BILL NUMBER: AB 2697	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 11, 2008
	PASSED THE ASSEMBLY  AUGUST 13, 2008
	AMENDED IN SENATE  AUGUST 6, 2008
	AMENDED IN SENATE  JULY 2, 2008
	AMENDED IN SENATE  JUNE 18, 2008
	AMENDED IN ASSEMBLY  APRIL 15, 2008
	AMENDED IN ASSEMBLY  APRIL 2, 2008

INTRODUCED BY   Assembly Member Huffman

                        FEBRUARY 22, 2008

   An act to add Article 4 (commencing with Section 127450) to
Chapter 2 of Part 2 of Division 107 of the Health and Safety Code,
relating to hospitals.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2697, Huffman. Boutique hospitals.
   Existing law provides for the licensure and regulation of health
facilities, including hospitals, by the State Department of Public
Health.
   This bill would require a boutique hospital, as defined, to
contract with an independent contractor for a study on the impact of
the boutique hospital on the health of the community care system,
focusing particularly on the financial impact on hospitals in the
area served by the boutique hospital. The bill would require these
studies to be filed with the Office of Statewide Health Planning and
Development and the board of supervisors of the county in which the
hospital is located, and would require the boutique hospital to make
the study available to the public, upon request. The bill would not
apply to specified charitable acute care hospitals.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature hereby finds and declares all of the
following:
   (a) The preservation of California's full-service hospitals is of
critical importance to the health and welfare of the people of the
state.
   (b) Many full-service California hospitals are facing financial
challenges that threaten their ability to serve their essential role
in the health care delivery system, including providing care to
Medi-Cal beneficiaries and uninsured patients.
   (c) California hospitals that provide multiple services to their
communities are often only able to do so because other departments of
the hospital, such as cardiac surgery, orthopedics, and other
surgery programs, operate at a financial gain, offsetting the
sometimes significant losses incurred by nonsurgical programs.
   (d) The ability of a hospital to continue to provide all services
to California's insured and uninsured patients is threatened by
so-called "boutique hospitals." These are hospitals that offer only
services that are profitable, such as open-heart surgery and
orthopedic surgery, and do not offer services that operate at a loss,
such as emergency services or maternity services.
   (e) If full-service hospitals lose a substantial percentage of
their revenue-generating programs to "boutique hospitals," the
general medical and emergency services that communities depend on
will cease to be financially viable, causing the further erosion of
the health care safety net in California, with disastrous results for
the public's health.
  SEC. 2.  Article 4 (commencing with Section 127450) is added to
Chapter 2 of Part 2 of Division 107 of the Health and Safety Code, to
read:

      Article 4.  Boutique Hospital Impacts


   127450.  (a) For purposes of this section, "boutique hospital"
means any general acute care hospital to which either or both of the
following applies:
   (1) Not less than two-thirds of the inpatient discharges are
classified in not more than three major diagnosis categories.
   (2) Not less than two-thirds of the inpatient discharges are for
surgical diagnosis-related groups, as defined by the federal Centers
for Medicare and Medicaid Services.
   (b) Every boutique hospital shall, prior to the commencement of
operations and every three years thereafter, contract with an
independent consultant to perform a study of the impact of the
hospital on the health of the community health care system, focusing
particularly on the financial impact on hospitals in the area served
by the boutique hospital. All costs associated with the study shall
be borne by the boutique hospital.
   (c) The consultant performing the independent health care impact
study shall meet with the appropriate impacted groups to gather
necessary information to complete the study.
   (d) The independent health care impact study shall include, but is
not limited to, all of the following:
   (1) An assessment of the effects of the boutique hospital on
emergency services and any other health care services that
surrounding hospitals are providing.
   (2) An assessment of the effects of the boutique hospital on the
level and type of charity care that surrounding hospitals have
historically provided.
   (3) An assessment of the effects of the boutique hospital on the
provision of health care services to Medi-Cal patients, county
indigent patients, and any other class of patients by surrounding
hospitals.
   (4) An assessment of the effects of the boutique hospital on any
significant community benefit program that the surrounding hospitals
have funded or operated within the preceding year.
   (5) An assessment of the effects of the boutique hospital on
surrounding hospitals staffing for patient care areas as it may
affect availability of care and on the likely retention of employees
and physicians as it may affect continuity of care.
   (6) An assessment of the financial effect of the boutique hospital
on surrounding hospitals.
   (e) The independent health care impact study shall, where
applicable, quantify the effects of the boutique hospital's
operations in dollars and clearly document the study methodology and
assumptions.
   (f) Every boutique hospital shall file its independent health care
impact study with the Office of Statewide Health Planning and
Development and the board of supervisors of the county in which the
boutique hospital is located. Every boutique hospital shall also make
the study available to the public upon request.
   (g) This section shall not apply to a general acute care hospital
that is an eleemosynary institution that does not bill patients for
services provided, or that specializes in pediatrics or physical
rehabilitation.