Equity.

Activities funded through the Alliance’s reserves included:

• Allocating $18 million for Alliance Family Care, a health care plan that provided comprehensive coverage for up to 7,500 low-income, uninsured Alameda County families who did not qualify for public programs due to income or immigration status.

• Allocating $9.2 million to support three Disproportionate Share Hospitals in Alameda County during a period of escalating hospital costs and a potential collapse of the hospital safety net system.

• Granting $4.5 million through the Community Health Investment Fund (CHIF) for competitive grants to community-based organizations for innovative programs that improved the health of Medi-Cal and uninsured or underserved populations.

• Reimbursing primary care physicians, specialists, and other providers higher than what Medi-Cal and other payors would pay on a fee-for-service basis. Implementation increased the number of access points for traditionally underserved populations and helped providers cross-subsidize for uncompensated care provided to low-income, uninsured populations. All contract providers received rate increases from 1999-2003, with annual increases ranging from 7% to 25%.

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Figure 1

Figure 2

By FY 2006, the Alliance became concerned with its reduced level of reserves and

unrelenting medical care trends that portended higher costs. With support from its

broad base of community partners, the Alliance made a case to the state for increased

premium payments for its Medi-Cal program. The state legislature approved a rate

increase for the Alliance; however, it was later vetoed by the governor. Fortunately,

the cost management strategies implemented by the Alliance began to show

positive results. Those strategies relieved fi nancial pressures, enabling the Alliance

to emerge from fi nancial peril without assistance from the state. After fi ve years

of fi nancial challenges and operating losses, the Alliance’s fi rst decade ended on a

high fi nancial note.

Financial Results For Fiscal Year 2005-06

Operating Results

For the fi scal year July 1, 2005 through June 30, 2006, the Alliance recorded net income of $7.3 million, a remarkable turnaround from the prior year net loss of $5.7 million.

The following are highlights of the fi scal year:

• Instituted innovative utilization management practices. • Reduced expenditures for high-cost tertiary inpatient care.• Increased the effectiveness of administrative operations.• Launched Healthy Kids to expand coverage to uninsured children.

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Successfully Managing Medical Expenses

The Alliance has worked aggressively to contain medical and administrative costs. In a climate where medical costs are perpetually rising, the Alliance’s medical costs declined 4% overall from the prior fi scal year. This resulted from the combined efforts of the Alliance’s contracting physicians, hospitals and other providers supported by the work of Alliance management and staff.

Sense of Purpose

Alameda Alliance for Health is dedicated to making a difference in the quality and

delivery of health care in the community.

This commitment is driving the following organizational priorities for our future:

• Infl uencing public policy to support the continuation, expansion, and improvement of health coverage for vulnerable populations;

• Reinvesting reserves gained from positive operating margins for health care delivery for the uninsured and vulnerable populations through support of the county’s safety net system;

• Advocacy and promotion of best medical practices and community health practices; and

• Participating in the Medicare market with a focus on improving access and quality care for the Medicare/Medi-Cal dual eligible population.

Through this decade, the Alliance overcame many challenges, learned many lessons,

and emerged stronger than ever. With commitment and expertise at its core, the

Alliance stands prepared to take on the challenges and opportunities of the future.

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Alameda Alliance for Health StaffSummer 2006

Alameda Alliance Staff Summer 2006

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