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 
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           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 
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             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