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Diana Dooley on 2 Years of Budget Cuts, Controversy and Reform

It’s hard to believe Diana Dooley has been on the job only two years, given the number of large and historic health care changes under way in California.

Appointed secretary of California’s Health and Human Services Agency by Gov. Jerry Brown (D), Dooley has overseen billions of dollars in budget cuts, realignment of county and state responsibilities and the building of a foundation for comprehensive reform that includes creating a statewide insurance exchange and launching multiple conversions from fee-for-service to managed care in Medi-Cal, California’s Medicaid program.

It has been a packed two years.

Dooley reflected on her first two years as secretary — challenges, successes and lessons learned from the sometimes-bumpy road to reform.

California Healthline:
Pearl Harbor Day, Dec. 7, two years ago. That’s when you took this job.

Diana Dooley: Really? That was the day? That’s pretty fitting.

California Healthline:
How would you characterize how it’s gone over the last two years?

Dooley: Clearly, the foundation of what we’re trying to do in this agency … is based on the governor’s commitment to a strong foundation and the deficit, addressing the structural issues with the financing of state government more broadly.

We’re all in this together, and we can’t build a strong health care future or reform the health care system or address some of these other issues if we don’t have a firm foundation. So everything has been through the lens of dealing with the deficit and the structure of government.

California Healthline:
That’s interesting that’s what you pick out, because if I had to sum up the past two years, I would say creation of the Health Benefit Exchange, the five conversions to Medi-Cal managed care, launching the task force. You picked something that actually isn’t even on my list here.

Dooley: Those are things that I have on my list, as well. But those things sit on top of the basic program of working to restore public confidence. A fundamental tenet of democracy is you have to have consent of the governed.

California Healthline:
So you’re trying to get everyone on board for the Affordable Care Act implementation, for the Medi-Cal managed care conversions, for all of these things that take a lot of public confidence and provider confidence. Yet at the same time, there are huge budget cuts and service cuts. How do you frame that for people?

Dooley: That is the challenge. If we had enough money, we would continue to let health care escalate in its cost. I don’t know what’s unsustainable. … But the crisis that represents in government is that if we can’t fund education and we can’t fund environmental protection and we can’t build roads, if we can’t do the other things that government is expected to do because of the amount that’s being taken to deliver health care, we then have to address that. I think that’s where we are. I think that’s where we are in California, and that’s where we are in Washington.

California Healthline:
Basically, the budget cuts have forced us to be more efficient.

Dooley: Exactly. It has forced us to address the issues. For example, one … of the biggest challenges to implementing the Affordable Care Act is changing the way people think about managed care. Because that is hard, coming to the recognition that we can’t stay in the fee-for-service environment.

We have a health disease system. We don’t have a health care system. … We have to rethink what care integration and care management is, that’s at the heart of it. That’s what we’re doing with our Coordinated Care Initiative, it’s what we’re doing with our Seniors and Persons with Disabilities program. The dustup over Healthy Families is a little bit curious, because all of those kids are in managed care anyway, in the Healthy Families program, and almost every state in the country put their [Children’s Health Insurance Program] into their Medicaid programs at the outset.

California Healthline:
It seems many people may be comfortable with the idea of moving kids from Healthy Families into Medi-Cal managed care, I think the question people have is whether the state is ready to do it. You’re talking about getting people behind it, getting the trust, and the SPD conversion and the ADHC/CBAS conversion have had so many troubles. We’re also looking ahead to the bigger ACA and CCI conversions, and Healthy Families is right in the middle of that. I think most people want to know that the state has concrete lessons learned from the SPD conversion, from the CBAS program, moving into Healthy Families.

Dooley: We’re doing a lot of things at the same time. We’re making a lot of changes. And there are going to be speed bumps. There are going to be places where you have to slow down, and get over. But we have to move in that fundamental direction of the ACA, away from fee-for-service, and into care coordination and care management. And we’re doing that.

California Healthline:
So I guess what you’re saying is because there’s a limited amount of time, you just have to move forward, and hope the providers …

Dooley: And slow down at the speed bumps, and make corrections where we have to make corrections. We will have access. Where we need to make course corrections, we will make course corrections, but we’re not going to be able to wait till everything is perfectly aligned, till everybody agrees this can all go off without a hitch.

California Healthline:
Everybody talks about lessons learned, and how we’ve learned lessons from SPD and CBAS conversions. So what are the lessons learned, specifically? Healthy Families and the duals project, are those going to have problems, and similar controversy? Specifically, can you pick out one lesson that you can learn from the other two transitions? And say, with this next transition, with Healthy Families or CCI, we’re going to do it this way, because we learned from the other ones.

Dooley: We’re learning all the time. The process is pretty straightforward. We have communication with the beneficiaries, communication with the providers, we have dates, and when we get to that date we make the transition. There’s phasing in the Healthy Families transition, so that it will start in January, and we’ll phase as we need to. And there are going to be places where there will be problems we have to solve in the process, as we have in the SPDs, we’re still dealing with those changes. But for the most part, most of the people we transitioned in the SPDs are satisfied. In our review of the actions, people are getting as good, and in some cases even better, care when it’s coordinated with their plan.

California Healthline:
You strike me as a consensus person, and you’ve said that the hardest work is always in the middle. How has that approach helped get the health care effort moving over the past two years?

Dooley: I think there is considerable respect about the governor’s motives. He wants what’s best for California. He wants to bring people together — with our county partners, with our stakeholders. I accepted this position with him because I share that view. He leads from the middle, and I govern from the middle.

California Healthline:
So I assume you’ve had that consensus approach as chair of the Health Benefit Exchange. It’s such a powerful entity making such big changes, and yet there’s been almost no controversy about it. Is that because of the approach to it or because of the united nature of the exchange board itself?

Dooley: I’m the only one from the current administration on the board. We were very fortunate to be able to recruit Peter Lee (executive director of the exchange). He and I share that sense of building to the middle. So we’ve been able to do that well, between my board leadership and his staff leadership. I credit him with a lot of that.

I think we have some rough spots ahead. There are the affordability questions, the plan design. This has been an inside-baseball conversation for two years, among people who speak the same language, and that will change when it’s introduced in 2013 to the broader public, which has a far different language about what their needs are. I think we’ve positioned it really well, but it’s not going to be without controversy.

The expectation that we’re going to flip the switch in 2014 and suddenly everyone has health insurance is way wrong. It’s the beginning of a decades-long effort to change the system.

California Healthline:
In our first interview two years ago, when you first took this job, you said this about California’s health care system: ‘I don’t see it all radically redesigned. I see the gradual changes. I can’t see the analytical construct for a big change.’ Now, arguably, you’ve presided over the biggest changes in health care in California since the 1960s. Do you still feel it’s not a radical change?

Dooley: I don’t see a revolutionary change, like single payer would be. But there are still advocates for single payer, it’s not happening right now. But there’s a belief among some of those who think it should happen that we’ll give this a little time and when it collapses, or doesn’t produce the results people expect, we’ll come back. And there’s talk of a ballot initiative in 2014 for single payer.

What we’re doing, it isn’t immediate revolution. It is building over time. It is a revolution, yes. Clearly the basic tenet of moving from fee-for-service to managed care is revolutionary, but it’s been a revolution that started 20 years ago.

But here’s my point. Rube Goldberg himself could not have invented a machine like we have in health care. But we will tinker with it, use the wrenches and twist the knobs, as we have to, to get it moving in a different direction. We are an aircraft carrier. It’s hard to turn, but we are turning it — toward efficiency, quality measures, transparency.

Getting to the central theme for me, that is getting people to sit down around a table and work together on a problem, no matter what the problem is, and figuring out what we’re going to do to solve it.

The complete transcript of this interview is available as a PDF.

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