BILL ANALYSIS SB 726 Page 1 Date of Hearing: August 27, 2009 ASSEMBLY COMMITTEE ON APPROPRIATIONS Kevin De Leon, Chair SB 726 (Ashburn) - As Amended: August 20, 2009 Policy Committee: Business & Professions Vote: 10-0 Health 14-1 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill extends and modifies an exception to the Corporate Practice of Medicine (CPM) statutes for specified health facilities from 2011 until January 1, 2018. CPM prohibits health facilities from hiring physicians in most settings. Specifically, this bill: 1)Extends a CPM exception established by SB 376 (Chesbro), Chapter 411, Statutes of 2003. SB 376 authorized participating district hospitals to hire up to two physicians each. Defines and specifies eligibility for qualified district health care facilities. Adds qualified rural hospitals to the CPM exception established by SB 376. Defines qualified rural hospitals. 2)Authorizes participating hospitals to hire between two and five physicians depending on a showing of need. 3)Establishes parameters for hospitals to certify with the Medical Board of California the need to recruit physicians due to work force shortages. 4)Requires the MBC to report to the Legislature by July 1, 2016 about the impact of this bill. FISCAL EFFECT Absorbable workload to the MBC to continue oversight of physicians practicing in California and to complete the impact report by 2016. SB 726 Page 2 COMMENTS 1)Rationale . This bill establishes exceptions to CPM statutes to provide specified district health care facilities and rural hospitals with additional support to recruit and retain medical staff. According to the author and supporters, health professional workforce issues are exacerbated in many areas statewide, including rural areas, due to low reimbursement by public payers such as Medi-Cal and Medicare and the higher concentration of low-income, uninsured, and elderly patients in many rural communities. Up to approximately 60 of California's 400 hospitals could qualify for the exceptions established in this bill. In addition to health care district or rural status, health care facilities must also meet designations related to medically underserved or health professional shortage areas. 2)Recent amendments address several technical issues with regard to the definition of a rural hospital and the confidentiality of physician recruitment information. 3)The Corporate Practice of Medicine refers to prohibitions in California law that ban the direct employment of physicians by hospitals and health care facilities. California's prohibitions in this area are some of the strongest in the country. Current law makes exceptions for employment of doctors by UC medical centers, county hospitals, some community clinics, and some non-profit organizations. Current law contains several other specific exemptions to CPM. 4)Related Legislation a) AB 646 (Swanson) and AB 648 (Chesbro) in the current session each also establish exceptions to CPM statutes. Each bill failed passage in the Senate Business and Professions Committee. b) AB 1944 (Swanson), SB 1294 (Ducheny), and SB 1640 (Ashburn) in 2008 each addressed modifications of CPM and hiring of physicians. AB 1944 failed passage in the Senate Health Committee, SB 1294 failed passage in the Assembly Appropriations Committee, and SB 1640 failed passage in the Assembly Business and Professions Committee. SB 726 Page 3 c) SB 376 (Chesbro), Chapter 411, Statutes of 2003 established a pilot project to authorize district hospitals to hire up to two physicians. The MBC has had difficulty evaluating SB 376 because of the low number of physicians who were hired. SB 376 expires in 2011. Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081