$675. for that same premium by los angeles, the access plus is $420. supervisor campos: if we could go back to the point you made in trying to respond to the hospital changes to mitigate the effect of hospital consolidation, one of the strategies was to narrow hospital networks for blue shield in 2005. i wonder if you could go back to that. >> certainly. what we did was we built our data warehouse in 2003 and brought in all of our health claims data. we also engaged, and it is a little bit different study -- similar, but we engaged them to conduct a similar study, and what they did was we said we are going to spend huge amounts of money paying for hospitals, we want to determine the value for

those dollars spent. so we index our hospitals from high to low based on both cost and quality criteria. and then select the the hospitals in our network, giving hospitals we are going to exclude from the network the opportunity to either improve their quality or reduce their prices. those hospitals that chose not to do that were eliminated from our network. supervisor campos: can you say which hospitals? >> i looked at the list. it was the sutter hospitals. there were some hospitals down south. it was a small list, but a significant list in the sense that some of those hospitals eliminated were part of large systems. supervisor campos: thank you. >> as i was explaining, we regionally price our contacting agencies.

we do that based on the actual cost of the region. i was illustrating the premium for a single party under blue shield axis-plus of the bay area is $675, compared to the same product via los angeles at $428. as the sub costs rolls up to actual premium differentials in terms of how we set premiums for our contract agencies. the state requires a single statewide rate, so you will not see the same phenomenon when we purchased for state assets. we also narrowed our physician networks to 2008. we did that for both the blue shield product as well as the p po. we added blue shield net value and first select.

again, we were purchasing physician services based on this cost to quality and have allowed us to said in-house plans with in this product. for the net value product, as long as the networked -- it is a similar design, we have not yet done anything in which we are moving any members. they voluntarily go into those plans. one of the reasons our members have difficulty going into the plan is they like to maintain the ability to pick a specialist. primary care guides the selection of specialty services

on the hmo side because it gives them more choice. . we have not seen quite as much movement. we seek solutions that mitigate unwarranted regional variation in hospital costs, quality, and out comes while preserving member choices. hospital costs, we continue to that solutions.

one of the ways we move to reference pricing for hips and knees was as he did this morning that the cost of care so widely varied for the same service without a better outcome within the same markets. that level of transparency allows us to say we can design a product for our member and they can choose. or do they want to have the option of going outside of the 46 hospitals that do the kids and these were 30,000 or less and go to a higher price hospital and pay the difference? ucsf is one of our 46 doing our hips and knees.

the document under blue shield, that is an integrated health model. in the first year, which we've highlighted, we paid 50 -- we say $15 million. we're now starting to see additional savings this year of $9 million, and we expect to move forward in terms of starting to see savings each year in terms of guiding our members to an integrated health model.

we are seeing savings by reductions in hospital days, reductions in the admissions, and greater efficiencies for both the hospital and physicians as well as better coordinated care, and we are going to continue to watch that model as it unfolds, both for our members as well as any future accountable care organizations that blue shield will be developing in other parts of the state. i want to point out something i think you need to pay attention to because we are starting to pay attention to it. that is that cost management of the implantable medical devices -- we worry that we will see a proliferation in the market of multi-competing companies with multiple models and direct to consumer advertising similar to what happened to the pharmacy industry. we're trying to get ahead of that curve as part of our

strategies for managing our markets moving forward. finally, we were -- we actively sponsored the patient safety initiative. we will be doing more work in patient safety as it relates to not just improving quality, but releasing costs. we have been working closely with health and human services to demonstrate our commitment and our efforts and to coordinate as they roll out patient safety in their health care reform. i did not mention health care reform, but we implemented a number of provisions that included increasing the eligibility for up to 26 for our dependence, eliminating cost share and preventive services, eliminating lifetime limits, converting our annual dollar limits, and applying for $200 million in an early retiree reinsurance, and it was mentioned by the hospital

association speaker or one of our speakers that health care reform has been cited for one of the reasons that hospital costs have been going up. that is not our experience. in fact, we were read a lot about that, that we would see market response to health care reform that would not be warranted. we already had in 2008 eliminated most, schering for preventive services, and for the early retiree reinsurance program, it was nice that the federal government recognize our commitment for early retirees. that concludes my remarks, and i am happy to answer any questions. supervisor campos: thank you very much. i want to thank all the panelists for your very insightful presentations. i think we all learned a lot, and i want to thank my colleagues on the committee as

well as members of the audience for their patients -- patience in listening to a very complicated subject matter. if it is ok, i wanted to take a very short break and then come back so that we can hear from the public. we're just going to take a very short break and d supervisor campos: welcome back to the government audit and oversight committee. my apologies for having to take a break, but we needed to have a quorum to make sure that we could continue with the hearing. i wanted to thank supervisor

avalos who has joined us on the committee. he has been appointed temporarily to serve on this committee so we can proceed to finalize the hearing. this is an opportunity to hear from members of the public that have been sitting quite patiently for the last couple of hours to provide comment on this very important issue. be what to say something? -- do you want to say something? supervisor avalos: i am playing when backup catcher today.

supervisor campos: let me begin by calling the following speakers. [reads names] and my apologies if i mispronounce your name. maybe some of the speakers have left, and our apologies to them.

we will begin the clock once the computer has been set up. >> thank you very much, supervisors for this opportunity. there is research we have done on hospital spending and patient mortality. i am hoping things will improve. for some time, researchers have been studying how health care is delivered three of the united states. the best known work is the hot list of health care that shows

that medicare spending vary widely across the region. it has much higher spending in miami and raises the question, what does more spending by? the answer may be, and not much. some researchers have used in the atlas to analyze the relationship between mortality in spending among medicare beneficiaries and found that in regions that spent a lot on health care, heart attacks and cancer patients are less likely to survive. that is major implications for health policy. it suggests the many of it -- much of it is wasteful. it is hard to overstate how influential this has been.

during the health care reform debate, they devoted shows entirely the health policy. that gives you a sense of the research. the most recent atlas reported spending at specific hospitals. our research team ranked spending to discharge records throughout california. [chime] supervisor campos: because of the fear that we might lose a quorum, we need to limit it to 2 minutes. if i could ask you to wrap up. >> patients in california were treated in the highest spending hospital rather than the lowest, a large number could be avoided.

at least in the context of hospital care, more isn't less, more is more. >> thank you for coming out here. as we look forward to continuing the discussion with you as the committee comes back to this issue. next speaker, please. >> the afternoon, supervisors. i want to talk about health care in san francisco.

>> we always have meetings with our workers, and the first question we always as is what they would want to change in san francisco. the first thing that comes up as health care, the second is workers' rights issues, and the third is education. why is health number one? if they are not healthy, they can't work. because medical costs in san francisco are very high, a lot of them can't afford it. so a lot of the illnesses are minor.

but until it becomes more, [unintelligible] for example, a worker came out and told her that she needed to go back to china. they responded, that is great, why are you coming back. her responses, i dunno if i will come back because i don't know if i will see you again. years ago, she went to the doctor who the doctor said she had a lump in her cervix. because medical costs were so high, she did not get treatment

for it. until a few months ago, there was a lot of pain and she could not even go to work. the doctors said she had cancer. in san francisco, there is no way she can afford the medical costs so she had to go back to china. the after hearing semiprofessional talk about the high cost of medical care, it is all because of certain hospitals

controlling the costs. so if the cost goes higher and higher, how are they supposed to seek medical care? even though they have some hospitals in san francisco, do they use care of our residents? the government controls the cost in the future. supervisor campos: let me read more names. [reading names]

>> i am disabled and i have a question. currently, they provide preventive care and coverage for me. i don't know under the new regime is healthy san francisco will be reduced or seven -- discontinued. most of them are working with low wages, retirees, low wages. women of color and people with language barriers. the list goes on. not only do these individuals require ha affordable health care, but what about services that will treat these people

through rehabilitation and physical memory? will that be covered as well? will that be available to all of the groups we have mentioned? supervisor campos: next speaker, please. if you could bring the microphone closer to you, thank you very much. >> i of the member of the associate community center. i live in the social district.

supervisor campos: ok. why don't we reset the clock so we can do it through translation? >> i want to share my story with everybody.

the effort because i have brain surgery, it is hard for me to go out and do work. my husband cannot cover me on his work insurance. because it is very expensive. so she is covered under medicare.

>> of the cost is so expensive that i am not able to pay its. i am looking forward to have the

hearts and minds to serve low- income communities like mine. supervisor campos: think you very much. i know it is difficult to share something as personal as that. thank you along with the other folks that have been waiting so long to speak. let me read a few more names. any member of the public that would like to speak on this item, please come up. >> i am a registered nurse in the intensive care unit at a hospital. most of our patients come from the community and the city.

they are making more profits than they have ever made. the net profit was almost $741 million. these are the worst in the country oppose the economic downturn. there are the highest-paid in the area. despite all these facts, it is so little to maintain for health care in san francisco. i work alongside extremely sick san franciscans.

limited supplies and often no hot water. they don't have a call like. when it rains, the wells literally flooded with water from a leaking roof. the nurses continue to work in such conditions because we are committed to our patient and community. we appreciate them showing the same dedication to our patients by investing some of the millions. supervisor campos: i also saw walter. next speaker. >> ♪ if you want the health care come and get it made your mind up fast

if you want good things in health, come and get it you better hurry because it may not last ♪ ♪ did i hear you say that there would be a high price and i don't like that's not very nice if you want a good medical fang, come and get it it may not last and the price is going up awfully fast. ♪ supervisor campos: next speaker, please.