BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 276| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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: CONTINUED AB 276 Page 2 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. CONTINUED AB 276 Page 3 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 CONTINUED AB 276 Page 4 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); CONTINUED AB 276 Page 5 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 CONTINUED AB 276 Page 6 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; CONTINUED AB 276 Page 7 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 CONTINUED AB 276 Page 8 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. CONTINUED AB 276 Page 9 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 **** END **** CONTINUED AB 276 Page 10 CONTINUED