County struggling to track its highest-cost patients amid tight health care budgets, grand jury finds

Santa Cruz County’s Health Services Agency serves an unusually high number of costly patients with behavioral health and substance use conditions, but health officials still lack effective ways to identify and manage these “high-cost beneficiaries,” according to a new report by the Santa Cruz County Civil Grand Jury.

The civil grand jury’s latest report, its fifth this year, found that the agency has been made aware of its issues with tracking and reporting on its highest-cost clients for several years now. But without clear data, the county struggles to pinpoint exactly who these clients are, why their care is so expensive, and how best to use its funds and services to support them effectively.

The findings come after tense budget discussions between the HSA and the county board of supervisors. Former HSA director Mónica Morales proposed budget cuts in late April that included 12 layoffs, a staffing reduction of more than 74 positions, and the closure of important safety net programs. The agency was able to avoid most of the proposed layoffs for the time being, after the board of supervisors agreed to reallocate more than $500,000 from road and housing initiatives to maintain the county’s lab and radiology services until September.

The civil grand jury, made up of 19 volunteer members, interviewed people from HSA departments, county-contracted service providers and law enforcement to understand why some patients require the level of service they do and become high-cost beneficiaries. 

The jury identified several issues contributing to the high costs for some people under its care. Such patients commonly experience multiple overlapping problems, such as mental health disorders, substance use issues, homelessness, chronic health conditions, interactions with the justice system and dwindling support for older adults. As a result, about 15% of patients served by the county’s behavioral health division use more than 55% of the health services that the HSA provides, compared to just 34% statewide.

But the jury found that identifying the high-cost clients in the county is difficult because of a lack of data collection. While the county has several programs that help these clients, there is poor coordination among them, meaning the county can’t accurately track people as they move through the system.  

The government watchdog acknowledges the county’s “ever-shrinking budget,” but issued several recommendations to improve how the local government manages and pays for the care of high-cost patients, such as spending more on programs and staff, and focusing on the underlying issues caused by homelessness as well as physical and mental health conditions. 

Jurors also pointed to the nearly 30-year partnership the county has with the Central California Alliance for Health, an insurer and managed care organization serving 440,000 Medi-Cal patients in five counties, including Santa Cruz. 

The watchdog gave eight recommendations, including urging the two organizations to expand their relationship and develop a “level of care” tool — essentially an assessment that helps determine the resources and amount of care that a patient receiving mental health services needs. Eventually, the county could use the tool to manage all of its health care clients, the watchdog said.

The two organizations should also create a process to share data and develop a “value-based” financing model that ties what health care providers earn to the results they deliver for their patients, such as quality and equity of care. The jury said the county and the alliance should consider combining Medicaid and non-Medicaid funds to support their aligned goals.

The board of supervisors and the governing board of the Central California Alliance for Health are required to respond to the report by Sept. 24. District 5 County Supervisor and former Encompass Community Services CEO Monica Martinez did not return Lookout’s request for comment by publication time.

In a statement sent to Lookout, county behavioral health director Dr. Marni Sandoval said the department was not yet prepared to fully comment on the report.

“The care of individuals with critical mental health and substance use needs is of utmost importance to the department and county staff are deeply committed to this work,” she said. “We would like the opportunity to fully review the report and defer further comment until we make a formal response.”

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