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A-1 Pacific Business Group on Health Quality Initiatives: The Power of Diversification

Appendix A-1: Case Study Pacific Business Group on Health Quality Initiatives

Community quality collaboratives are community-based organizations of multiple stakeholders, including health care providers, purchasers (employers, employer coalitions, Medicaid and others), health plans, and consumer advocacy organizations, that are working together to transform health care at the local level. The Agency for Healthcare Research and Quality offers these organizations many tools to assist in their efforts.


The Pacific Business Group on Health (PBGH) demonstrates the intersection of art and science required to sustain a successful collaborative. In particular, this broad collaborative has translated the demands of a diverse and sophisticated market into effective programs that deliver tangible value while building trust across the enterprise. This, in turn, has created a diverse portfolio of activities, products, resources, and sources of funding that all contribute to the sustainability of the PBGH model.

Under the umbrella of PBGH, two organizations have emerged to address specific quality issues in California. Combined, these two organizations generate funding of more than $7.9 million per year. A portion of this funding is generated through established models that provide a financial base for the improvement of health care quality in California. This case study will focus primarily on the successful practices of these working groups:

  • The California Cooperative Healthcare Reporting Initiative (CCHRI), established in 1993, “collects and reports comparable, reliable performance data ... to help consumers and purchasers make informed health care purchasing decisions.”1 When this group convened, it was the first time that health plans and employers in California began working collaboratively on organized quality reporting projects.
  • The California Quality Collaborative (CQC) started as the Breakthroughs in Chronic Care Program, which expanded and was renamed CQC in 2007. Today, it is a broad-based health care improvement organization dedicated to advancing the quality and efficiency of patient care in California. CQC's expert quality improvement programs work with integrated physician groups to redesign and transform health care delivery at the practice site.2

About This Case Study

This case study is part of a technical assistance program on sustainability developed by the Agency for Healthcare Research and Quality (AHRQ). The goal of this program is to support Community Quality Collaborative (Community Quality Collaborative) leaders and members in defining strategies that will lead to productive and financially sound collaboratives.

This program explores the intersection of the science of organizational effectiveness—such as models, tools, and proven examples—with the art of collaborative success through passion, creativity, and exploration.

Each of the three case studies highlights a successful collaborative organization, focusing on the leading practices that have enabled that organization to grow and thrive. The case studies were prepared through interviews with staff and stakeholders, review of documents provided by each organization, and online research.

This case study includes the following sections:

  • Overview of the business models of specific PBGH initiatives.
  • Discussion of leading practices, with examples of their application.
  • Insight into the next-stage strategies of the studied organizations.
  • Suggested next steps for Community Quality Collaboratives.

This information is also summarized in the Sustainability Program Overview for Community Quality Collaboratives.

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Turning Opportunities Into a Strategic Portfolio

PBGH was founded in 1989 on the concept that ultimately led to the creation of CCHRI: building cooperative initiatives to report data and thereby improve health care. At the time, the basic concept was controversial. Health care providers typically did not have direct contact with the employers who paid the premiums, and there was concern that a collaborative effort could undermine relationships with health plans. However, this strategy broke new ground that paved the way for more innovative approaches in California.

With a strong anchor in the large employer business community, PBGH's scope expanded in the early 1990s to encompass group negotiations with health plans. As health care premiums were rapidly increasing, employers joined together to find efficiencies and balance with their health plan partners, who were themselves consolidating and gaining market presence. The success of the group negotiations led to the creation of the Quality Improvement Fund (QIF), an employer-sponsored recurring source of funding for various quality initiatives, which continues to the present day. The QIF contributions are leveraged with financial and in-kind contributions from other partners, including health plans, providers, researchers, and foundations.

Throughout its history, PBGH has been a leader in looking for innovative ways to have an impact on health care. For example, PBGH bid on—and won—the opportunity to oversee the Health Insurance Plan of California (HIPC), which it re-branded as “PacAdvantage.” This extension into the small business market provided additional opportunities, insight, and significant cash flow, further diversifying the portfolio and influence of PBGH stakeholders and resources.

Across its programs, PBGH has honed its core competencies into consistent leading practices that provide insights for developing collaboratives including how to:

  • Identify, seize, and extend market opportunities.
  • Leverage relationships across multiple programs.
  • Build a diverse portfolio of projects and resources.
  • Deliver very specific value-added benefits that engage stakeholders.

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Business Model Insights

PBGH is engaged in a number of activities and initiatives that support the fulfillment of its mission, including:

  • Value-based purchasing
  • Quality measurement and improvement
  • Consumer engagement
  • Public policy3

In each area, objectives and governance are clearly defined to meet stakeholder expectations. Furthermore, funding is managed at the program level, such as within the CCHRI and CQC programs, as well as at the overall strategic planning level for PBGH.

The following charts illustrate the sources and uses of funds for the quality improvement component (CQC) and the quality measurement component (CCHRI). These examples enable Community Quality Collaboratives to compare their business models and identify additional opportunities and strategies.

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California Quality Collaborative

Annual funding for CQC totals $1.2 million. Approximately two-thirds is provided by health plans. Other significant contributors include pharmaceutical companies, the California HealthCare Foundation, and the PBGH purchasers (through the QIF).

A small portion of funding is generated from fees for services, such as the Optimizing Performance Series that provides collaborative coaching for medical group leadership, and the Improving Patient Experience Collaborative that “prepares organizations in the implementation of key changes at practice sites to improve and sustain patient ratings.”4

Quick Facts: CQC5

  • Mission: To identify and accelerate the adoption of proven innovations in ambulatory care to achieve the highest attainable value of health care we deliver.
    • For the benefit of all patients cared for by provider groups in California
    • To achieve the six Institute of Medicine (IOM) aims for health care:
      1. Safe
      2. Effective
      3. Patient-centered
      4. Timely
      5. Efficient
      6. Equitable
    • CQC transforms outpatient practice by leveraging the relationships physicians already have with medical groups, IPAs, and health plans that together contract with 35,000 practices.
  • Launched: As Breakthroughs in Chronic Care in 2004; name changed to CQC in 2007
  • Participation: Supported by a statewide leadership collaborative of purchasers, health plans, and physician groups

The following charts illustrate the business model of the CQC.


Sources of Funds pie chart showing sources of funds: 12% physician group fees, 6% PGBH, 15% foundation grants, 17% pharmaceutical grants, 50% health plans. Uses of Funds pie chart noting uses of funds: 5% regional networks: Inland, LA, and Orange; 19% building capacity; 21% efficiency; 26% core support; 25% patient experience.


The governance of CQC is by design less formal than other organizations studied. Participants may be engaged at multiple levels as well as on other PBGH initiatives. The group aims for consensus and rarely requires voting. When voting occurs, the majority decides. Prior to steering committee meetings, the executive committee (including Diane Stewart, director of performance improvement for PBGH, and the two co-chairs) meets to prepare the agenda.

CQC is directed by a 13-member steering committee and supported by various working project teams. The steering committee is composed of an equal number of medical group representatives (who are primarily the customers of the programs) and health plan representatives (who are the predominant funders of the collaborative.) Likewise, the co-chairs represent the health plan perspective and the medical group perspective. In addition, the committee includes community and academic representatives.

This governance structure reflects the leading practices that have enabled PBGH and CQC to succeed, particularly maintaining balance among stakeholders and delivering tangible value that leads to continued participation and funding.

California Cooperative Healthcare Reporting Initiative

Annual funding for CCHRI totals $6.7 million, with government, health plans, and physician groups providing the largest contributions. This budget directly supports specific programs, with more than half directed to the California Physician Performance Initiative for Medicaid Pilots (CPPI), which is expanding on the work completed as a Better Quality Information to Improve Care for Medicare Beneficiaries (BQI) Project, and an additional large portion supporting the Patient Assessment Survey program.

According to CCPI program information6:

  • CPPI, which was started in 2006 by CCHRI, is developing an approach to measure and report the quality and cost of health care provided by physicians. The goal is to improve the delivery of quality care while moderating costs. CPPI received federal funding in 2006 to develop a system to measure and report on the quality of health care provided by physicians. Three California commercial health plans joined with Medicare to pool their medical claims data to measure quality of care as part of a national effort to establish physician performance standards. In the next phase of work, CPPI will test cost of care measures and additional quality measures.
  • The Centers for Medicare & Medicaid Services (CMS) funded the first phase of the multi-year BQI initiative in conformance with goals established by AQA. (The AQA was originally known as the ambulatory care quality alliance, but has broadened its scope to incorporate all areas of physician practice.) A limited set of quality measures is being tested and validated during the pilot phase. Additional funding has been provided by PBGH, the California HealthCare Foundation, the participating health plans, and Merck & Co. This support is being used to test a broader set of quality measures, develop composite indicators that are an aggregation of individual measures, and test episode-based cost of care measures.

Quick Facts: CCHRI7

  • Mission: To collect and report comparable, reliable performance data for stakeholder use.
  • Launched: 1993
  • Participation:
    • Nine health plans representing more than 90% of the commercially insured population in California
    • PBGH purchasers representing nearly 3 million California employees, retirees, and their families
    • 150+ medical group/IPA participants
    • California Association of Physician Groups (CAPG)
    • California Hospital Association (CHA)
    • California Medical Association (CMA)
    • The Permanente Medical Groups (TPMG)

The following charts illustrate the business model of CCHRI.


Sources of Funds pie chart showing sources of funds: 35% government (CMS), 30% physician groups, 24% plans, 3% PBGH, and 1% pharmaceutical companies. Uses of Funds pie chart noting uses of funds: 51% CPPI/BQI, 39% PAS, 9% HEDIS, and 1% Other: After Hours/CAHPS.


CCHRI is largely consensus-driven. David Hopkins, director of quality measurement for PBGH, notes that reaching consensus is a group effort, which has matured over time. Oversight is provided by an 18-member executive committee composed of equal representation from each of the stakeholder groups: purchasers/consumers, plans, and providers. When voting is required, the majority decides. Each stakeholder group is represented by six votes.

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Application of Leading Practices: A Multidisciplinary Approach

Successful collaboratives require a creative approach that calls on many skills and experiences. According to Wells Shoemaker, CAPG medical director, “Effective groups need to know a lot about health care, business, technology, production engineering, legal implications, and human relationships.”

CQC has found success by welcoming fresh ideas to solve problems. Contributors to the quality improvement projects include executives, doctors, office staff who greet patients, data analysts, and human resource staff members in all organizations. This approach was developed from the Institute for Healthcare Improvement concept of engaging all levels and disciplines to optimize health care performance through a team approach. The process starts with organizational leaders at the steering-committee level thinking about the desired end result. They, in turn, enable all levels within their organizations to participate in the quality improvement process.

Note: The Sustainability Program Overview for Community Quality Collaboratives defines seven leading practices that are common among successful collaboratives. Each case study highlights a subset of those practices. For more information, please go to the Overview document.

The depth and diversity of the PBGH resources have enabled CCHRI and CQC to demonstrate leadership in the following practices:

Maintaining Balance Among Stakeholders

PBGH engages its stakeholders across many fronts. The effort to balance perspectives, skills, and work effort is reflected at multiple levels, including the PBGH parent organization, as well as the programs managed by PBGH, such as CQC and CCHRI. The organization's staff members are constantly fine-tuning the balance between participants' expectations, input, participation, and funding.

The relationships between the PBGH groups offer unique insight and opportunities. For example, when PBGH brokered successful group negotiations between purchasers and health plans, the purchasers agreed to contribute to a QIF in recognition of the value created. Contributions to the QIF are based on a per-member calculation, and may include contributions from purchasing stakeholders who do not participate directly in the negotiating alliance, but who recognize the collective benefits provided.

The QIF, in turn, contributes to PBGH programs, such as CCHRI and CQC. Some projects are approved and funded exclusively by the QIF, while others combine QIF funding with financial and in-kind contributions from other sources. As projects demonstrate success, some remain under the PBGH umbrella, while others migrate to different organizations. These decisions are determined by the PBGH and program leadership, based on stakeholder expectations and market opportunities.

As participants work together across multiple initiatives, they develop rapport and trust. This is sometimes referred to light-heartedly as a “quality trolley bus” on which stakeholders are traveling together. Michael-Ann Browne, regional medical director of BlueShield of California and a CQC board member, credits the PBGH staff with doing a good job of managing such that they are perceived as a neutral third party. Shoemaker concurs that the balance of qualifications and chemistry across the groups builds trust, which in turn delivers results.

At the same time, the segmentation of topics and activities into distinct programs allows efforts like CQC to be less contentious. Stakeholders recognize that they need each other and the data each provides to gain the best perspective on their shared challenges. For example, health plans tend to have better data on inpatient claims, such as emergency room experience, while medical groups and providers manage the details of care that are provided under capitated arrangements. The combination of these and other data sources provides the richest details to address the whole picture. There is also value in using consistent definitions and measuring in the same way, which requires a collaborative effort.

No Substitute for ‘In-Person' Time

Collaboratives typically call on the skills and time of people who are already busy and in demand. Yet, “in-person time” is frequently cited as critical to building the trust and collaboration required to succeed over time.

For example, when Browne assumed her role as medical director for Blue Shield of California, she quickly became aware of the number of collaboratives her organization supported and the commitments required of each. While it would be easier on most schedules to meet by conference call, she acknowledges the importance of meeting face-to-face regularly.


  • CCHRI meets in-person twice each year and monthly via conference call.
  • CQC employs a variety of approaches. Its steering committee meets in-person three times a year and by conference call three times per year.
  • Planning groups specific to each program area meet at least bi-monthly. About half of the steering committee members are also involved in program development, which provides additional opportunities to build relationships.
  • In addition, individuals representing PBGH stakeholders may work together on multiple programs and committees, which multiplies opportunities for building relationships.

Leading Practice

When organizing governance structures and planning activities, identify opportunities for stakeholders to make in-person connections. Strategic planning discussions—such as sustainability planning, determining goals, and defining or refining governance and roles—are prime opportunities for in-person meetings.

Delivering Tangible Value

PBGH leaders and stakeholders recognize the importance of delivering on their commitments. This practice includes clearly understanding the needs and expectations of stakeholders, planning appropriate programs, and delivering on the stated objectives with tangible products, services, and information

“It's hard to be against quality,” Browne said. Yet it takes incentives, leadership, and persistence to get people to take action. “The driving forces are the people and the value of the product.” This view is echoed by Peter Lee, executive director of national health policy for PBGH, who recognizes that organizations need more than a vision for the greater good to get to seven-figure funding.

For example, CCHRI made an early foray into measurement at the medical group-level in the late 1990s, essentially attempting to apply HEDIS measures at the group level. At that time, CCHRI struggled to make a compelling business case, so attention shifted elsewhere, according to Hopkins. The effort was not in vain, however. The lessons learned ultimately were transferred to current pay-for-performance efforts.

By contrast, CCHRI now produces an annual Report on Quality that delivers recognized value to a wide range of stakeholders. CCHRI shares one view of the data with the general public, while providing more detailed insight and interaction to the providers that enables them to improve their processes and results, as well as to the PBGH stakeholders who directly support the process. For example, the public report provides summary patient satisfaction ratings at the group level. Providers and direct supports of the effort have access to the details that lead to the summarized ratings.

Generating Funds From Services

A core piece of CCHRI's funding is used to create the annual Report on Quality, which includes project management of an integrated chart pulling activity. This project has been funded by health plans and PBGH since the inception of CCHRI in 1993. This arrangement generates recurring funds for the program and benefits to the participants. The data also support multiple purposes, including serving as the basis of the California Office of the Patient Advocate health plan report card.

Other examples of funding from services include CQC collaboratives and seminars.

Employing Rigorous Prioritization

Given the breadth of the PBGH agenda, prioritization is a core competency. “Steer clear of trying to do everything,” Lee advised. Hopkins cautioned against failing to deliver what you promise.

CCHRI applies this practice through careful selection of group projects. Once the initial methodology is established and the value is recognized, projects are expanded to encompass additional factors. For example, survey results from the Consumer Assessment of Healthcare Providers and Systems (CAHPS) help purchasers and consumers make decisions about health plan choices. The survey was first applied to HMOs. In response to stakeholder interest, the report is expanding to include PPO scores in 2008.

Using the data generated through CCHRI, CQC is able to prioritize its projects. For example, CQC developed learning networks and quality improvement training for physician groups that have lower than average scores in clinical measures used in pay-for-performance programs. The specific projects are selected based on market data comparing performance across the 58 counties in the state, which identified that lower performance was clustered in four counties.

The practice of prioritization may lead a collaborative organization to play different roles depending on the project. For example, PBGH functioned as a catalyst to help get a pay-for-performance program launched under the Integrated Healthcare Association (IHA), but does not house or manage the program.

The Value of Benchmarks

CQC operates within a $1.2 million annual budget that includes recurring contributions from health plans, employers, medical groups, and others. The three primary stakeholder groups also contribute significant in-kind time to the work of the organization.

This budget equates to roughly 10 cents per covered member per year. In other markets where quality improvement coalitions are active and well established, such as Minnesota and Vermont, contributions to similar programs total 60 to 80 cents per member per year.

This benchmark provides valuable data and ideas for groups in other regions to find ways to increase funding for quality initiatives.

This theme is echoed by Browne, who stated “Measuring performance relative to others has high impact. We all think we are performing well, but statistically speaking, half in any group are ‘below average.” This logic applies to collaboratives as well as to health plans, medical groups, and individuals. It also emphasizes the value of understanding how others are performing and what the successful performers do to achieve better results.

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Life Stages: What's on the Horizon for CCHRI & CQC?

While PBGH presents a successful story, the road has not always been smooth. Change is inevitable over a span of nearly 20 years. During that time, PBGH has seen turnover in key stakeholder positions, as well as significant changes in the market. Membership chemistry has changed as the companies represented have consolidated, changed course, or moved their headquarters out of state. Likewise, the challenges and opportunities facing each Community Quality Collaborative will vary, depending on its stage of development and the prevailing forces in its local market.

The PBGH organization as a whole is well-established and continually looking for ways to refine and extend the unique missions of each program. This stability provides a good foundation for the various programs, which may be at the same or different stages in their own development.

The following diagram and chart highlight the life stages of collaborative organizations and the key focus areas and challenges in each stage.


Diagram showing Life cycle phases. There is a circle of arrows and they are in the following order: Vision, Growth, Establishment, Extension, and Rebooting. The table below provides more detailed information.


PhaseCommon ActivitiesKey QuestionsDesired Outcomes
  • Defining goals
  • Assessing market forces
  • Recruiting leaders
  • Securing initial funding
  • What are we trying to accomplish?
  • Who will help us get there?
  • Clear goals
  • High energy and engagement
  • Initial funding
  • Demonstrating value
  • Recruiting members
  • Building strategic plans
  • Leveraging and extending funding
  • How will we get there?
  • What do our stakeholders expect?
  • Early “wins” – producing recognizable value
  • Roadmap for growth
  • Committed membership
  • Institutionalizing value
  • Executing plans
  • Retaining members
  • Building infrastructure
  • Are we on track and delivering value?
  • How do we sustain commitment and success?
  • Recognition as a leader and trusted source
  • Sustainable business plan
  • Reliable funding
  • Delivering recognized value
  • Assessing results; benchmarking
  • Adjusting plans and structure
  • What is working or not working?
  • How has the market shifted?
  • Continued demonstration of value and recognition
  • New perspectives
  • New or renewed funding
At times, organizations are challenged by events and circumstances that force significant regrouping and changes, which may be unplanned or outside of a typical life cycle.
  • Responding to significant shifts or negative events
  • What went wrong?
  • How will we adjust and continue?
  • Renewed vision
  • Practical plan of action
  • Retaining critical leaders, members, and funding

Extension Stage Strategies

Like the health care market, quality collaboratives, including those that are well established, must listen carefully and continually adjust. To continue on their successful journey, CCHRI and CQC are applying the following strategies:

  • Making the Business Case: For each project, these organizations define clear objectives that meet stakeholder needs. For example, CQC has defined the following very specific objective: to identify key changes to improve cost efficiency in three to five areas by 25 percent by March 2009, then spread them to 2 million patients through 27 high-capability groups by June 2010. Meeting this objective will deliver tangible value across the stakeholder groups.

    As another example, CCHRI is conducting a BQI pilot project with CMS. When the contract ends in October 2008, CCHRI will have run three data cycles but will not have demonstrated all of the program's objectives. Because there are not many options for alternative funding, CCHRI leadership must make a compelling business case to the health plans, such as demonstrating power in the aggregated data versus what plans have in their own data. In the end, CCHRI expects to generate valid reliable measures of quality and cost at the individual physician level, which no one has delivered yet.

  • Managing Relationships: Collaboratives rely heavily on stakeholders for both funding and volunteer resources, and PBGH has demonstrated success in managing productive relationships across a wide range of projects over time. CQC is exploring new ways to build and maintain connections by assigning relationship managers to stay in close touch with key customers. Likewise, CCHRI is seeking to expand its physician engagement activities to coordinate the provision of tools and incentives to help physicians improve their performance.
  • Maintaining Membership: PBGH relies on a strong anchor in the business/purchaser community. Changes in its members' businesses, such as consolidation, leadership transitions, and movement out of California, can have a significant impact on the mix of stakeholders and representative board members. The organization needs to be tactical, and must demonstrate a strong, relevant return on investment to keep stakeholders at the table. The connection is also personal: It's necessary to engage individual participants through value-added group discussions, access to leading thinkers and sophisticated peers, practical information, and industry recognition.
  • Exploring New Frontiers: To remain fresh and relevant, established organizations need to infuse new ideas and approaches. From its multidisciplinary resources, PBGH develops new collaborative ideas and opportunities. For example, CQC is experimenting with social networking to find tools and links to expand on past successes. CCHRI is expanding the scope of its successful reporting initiatives and exploring new technology through partnerships with experts in the field.

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Next Steps to Build Staying Power in Your Community Quality Collaborative

In conclusion, the experiences of CCHRI and CQC provide ideas and motivation to help Community Quality Collaboratives develop sustainable strategies. While the life stage, funding strategies, and near-term objectives of each Community Quality Collaborative will differ, there are powerful lessons to be learned from organizations that have developed leading practices through experience.

As you build strategic plans that emphasize sustainability, your Community Quality Collaborative leadership may want to explore strategies exemplified by CCHRI and CQC, such as:

  • Strong Value Proposition: How do our sources of funding compare with organizations that have similar missions and goals? Is there good alignment between our funding and the work we are trying to accomplish?
  • Recurring Funding Opportunities: Are we establishing a diverse portfolio of relationships and programs that may lead to reliable recurring funding and other types of support?
  • Engagement Strategies: How are we ensuring that key people are well connected to our mission and organization? Do we have enough in-person sessions?
  • Effective Governance: How are our program goals organized into committees, subcommittees, and/or workgroups? Does this structure engage and motivate members and actively support our mission?

For more information, please go to the two other case studies.

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1 CCHRI Summary, provided by CCHRI

2 California Quality Collaborative.

3 Pacific Business Group on Health

4 California Quality Collaborative,

5 Ibid.


7 CCHRI Summary, provided by CCHRI

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Page last reviewed January 2009
Internet Citation:   A-1 Pacific Business Group on Health Quality Initiatives: The Power of Diversification: Appendix A-1: Case Study Pacific Business Group on Health Quality Initiatives. January 2009. Agency for Healthcare Research and Quality, Rockville, MD.


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