BILL ANALYSIS
SB 1325
Page 1
Date of Hearing: June 15, 2004
ASSEMBLY COMMITTEE ON HEALTH
Rebecca Cohn, Chair
SB 1325 (Kuehl) - As Amended: June 9, 2004
As Proposed to be Amended
SENATE VOTE : 23-12
SUBJECT : Hospitals: physicians and surgeons: self-governance.
SUMMARY : Clarifies the medical staff's right of self-governance
and makes various findings and declarations. Specifically, this
bill :
1)Requires the medical staff's right of self-governance to
include, but not be limited to, all of the following:
a) Establishing in medical bylaws, rules or regulation,
criteria and standards consistent with the medical peer
review process, for medical staff membership and
privileges;
b) Establishing in medical staff bylaws, rules or
regulations, clinical criteria and standards to oversee and
manage quality assurance, utilization review, and other
medical staff activities including, but not limited to,
periodic meetings of the medical staff and its committees
and departments and review and analysis of patient medical
records;
c) Selecting and removing medical staff officers;
d) Assessing medical staff dues and utilizing the medical
staff dues as appropriate for the purposes of the medical
staff;
e) The ability to retain and be represented by independent
legal counsel at the expense of the medical staff; and,
f) Initiating, developing, and adopting medical staff
bylaws, rules and regulation, and amendments thereto,
subject to approval of the hospital governing board, which
approval shall not be unreasonably withheld.
SB 1325
Page 2
2)Prohibits the medical bylaws from interfering with the
independent rights of the medical staff to do any of the
following, but requires the procedures for:
a) Selecting and removing medical staff officers;
b) Assessing medical staff dues and utilizing medical staff
dues as appropriate for the purposes of the medical staff;
and,
c) The ability to retain and be represented by independent
legal counsel at the expense of the medical staff.
3)Requires, that with respect to any dispute arising, the
medical staff and hospital governing board to meet and confer
in good faith to resolve the dispute. Allows a superior court
of any county to issue an injunction, writ of mandate, or
other appropriate order whenever a person or entity has
engaged in or is about to engage in any acts or practices that
hinder, restrict, or otherwise obstruct the ability of the
medical staff to exercise its rights, obligations, or
responsibilities, as specified.
4)Makes legislative findings and declarations on the following:
a) That providing quality medical care in hospitals depends
on the mutual accountability, interdependence, and
responsibility, of the medical staff and the hospital
governing body for the proper performance of their
respective obligations;
b) That the governing board of a hospital must act to
protect the quality of medical care provided and the
competency of its medical staff, and the responsible
governance of the hospital in the event that the medical
staff fails in any of its substantive duties or
responsibilities, and nothing in this bill undermines their
authority. The final authority of the hospital governing
board may be exercised for the responsible governance of
the hospital or for the conduct of the business affairs of
the hospital but such final authority may only be exercised
with a reasonable and good faith belief that the medical
staff has failed to fulfill a substantive duty or
responsibility in matters pertaining to the quality of
patient care. Specifies that it would be a violation of
SB 1325
Page 3
the medical staff's self-governance and independent rights
for the hospital governing board to assume a duty or
responsibility of the medical staff precipitously,
unreasonably, or in bad faith; and,
c) That the specific actions that would constitute bad
faith or unreasonable action on the part of either the
medical staff, or hospital governing board will always be
fact specific and cannot be precisely described in statute,
and that the provisions set forth herein do nothing more
than provide for the basic independent rights and
responsibilities of a self-governing medical staff.
Specifies that a successful relationship between a
hospital's medical staff and governing board depends on the
mutual respect for the rights and responsibilities of the
other.
EXISTING LAW :
1)Provides for the licensing and regulation of physicians and
surgeons by the Medical Board of California in the Department
of Consumer Affairs.
2)Requires a licensed general or specialized hospital with five
or more physicians on its medical staff to have rules adopted
by its board of directors to govern the operation of the
hospital, and the rules to include the following:
a) Provision for the organization of licensed physicians
within the hospital into a formal medical staff with
appropriate officers and bylaws, and with staff
appointments on an annual or biennial basis;
b) Provision that membership on the medical staff shall be
restricted to physicians and other licensed practitioners
competent in their respective fields and worthy in
professional ethics. Prohibits the division of profits
from professional fees and such division is cause for
exclusion from the staff;
c) Provision that the medical staff is self-governing with
respect to the professional work performed in the hospital;
that the medical staff meet periodically and review and
analyze at regular intervals their clinical experience; and
SB 1325
Page 4
the medical records of patients to be the basis for such
review and analysis; and,
d) Provision that adequate and accurate medical records be
prepared and maintained for all patients.
3)Requires a licensed general or specialized hospital, having
less than five physicians on its medical staff to have rules
adopted by its board of directors to govern the operation of
the hospital, and the rules to include the following
provisions:
a) That membership on the medical staff shall be restricted
to physicians and other licensed practitioners competent in
their respective fields and worthy in professional ethics.
Division of profits from professional fees in any manner is
prohibited and any such division is cause for exclusion
from the staff; and,
b) That adequate and accurate medical records be prepared
and maintained for all patients.
4)States that it is unprofessional conduct if the rules for the
medical staff and hospital are not adopted.
FISCAL EFFECT : Unknown. This bill passed out of the Senate
Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS :
1)PURPOSE OF THIS BILL . The California Medical Association
(CMA), the sponsor of this bill, states that too much is left
to implication regarding the authority of the medical staff
and the authority of the adopted bylaws. CMA claims that
while the intent of the law is clear, there is no explicit
statement in the law indicating that the adopted bylaws of the
medical staff govern all professional services provided in the
hospital, even if it is the hospital itself that enters into a
medical service provider contract. CMA states that a recent
incident where one hospital is attempting to exploit the
ambiguity in the law and exercise the authority to contract
for medical service providers is the impetus for this bill.
The sponsor points out that this bill is an attempt to clarify
the role of the governing bylaws of the medical staff.
SB 1325
Page 5
2)VENTURA INCIDENT . CMA points out that a Ventura incident
illustrates the need for this bill. The hospital
administration of a hospital in Ventura County is being sued
by its medical staff for violating state laws requiring
medical staff self-governance. The suit alleges that the
administration usurped the medical staff's credentialing,
standard setting, disciplinary and quality assurance
functions; refused to recognize duly elected medical staff
officers; unilaterally amended the medical staff bylaws;
improperly interfered with medical staff's efforts to review
and update its bylaws; and illegally seized the medical staff
dues totaling $250,000. CMA has filed a brief with the court
discussing state and federal precedents that establish and
reinforce a medical staff's position as a separate legal
entity. The case is still pending in Ventura County Superior
Court.
3)MEDICAL STAFF SELF-GOVERNANCE . According to CMA, for over
thirty years, oversight and quality assurance of medical care
has been the responsibility of licensed physicians. CMA
points out that ensuring the needs of patients remains the top
priority in all medical decisions and that California law
provides that "medical staff shall be self-governing with
respect to the professional work performed in the hospital."
CMA claims the purpose of this doctrine is to insulate medical
decision making from influence by hospital administrative
staff who are primarily concerned with the administrative
needs of the hospital, and its profitability. CMA illustrates
the potential conflict that may arise between hospital and
medical staff using the example of the selection of service
providers for radiology. While a hospital may prefer a
long-term contract offering low cost services to ensure future
profitability and cost control, the medical staff may prefer a
probationary period to assess the skills of the new service
provider. CMA states that staff physicians are also concerned
about cost control but their primary interest lies on what is
best for a patient. CMA stresses that medical staff
self-governance ensures that such decisions are made by
licensed physicians who act under the duty of care to their
patients and not to the governing board of a hospital acting
under a fiduciary duty to shareholders.
The Joint Commission on Accreditation of Healthcare
Organizations (JCAHO) which accredits hospitals across the
country, requires medical staff self-governance because it
SB 1325
Page 6
believes self-governance also leads to quality patient care.
JCAHO specifies in its 2004 Medical Staff Standards for
Hospitals that "the hospital has an organized, self-governing
medical staff that provides oversight of care, treatment, and
services provided by the practitioners with privileges,
provides for a uniform quality of patient care, treatment, and
services and reports to and is accountable to the governing
body. Medical staff bylaws address self governance and
accountability to the governing body and the organized medical
staff has a leadership role in organization performance
improvement activities to improve quality care, treatment and
services and patient safety."
4)SUPPORT . Supporters believe this bill is necessary to protect
patient care and preserve medical staff independence from
intrusions by hospital administrators. To them, this bill
reinforces the protection already provided to medical staffs
under existing law.
5)OPPOSITION . The opponents are concerned that this bill would
create an uncertainty between hospital governing board and
medical staff. They point out this bill would significantly
change the relationship between the hospital and its medical
staff. The California Healthcare Association (CHA) and other
hospitals oppose this bill. However, the proposed amendments
represent a compromise between the sponsors and CHA.
6)PRIOR LEGISLATION . AB 405 (Kuehl) of 1997, would have
required hospitals to establish a formal process to consult
with its medical staff prior to making a decision to enter
into, continue, or terminate an exclusive contract for medical
services. In his veto message, then Governor Pete Wilson
indicated that hospital management and the medical staff can
and should consult with each other on quality of care issues,
and require no legislative directive to do so.
REGISTERED SUPPORT / OPPOSITION :
Support
California Medical Association (sponsor)
California Academy of Family Physicians
California Nurses Association
SB 1325
Page 7
California Podiatric Medical Association
California Society of Anesthesiologists
Opposition
Adventist Healthcare Coalition
Alliance of Catholic Health Care
Beta Health Care Group
California Healthcare Association
Catholic Healthcare West
Loma Linda University Medical Center
MemorialCare Medical Centers
Palomar Pomerado Health
Scripps Health
Sutter Health
United Hospital Association
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097