From the Health System Sustainability Group

 

Introduction

This document reflects the consensus recommendations of the Health System Sustainability Group, in response to your letter of October 22, 2025.

The accelerating crisis of cost and access overtaking Oregon’s healthcare system was decades in the making, and cannot be turned around in the course of a single biennium. Therefore, we are proposing a seven-year, three-biennia strategy, the foundation for which would be established in the 2026 session and the balance of this calendar year.

• Step 1: Immediate Actions – 1 year: 2026 session and CY 2026
• Step 2: Medium-term Actions – 2-years: 2027 session/biennium and CYs 2027 and 2028
• Step 3: Long-term Actions – 4 years: 2029 and 2031 sessions/biennia and CYs 2029-2032

Because of the need for a consistent set of policy and budget decisions over the course of multiple biennia, we believe that a “North Star” must be established – a long-term policy vision for what we want Oregon’s health care system to look like in 2033, the values we want it to reflect and the outcomes we want it to produce. This North Star will help keep us on course, by giving us the ability to ensure that the individual budget and policy actions taken across three biennia will consistently move us toward, not away from, our goal.

The recommendations in this report focus on Step 1: actions that can be taken immediately to help stabilize the health care system in the short-term, while identifying the major system cost-drivers that must be addressed in the 2027 session and beyond. 

A second set of recommendations will be presented to you no later than July 1 of this year, focused on possible delivery and payment system reforms—for consideration by the 2027 session, and implemented over the course of the 2027-2029 biennium.

We also believe that the Vision for Oregon’s health system future (North Star), and the main elements of this seven-year, three biennium strategy, should be memorialized through a Joint Resolution adopted by the legislature in the 2026 session.  

We have identified eight broad categories that contribute, in one way or another, to the relentless and unsustainable increase in the total cost of care, which is both compromising access and threatening the financial stability of the system itself.  

1. Negative Payer Mix
2. Oregon’s Poor Business Climate
3. Costly Regulatory/Administrative Overhead
4. Oregon’s Primary Care Infrastructure
5. The Delivery System and Payment Model
6. External Cost Drivers, including: prescription drugs, labor and workforce issues, and a broken, fragmented behavioral health system.
7. The need for Primary Prevention
8. The disparity between unlimited demand and the reality of finite resources.

We recognize that none of these issues will be easy to resolve. All of them will require difficult conversations and the willingness to work together in good faith, to find solutions that serve the long-term interest of our state and the people who live here.

Currently, the healthcare landscape in Oregon is fragmented and contentious, with no center and no shared vision for the future. It is characterized by a politics of scarcity, driven by short-term financial considerations, rather than by mission, or by the long-term stability of the system itself. Today across our state, payers, providers, labor, employers and health care consumers are operating in silos, as though they are separate unrelated entities—when, in reality, they are all part of a larger ecosystem which, itself, is unsustainable and drifting irrevocably towards a fiscal precipice.

The escalating crisis in cost and access, and the increasing fragility of the system itself, give us the opportunity to move beyond a zero-sum politics of scarcity that can only create winners and losers—but never a lasting solution. We are ready to do our part to seize the opportunity before us.

Strategic Plan

Immediate/Short Term – 1 year: 2026 Session and CY 2026

PRIMARY GOALS

1. To stabilize the health care system over the next year as we begin to develop and implement more substantive medium and long-term strategies. 
2. To set the North Star for our seven-year, three biennium strategy.
3. To identify the main elements of our strategy in the eight categories and to set timeframes for deliverables.
4. Memorialize the Vision for Oregon’s health system future in a legislative Joint Resolution.

Goal 1: Stabilize the Health Care System 

The objective is to maintain access—particularly to primary care, and especially in rural parts of our state—for as many Oregonians as possible through actions that can be taken immediately. 

We recognize that some of these recommendations will be controversial—and we want to make it clear that we strongly support access to care for all Oregonians as a central policy objective. We also believe that access to food, housing and other social needs are foundational to the health of Oregonians. At the same time, given the immediate intersection of the significant loss of Medicaid funding caused by HR 1, and the growing total cost of care, our health care system needs to prioritize access to clinical care for as many Oregonians as possible, as we make the transition to a more affordable and sustainable system (i.e. implementing our medium and long-term strategies.

Medicaid

We understand that Medicaid is not technically in our “lane,” and are respectful that your Medicaid Sustainability Advisory Group is developing long-term recommendations for this program, as we confront the significant policy and fiscal impacts of recent federal legislation. At the same time, the Medicaid Program has a huge impact on both the stability of the commercial market and the cost ultimately paid by employers and employees. Since our central charge is to look at system sustainability and total cost of care, we offer these recommendations as actions that could slow the cost shift to the commercial market by stabilizing CCOs for the remainder of the biennium.

• Reduce administrative and reporting requirements that don’t directly fulfill obligations to CMS or add high value to OHP members. Stewardship and accountability are critical, but they should be meaningful and targeted. (For example, see footnote below) ^[1]
• Continue evidence-based prioritization and “right-size” the benefit to align with the resources available.
• Define the “core function” and “core population” for our Medicaid Program.
• Consider designing different benefits for different populations.
• Re-consider the role of CCOs in HRSN and ensure we are targeting a complex/high utilizing population, in partnership with the housing system, and reduce the administrative complexity of the model.
• Reevaluate the use of the Quality Incentive Program to reduce administrative requirements and target Oregon’s most pressing health outcomes and health disparities to assure performance is at or above national averages.
• Immediately initiate a dialog between OHA and CCOs regarding the potential consequences of the 3.4% 2027 rate increase built into the current budget.

Commercial Market

Short-term steps that can help stabilize the larger Oregon healthcare system and reduce the cost shift.

• Identify and remove particularly costly administrative/regulatory burdens from the commercial market.
• Put the Cost Growth Target Program on hold for two years. We believe a cost growth target is important, but its current configuration is ineffective. Task a group with bringing to the 2027 session, a plan to redesign the program to align with these medium and long-term strategies.
• Simplify the regulatory and administrative requirements necessary to be a Patient Centered Primary Care Home (PCPCH).
• Prioritize Rural Transformation Fund dollars for investment in primary care infrastructure, to improve access to primary and maternity care in rural Oregon. 

Goal 2: Set the North Star 

It is the goal of the legislature that by 2033—through the collective and collaborative efforts of Oregon business, health care providers, health insurers and labor leaders, we will live in a state where all Oregonians have timely access to a patient-centered primary care home, and to a basic, evidence-based benefit of quality, affordable healthcare services; where population health outcomes are improving; where Oregon’s healthcare system is far less complex than it is today, easy to access and navigate for individuals, and enjoyable to practice in for providers and other health care workers; where hospitals, clinics, and practices, including independent practices, operate on a stable, sustainable financial footing; where the cost shift to employers is minimized; and where utilization, unit price and total cost of care trend are below the national average.

Goal 3: To identify the main elements of our strategy and to set timeframes for deliverables.

This would include the eight major cost drivers listed above. Addressing them are, to a large extent, medium and long-term strategies, the foundation for which would be laid down in the 2027 legislative session and in the balance of this calendar year. Some preliminary steps, however, could be taken now. For example:

Business Climate:

At this year’s Business Summit, you announced the “Prosperity Roadmap,” a multi-year economic strategy to boost Oregon’s competitiveness, job growth, and GDP by focusing on business retention, job creation, and reducing red tape. The healthcare sector is committed to assisting with the execution of the Prosperity Roadmap. Given that this sector is one of the largest employers in Oregon, and contributes $38 billion to our economy, consider adding specific strategies in the Roadmap, focused on:

• Improving the business climate for the healthcare sector
• Putting a priority on attracting, supporting and expanding those businesses that grow the commercial market.

Primary Care

• Update the definition of Primary Care. Prepare legislation, for consideration by the 2027 legislative session to remove the current definition of “primary care” from statute and initiate a new rule-making process to ensure that the definition is aligned with the North Star.
• Simplify the regulatory and administrative requirements necessary to be a Patient Centered Primary Care Home (listed above under “Goal 1”).

Delivery System and Payment Model

The Health System Sustainability Group is working on a set of recommendations focused on changes in the delivery system and payment model to address inefficiencies, the incentives that encourage volume over quality, the wide variation in clinical practice, and the variation in price for similar services and procedures. Because of the complexity of the issues involved we propose bringing these recommendations to you no later than July 1, 2026, to align with the recommendations from your Medicaid Sustainability Advisory Group. This schedule still allows the recommendations to be developed in time for consideration by the 2027 session.

Workforce

Direct the Healthcare Workforce Committee to develop concrete recommendations for both of 2027 in 2029 legislative sessions to address critical workforce needs in the healthcare sector – recommendations that are coordinated with the seven year strategy and with the Governors “Prosperity Roadmap.”

Prescription Drugs

Direct OHA, PEBB, OEBB and the Department of Corrections to begin developing a joint plan for a single State Preferred Drug List to maximize state purchasing power. Initiate preliminary discussions with the other member states of the West Coast Health Alliance on how to structure a multi state drug purchasing consortium.

Goal 4:  Memorialize the Vision for Oregon’s health system future and the roadmap to get there in a legislative resolution.  (Adopted in the 2026 Legislative Session).

We recognize that there still remains much work to do. We request, however, that you consider acting on those immediate steps within your authority that can help stabilize our system for the balance of this year. We also request that you authorize us to continue this work, and to deliver to you, by no later than July 1, 2026, recommendations on: 

• Payment and delivery system reform (see above) 
• A proposed timeframe and set of deliverables for medium and long-term actions
• The other parties that must be engaged in this work over the next few years including, but not limited to, leaders from labor, business, and consumer groups, as well as health care providers and insurers.

Respectfully Submitted.

The Health System Sustainability Group

Jennifer Burrows, CEO Providence, Oregon

Steve Gordon, MD, CEO St. Charles Health System

Maggie Hudson, CEO Santiam Hospital

Erik Thorsen, CEO Columbia Memorial Hospital

Doug Boyson, former CEO of Samaritan Health

Greg Van Pelt, former CEO St. Vincent’s Hospital

Robert Gootee, CEO Moda Health

John Espinola, MD, CEO PacificSource

Don Antonucci, CEO Providence Health Plan

Brian Duty, MD (OMA president)

Helen Bellanca, MD

Laura Knudson, MD

David Dorsett, MD

John Kitzhaber, MD – Facilitator

 

 

 

 

 

 

 

 

 

 

 

 

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^[1] CCO Reporting Burden

CCO – CY 2025 Deliverables:  Includes 175 deliverables (106 required and 69 “conditional”). Many are quarterly submissions, due on the same day, include duplicate fields, and are submitted via manual Excel templates prone to errors and lots of back-and-forth clarification between CCOs and OHA.  Lots of CCO FTE involved in this required reporting.

For example, in the realm of HRSN, CCOs are reporting bits and pieces of data (many fields overlap) in these quarterly reports (all due in separate quarters):

• Exhibit L
• Exhibit I
• Social Needs Service Coordination Report

CCOs also have to submit ongoing HRSN Claims and Encounter data, which overlaps with the above reports.