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: AB 334 | Page 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. -- END --