BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:       AB 334
          AUTHOR:        Buchanan
          AMENDED:       August 11, 2014
          HEARING DATE:  August 29, 2014
          CONSULTANT:    Marchand

          PURSUANT TO SENATE RULE 29.10.

           SUBJECT  : Alameda Health System hospital authority.
          
           SUMMARY  :  Expands a provision of law restricting the ability of  
          a hospital authority in Alameda County to contract out physician  
          services to private entities by clarifying that the hospital  
          authority is also prohibited from contracting out physician  
          services to a subsidiary or other entity established by the  
          hospital authority. Contains an urgency clause that will make  
          this bill effective upon enactment.

          Existing law:
          1.Establishes a hospital authority as a separate public agency,  
            established by the Board of Supervisors of Alameda County to  
            manage, administer, and control the Alameda County Medical  
            Center (doing business as the AHS).

          2.Requires the hospital authority to be governed by a board that  
            is appointed by the Board of Supervisors of the County of  
            Alameda, and requires its mission to be the management,  
            administration, and other control of the group of public  
            hospitals, clinics, and programs that comprise AHS in a manner  
            that ensures appropriate, quality, and cost-effective medical  
            care.

          3.Requires the hospital authority to have the power to sue or be  
            sued, to employ personnel, and to contract for services  
            required to meet its obligations.

          4.Prohibits, prior to January 1, 2024, AHS from entering into  
            any contract with any private person or entity to replace  
            services being provided by physicians and surgeons who are  
            employed by AHS, and in a recognized collective bargaining  
            unit as of March 31, 2013, without clear and convincing  
            evidence that the needed medical care can only be delivered  
            cost-effectively by a private contractor.
                                                         Continued---



          AB 334 | Page 2




          
          This bill:
          1.Revises a provision of law prohibiting AHS, prior to January  
            1, 2024, from contracting with private entities to replace  
            services provided by physicians who were employed by AHS and  
            in a recognized collective bargaining unit as of March 31,  
            2013, by expanding this provision to prohibit AHS from  
            contracting these services to "any other person or entity,  
            including, but not limited to, a subsidiary or other entity  
            established by the authority."

          2.Includes an urgency clause that will make this bill take  
            effect immediately in order to protect, at the earliest  
            possible time, the employment status of represented doctors at  
            AHS, which has incorporated a non-profit public benefit  
            corporation called Alameda Health Partners.

           FISCAL EFFECT  :  The current version of this bill has not been  
          heard by a fiscal committee.

           PRIOR VOTES  :  Prior votes not applicable to the current version  
          of this bill.
           
          COMMENTS  :  
           1.Author's statement.  According to the author, this bill is  
            necessary to clarify the protections afforded to the physicians  
            employed by AHS.  AB 1008 (Buchanan), Chapter 311, Statutes of  
            2013, required that, prior to contracting with a private entity to  
            deliver medical services, the hospital authority demonstrate the  
            cost effectiveness of that service, negotiate with the  
            representative of the physicians over the decision to privatize,  
            and submit unresolved disputes to arbitration. This bill would  
            clarify that the provisions against unilateral contracting of  
            medical services apply to all third parties, including a wholly  
            owned subsidiary of AHS.  
          
          2.Background on the Alameda Health System.  AHS is an integrated  
            public health care system with more than 800 beds and 1,000  
            physicians across nine major facilities located throughout  
            Alameda County. The largest campus in AHS is Highland  
            Hospital, located in Oakland, with 236 inpatient beds, a  
            regional trauma center, and an affiliation with UCSF medical  
            school with 10 residency slots for physician training.
               
            In addition to Highland Hospital, AHS also includes the  
            following:




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          3


          


             a.   San Leandro Hospital, a 93-bed medical facility in  
               central Alameda County; 
             b.   John George Psychiatric Hospital, with 80 licensed beds  
               in San Leandro;
             c.   Fairmont Hospital, with a 50-bed Acute Rehabilitation  
               Center as well as a 109-bed skilled nursing facility; and,
             d.   A network of community clinics, called Wellness Centers,  
               which include Highland Wellness Center in Oakland, Eastmont  
               Wellness Center in Oakland, Hayward Wellness Center, and  
               Newark Wellness Center.

          1.Creation of the hospital authority. In response to growing  
            budget problems, the Alameda County Board of Supervisors  
            sponsored AB 2374 (Bates), Chapter 816, Statutes of 1996, to  
            authorize the County of Alameda to establish a hospital  
            authority to manage the hospitals and county programs  
            operating as the AHS.  AB 2374 required the governing  
            structure of the hospital authority to be separate and apart  
            from the County for the purpose of affecting a transfer of the  
            management, administration and control of the AHS.  AB 2374  
            required the hospital authority's governing body to be  
            appointed by the Board of Supervisors.
          
          2.Related legislation. SB 1352 (Hancock), Chapter 46, Statutes  
            of 2014, replaced outdated statutory references to the Alameda  
            County Medical Center with references to AHS.  This bill made  
            additional technical and conforming changes to state law and  
            included legislative findings and declarations regarding AHS. 

          3.Prior legislation. AB 1008 (Buchanan) made findings regarding  
            the agreement between Sutter Health and AHS to transfer  
            ownership of San Leandro Hospital to AHS, and specified how  
            employees of a facility acquired by, or merged into, AHS shall  
            be treated with regard to their retirement benefits. AB 1008  
            also prohibited the AHS from privatizing any work performed by  
            its employed physicians as of March 31, 2013 without clear and  
            convincing evidence that the needed medical care can only be  
            delivered cost-effectively by a private contractor.

          AB 2374 (Bates) authorized the Alameda County Board of  
            Supervisors to establish a hospital authority to manage the  
            hospitals and county programs operating as the AHS.
          
          4.Support.  This bill is co-sponsored by the Union of American  




          AB 334 | Page 4




            Physicians and Dentists (UAPD) and the American Federation of  
            State, County and Municipal Employees (AFSCME).  UAPD and  
            AFSCME state that state, county, city and district employees  
            already enjoy strong protections against contracting, but it  
            is unclear that any of those limits on contracting-out extend  
            to AHS employees. According to UAPD and AFSCME, state law was  
            recently amended to give some basic protections for Alameda  
            Health System employees.  However, UAPD has learned that AHS  
            is planning again to attempt to contract out all of its  
            employed physicians.  This bill proposes to clarify the law by  
            changing technical language regarding contracts, fixing a  
            slight error in language that could potentially threaten the  
            jobs of all AHS employees.

           SUPPORT AND OPPOSITION  :
          Support:  Union of American Physicians and Dentists (co-sponsor)
          American Federation of State, County and Municipal Employees  
                    (co-sponsor)

          Oppose:   None received.



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