BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   AB 276|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
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          |327-4478                          |                         |
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                                 THIRD READING


          Bill No:  AB 276
          Author:   Alejo (D)
          Amended:  8/7/12 in Senate
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  9-0, 6/27/12
          AYES:  Hernandez, Harman, Alquist, Anderson, Blakeslee, De 
            León, DeSaulnier, Rubio, Wolk

           SENATE GOVERNANCE & FINANCE COMMITTEE :  8-0, 7/3/12
          AYES:  Wolk, Dutton, DeSaulnier, Fuller, Hernandez, Kehoe, 
            La Malfa, Liu
          NO VOTE RECORDED:  Yee

           ASSEMBLY FLOOR  :  Not relevant


           SUBJECT  :    Central Coast Hospital Authority

           SOURCE  :     Author


           DIGEST  :    This bill permits Monterey County (County) to 
          establish the Central Coast Hospital Authority (Authority) 
          to take over management of Natividad Medical Center (NMC), 
          and requires the County Board of Supervisors to reach 
          agreement to merge or affiliate with at least one other 
          health care facility in the County before the Authority can 
          be established.

           ANALYSIS  :    Existing law:

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          1.Requires every county to be a "provider of last resort," 
            by supporting all incompetent, poor, indigent persons, 
            and those incapacitated by age, disease, or accident, 
            lawfully resident therein, when such persons are not 
            supported and relieved by their relatives or friends, by 
            their own means, or by state hospitals or other state or 
            private institutions.

          2.Permits the board of supervisors of each county to 
            prescribe rules which authorize the county hospital to 
            integrate its services with those of other hospitals into 
            a system of community service.  Permits the board of 
            supervisors of any county to transfer the maintenance, 
            operation and management or ownership of the county 
            hospital to the University of California or any other 
            public agency or community nonprofit corporation 
            empowered to operate a hospital facility upon a finding 
            that the community services provided by the hospital 
            could be more efficient, effectively or economically 
            provided by the transferee than the county.

          3.Establishes the Alameda County Hospital Authority as a 
            separate public entity, established by the Alameda County 
            Board of Supervisors, to manage the Alameda County 
            Medical Center. 

          4.Defines "designated public hospital" as one of a list of 
            county and UC hospitals, including NMC and the Alameda 
            County Medical Center.

          5.Establishes the Medi-Cal Hospital/Uninsured Care 
            Demonstration Project Act, which revises hospital 
            supplemental payment methodologies under Medi-Cal. This 
            demonstration project provides funding to various 
            hospitals, including designated public hospitals.

          This bill:

          1.Permits the County to establish the Authority by 
            ordinance, and requires the Authority to be a public 
            entity separate and apart from the County.  Prohibits the 
            Authority from being established until an agreement is 
            reached to affiliate or consolidate NMC with at least one 
            other health care facility in the County.

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          2.Requires the purpose of the Authority to provide 
            management and administration for NMC to continue to 
            serve as a designated public hospital and ensure the 
            viability of the health care safety net in the County, 
            and to provide management and administration for the 
            continued operation of one or more other health care 
            facilities that may be affiliated or consolidated with 
            NMC.

          3.Requires, in order for the Authority to be established, 
            the Board of Supervisors of the County and at least one 
            governing board of another health facility to reach 
            agreement regarding affiliation or consolidation.  
            Permits this agreement to include, but not be limited to, 
            a transfer of the following:

             A.   Real estate and personal property, and assets and 
               liabilities from the County and the other health care 
               facility to the Authority;

             B.   Employees from the County and the other health 
               facility to the Authority; and

             C.   Maintenance, operation, and management or ownership 
               of NMC, pursuant to provisions of existing law, or of 
               the other health care facility;

          1.Requires the terms and conditions of the agreement to be 
            binding on the Authority, and requires the Board of 
            Supervisors of the County, after agreement is reached, to 
            adopt an ordinance to establish the Authority.  Permits 
            the agreement to be amended from time to time upon the 
            mutual consent of the Authority and the governing board 
            of the other health care facility or the Board of 
            Supervisors, or both.

          2.Requires an agreement concerning the transfer of 
            personnel to include a transition plan that requires all 
            of the following:

             A.   Ongoing communication to employees and recognized 
               employee organizations regarding the impact of the 
               transition on existing medical center and other health 

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               care facility employees and employee classifications;

             B.   Meeting and conferring by the County and the other 
               health care facility with affected employee bargaining 
               units on the timeframe for which the transfer of 
               personnel occurs, and a specified period of time 
               during which employees of the County affected by the 
               establishment of the Authority may elect to be 
               considered for appointment to vacant positions and 
               exercise reinstatement rights for which they are 
               qualified and eligible (requires an employee who first 
               elects to remain with the County, but who subsequently 
               seeks employment with the Authority within 30 days of 
               this election, to be subject to the provisions of this 
               bill); and

             C.   Acknowledgment that the Authority is bound by the 
               terms of the memoranda of understanding (MoU) executed 
               between the County and its exclusive employee 
               representatives, and between the other health care 
               facility and its respective employee organizations, 
               that are or will be in effect as of the date the 
               County adopts the ordinance that establishes the 
               Authority.  Specifies that subsequent MoU are subject 
               to approval only by the Authority.

          1.Specifies that an agreement for the maintenance, 
            operation and management or ownership of NMC, whether 
            accompanied by a change in licensing, shall not relieve 
            the County of the ultimate responsibility for indigent 
            care pursuant to provisions of existing law.

          2.Exempts the Authority from the jurisdiction of the local 
            agency formation commission, as specified.

          3.Provides for the retention of various rights and benefits 
            for employees of NMC, including the following:

             A.   Deems permanent employees of NMC on the effective 
               date of affiliation as qualified for employment or 
               retention, and prohibits any other qualifications from 
               being required (probationary employees retain their 
               probationary status and rights and do not have to 
               serve a new probationary period);

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             B.   Protects seniority rights of NMC employees;

             C.   Protects NMC employees' job classifications and 
               descriptions, and at least their existing salaries and 
               benefits, including accrued vacation and health and 
               retiree benefits; and

             D.   Requires the Authority to become a contracting 
               agency of the Public Employees' Retirement System 
               (PERS) for the purpose of continuing or providing 
               membership in PERS for those employees represented by 
               the exclusive representative of the former NMC 
               employees who transferred to the Authority.

          1.Requires the Authority to do all of the following for 24 
            months after the term end date of any NMC MoU in 
            existence when the County establishes the Authority:

             A.   Continue to recognize each exclusive representative 
               of each bargaining unit;

             B.   Continue to provide at least the same level of 
               employee benefits to employees who were NMC employees;

             C.   Roll over and continue to be bound by any existing 
               medical center or agreement covering the terms and 
               conditions, including the level of wages and benefits, 
               of those employees for 24 months after the term end 
               date of any MoU, unless modified by mutual agreement 
               with each of the exclusive representatives.

            1.  Prohibits anything in this bill, except for the 
              transfer agreement described in #5 above, from being 
              construed as prohibiting the Authority from determining 
              the number of employees, the number of full-time 
              equivalent positions, job descriptions, the nature and 
              extent of classified employment positions, and salaries 
              of employees.

            2.  Requires the Authority to be governed by a board of 
              trustees, consisting of the following nine members, 
              appointed for staggered terms, of which the Board of 
              Supervisors of the County appoints five, and the 

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              governing board of the other medical facility appoints 
              the remaining four.  Permits the Board of Supervisors 
              and the governing board to modify the size and length 
              of terms of the board of trustees, as long as it has a 
              minimum of five members.

            3.  Provides the Authority with certain powers, including 
              having the duties and rights of a local unit of 
              government; to sue and be sued; to purchase, lease, 
              hold or sell real and personal property of any kind 
              necessary; to appoint and employ a chief executive 
              officer and other employees as necessary; to incur 
              indebtedness and to borrow money and issue tax-free 
              bonds, including revenue bonds, to provide sufficient 
              funds for achieving its purposes; to engage in 
              contracts; to establish nonprofit, for profit, or other 
              entities necessary to carry out its duties; to request 
              that the board of supervisors levy a tax on behalf of 
              the authority as prescribed.

            4.  Requires the Authority to conform to various 
              requirements of existing law, including open meeting 
              laws and other laws that apply to public agencies, and 
              laws relating to peer review.

            5.  Requires the Authority to assume the liabilities for 
              the PERS benefits, workers' compensation, and other 
              employee benefits and liabilities with respect to 
              employees of the Authority, unless otherwise agreed to 
              by the Authority, the County, and the governing board 
              of the other health care facility.

            6.  Prohibits the transfer of NMC from the County to the 
              Authority from affecting the eligibility of the County 
              to authorize the Authority to do any of the following:

             A.   Participate in and receive allocation pursuant to 
               the California Health Care for Indigents Program, as 
               specified;

             B.   Participate in and receive allocations of local 
               revenue fund amounts as may be earmarked by the County 
               for indigent health care services;


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             C.   Participate in the financing of, and receive, 
               Medicaid disproportionate share hospital payments 
               available to a county hospital or designated public 
               hospital;

             D.   Participate in the financing of, and receive, 
               Medi-Cal supplemental payments made pursuant to 
               specified provisions of existing law;

             E.   Participate in the financing of, and receive, 
               safety net care pool funding, stabilization funding, 
               delivery system reform incentive pool payments, and 
               any other funding available to a county provider or 
               designated public hospital, as specified;

             F.   Participate in the financing, administration, and 
               provision of services under the Low Income Health 
               Program, as specified; 

             G.   Participate in and receive direct grant and payment 
               allocations under the Medi-Cal Hospital Provider Rate 
               Improvement Act of 2011, as specified;

             H.   Receive Medi-Cal capital supplements pursuant to 
               specified provisions of existing law relating to 
               qualified disproportionate share hospitals pursuing 
               capital improvement projects; and

             I.   Receive any other funds that would otherwise be 
               available to a county provider or designated public 
               hospital.

            1.  Requires the Authority to be responsible for human 
              resource functions, including position classification, 
              compensation, hiring and termination. Permits the 
              Authority to contract with the County or the governing 
              board of the other health care facility for services 
              and personnel.

            2.  Makes various legislative findings and declarations, 
              including the following:

             A.   NMC, currently a constituent department of the 
               County, is a designated public hospital and a critical 

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               component of the state's health care safety net;

             B.   The Board of Supervisors of the County has 
               determined that the needs of the citizens of the 
               County would best be served if NMC, while continuing 
               as a designated public hospital, is affiliated or 
               consolidated with one or more health care facilities 
               in the County and operated by a separate and distinct 
               public hospital authority that is separate and apart 
               from the County;

             C.   The Board of Supervisors has determined that the 
               creation of an Authority to manage NMC is the best way 
               to fulfill the County's commitment to its residents, 
               including the low-income, medically indigent, and 
               special needs populations of the County; and

             D.   Because there is no general law under which this 
               public hospital authority could be formed for these 
               purposes, the formation of a special authority by the 
               Legislature are required.

           Background
           
          NMC is a 172-bed acute care hospital owned and operated by 
          the County.  According to the County, it is a successful 
          designated public safety net provider serving the residents 
          of the County for more than 126 years, and providing access 
          to health care for all patients regardless of their ability 
          to pay.  As a county hospital, NMC is currently a 
          department within the County, and is thus subject to all 
          the rules, regulations, policies, and oversight inherent in 
          being within a county governmental structure.  The County 
          states that the Board of Supervisors has determined that 
          the needs of its citizens will best be served if NMC, while 
          continuing as a designated safety net hospital and 
          maintaining its mission, is affiliated or consolidated with 
          one or more health care facilities in the County, and 
          operated by a separate and distinct authority separate and 
          apart from the County.  The County argues that in an era of 
          health care reform and a constantly evolving competitive 
          health care marketplace, it is necessary that NMC continue 
          to improve its ability to function with increased 
          flexibility, responsiveness and innovation.

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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   
          Local:  No

           SUPPORT  :   (Verified  8/8/12)

          California Nurses Association
          Central Alliance for Health
          Monterey County Board of Supervisors
          Natividad Medical Center Board of Trustees
          Service Employees International Union

           ARGUMENTS IN SUPPORT  :    The County supports this bill, 
          stating that it believes the formation of the Authority is 
          the best long-term strategic and operational model for the 
          sustainability of NMC and its affiliation partners.  The 
          NMC Board of Trustees also supports this bill, stating that 
          the Authority is a unique opportunity to create a "best in 
          class" health care organization with best practices and 
          principles in local governance, high-quality care, high 
          patient/employee satisfaction as well as efficient and 
          effective business practices.  The Services Employees 
          International Union (SEIU) states in support that its 
          members who provide care at NMC and its clinics are 
          dedicated to helping our safety net hospital system prepare 
          for health care reform, and that this bill can be an 
          important building block in that preparedness.  SEIU states 
          that this bill also ensures that NMC employees transferring 
          from County to Authority status will have a seamless 
          transition of their wages, benefits and contracts, without 
          loss of rights or status.  The California Nurses 
          Association also supports this bill, stating that it 
          provides a viable solution to maintain the hospital's 
          mission of improving the health of the people in the County 
          through access to affordable, high-quality health care 
          services.

          CTW:RM:n  8/8/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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