Directors Corner April 2020

The Rationale for Statewide Purchasing Alliance:
Colorado as a “Commonwealth”

Last month I addressed a question I have often been asked regarding The Colorado Purchasing Alliance: “How does it relate to the ‘public option’ in Colorado? (It doesn’t.) But here’s the second question that I am asked often – and in almost every community: “Since ‘all healthcare is local’ and since every community is different, why do we need a ‘statewide’ solution? We’re different here [name any city in Colorado.] Why would we want a ‘one-size fits all’ approach to health reform?” Fair question. Here’s my answer.

Of the 50 states in the US, four call themselves a “commonwealth:” Kentucky, Massachusetts, Pennsylvania, and Virginia. What’s the difference? Only the name. In their politics and under their laws, commonwealths are just like states. And, name aside, each shares this central, unifying, democratic principle: a tacit agreement of their people to function for the common good.

So what has that to do with why we formed The Colorado Purchasing Alliance as a statewide healthcare purchasing cooperative? Everything. Because if we assume that our goal in promoting affordability and more reliability in healthcare is to benefit ALL Coloradans as members of our shared commonwealth, then we can only achieve that goal if we do five things:

• Optimize the pooling of purchasing power – across the State. The expressed, written intent of the statute enabling “healthcare cooperatives” is to “pool purchasing power.” In 2020, in a State now dominated by statewide health systems, that purpose is more essential than ever. Only a Statewide solution, with larger communities reinforcing smaller communities, can optimize pooling.
• Block cost shifting from one community or market to another. Group purchasing is not new. Numerous business coalitions across the US have done it. And here is what nearly always happens when one group of purchasers “buy-down” the price of care: high-cost hospitals, rather than reducing expense or realizing less revenue, inevitably shift those costs to other employers and to insurers outside of the purchasing block. It’s called “squeezing the balloon.” Only a statewide solution mitigate or eliminate this and create incentives to reduce expenses.
• Realize economies of scale. Creating the required structure and infrastructure for health reform can be done most cost-effectively if done once – and then shared across the State at whatever level makes the most sense to support continuous quality improvement at the local level. Only a statewide solution can leverage resources in this way.
• Promote a common standard – and support bench-marking.  By aligning with the Polis-Primavera Roadmap to Saving Coloradans Money, by collaborating on payment reform and Centers of Excellence with the Department of Health Care Policy and Finance, by engaging with the Colorado Medical Society’s workgroup on quality and cost, and by coordinating with groups like the Colorado Consumer Health Initiative we can promote a common approach across our state. Only a statewide solution can foster consistent, collaborative approaches.
• Maximize the speed of roll-out. With the involvement of some of Colorado’s largest purchasers – including the State and public employers, Taft-Hartley Plans, and employer trusts, we can generate the most meaningful change in the least amount of time. Only a statewide solution can expedite the benefit we see from pooling purchasing.

But isn’t each community different? Of course – in very specific and relevant ways that must be considered. Accordingly, while critical issues such as the under-use of primary care and mental health and over-use of low-value care – are universal across the state, solutions to these pressing problems must be formulated and executed locally – in concert with and led by community physicians. That’s why we have outlined an approach to this conundrum of Statewide vs. local solutions in a white paper with the rather lengthy title “Coordinating a Multi-Community Approach for Improving Healthcare Affordability and Outcomes Across Colorado: Goals, Premises and Alignment Strategies.” (The paper is only one page. Download it here.)

No, one-size certainly does not fit all. But if we are to benefit ALL Coloradans as much and as soon as possible -– on the plains and in the mountains, in the Front Range and on the Western Slope, in both rural and urban areas – we must draw a line around the four borders of our State and we must declare “THIS is our community. We are a commonwealth and we are working for the common good.”

To do that, we need a Statewide approach.