In response to looming federal and state funding cuts, Santa Clara County officials are taking decisive action to protect the viability of their vast public hospital system. The latest move involves a major shake-up of the Santa Clara Family Health Plan’s leadership, with the county seeking greater control over how Medi-Cal reimbursements are handled. At a Board of Supervisors meeting held on May 20, officials voted unanimously to replace a majority of the Family Health Plan’s governing board with county employees. This bold step, county leaders say, is critical to streamline healthcare administration, increase public hospital reimbursement rates, and ensure the system's long-term sustainability.
The Santa Clara Family Health Plan, established by the county in 1995, was originally intended to coordinate care for residents eligible for both Medicare and Medi-Cal. It was formed as a separate entity to manage complexities outside the county's direct administration. Today, it serves approximately 300,000 residents and is the largest managed care plan in Santa Clara County. However, county officials argue that the plan now operates more like a traditional insurance company focused on minimizing costs and generating surpluses, which they believe undermines the county’s public hospital network.
According to County Executive James Williams, the Family Health Plan’s current governance structure lacks sufficient oversight and a financial backstop, such as access to the county’s general fund. This has led to concerns that the health plan sets reimbursement rates too low for county hospitals, making it harder for the system to sustain itself financially. Williams emphasized the need for the county to have more direct influence over reimbursement decisions, especially in light of anticipated deep Medicaid funding cuts at the federal level and reductions proposed by Governor Gavin Newsom at the state level.
The county’s long-term goal is to shift to a single-plan Medi-Cal model, consolidating all eligible residents under one provider—the Santa Clara Family Health Plan—while removing Anthem as a competing plan. Officials believe this approach would help eliminate duplicative administrative costs, improve rate negotiations, and allow for more efficient delivery of care to low-income families, seniors, disabled individuals, and foster youth. However, such a transition requires approval from the California Department of Health Care Services and may take years to implement.
Not everyone is on board with the changes. Christine Tomcala, CEO of the Santa Clara Family Health Plan, called the proposal “reprehensible,” saying it disrespects the board, staff, and members. In a letter to the supervisors dated May 16, Family Health Plan leaders labeled the county’s move as a hostile takeover, warning it could compromise the health plan’s autonomy and the quality of services it provides. Their concerns center around whether shifting governance to county officials might prioritize hospital reimbursements over patient-focused care and long-term system stability.
Despite the criticism, the county remains firm in its stance. Leaders argue that the financial survival of the county’s hospital system depends on correcting inefficiencies in the current dual-plan setup and taking advantage of every available reimbursement opportunity under Medi-Cal. With the threat of reduced Medicaid funding looming, they believe it is imperative to act swiftly and decisively to protect both the public health infrastructure and the vulnerable communities that depend on it.
While the single-plan model may ultimately improve financial sustainability and service coordination, its implementation will be subject to regulatory review and community feedback. In the meantime, the recent board restructuring marks a significant shift in the relationship between the county and the Family Health Plan—one driven by a sense of urgency to adapt to a rapidly changing healthcare funding environment. Whether the county’s approach will lead to better outcomes or deepen tensions with the existing health plan leadership remains to be seen, but what’s clear is that Santa Clara County is not waiting idly for external decisions to dictate the future of its public healthcare system.
