BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 678
AUTHOR: Gordon and Dickinson
AMENDED: April 15, 2013
HEARING DATE: July 3, 2013
CONSULTANT: Marchand
SUBJECT : Health care districts: community health needs
assessment.
SUMMARY : Requires health care districts to conduct a community
health needs assessment every five years with the involvement of
specified stakeholders, and to include progress toward meeting
the health needs identified in this assessment in an existing
annual report that is required of health care districts.
Existing law:
1.Establishes "The Local Health Care District Law," under which
a local hospital district may be organized, incorporated and
managed. Permits a district to include incorporated or
unincorporated territory, or both, in any one or more
counties.
2.Authorizes a health care district to transfer, for the benefit
of the communities served by the district, any part of its
assets of the district to one or more non-profit corporations
to operate and maintain the assets. Prior to the district
transfer, requires the district board to submit a measure to
the voters of the district proposing the transfer.
3.Requires a health care district that leases or transfers its
assets to a corporation to act as an advocate for the
community to the operating corporation, and to report annually
to the community on the progress made in meeting the
community's health needs.
4.Establishes a local agency formation commission (LAFCO) in
each county, and provides LAFCOs with certain duties and
powers, including the power to control the boundaries of
cities and special districts. Requires LAFCOs to prepare and
regularly revise a sphere of influence for each city and
special district, and before preparing this sphere of
influence, to conduct a municipal services review of the area,
as specified.
Continued---
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This bill:
1.Requires a health care district that leases or transfers its
assets to a corporation, as specified, to conduct an
assessment, every five years, of the community's health needs
(community health needs assessment) and provide opportunities
for the involvement and input of citizens, public agencies,
civic organizations, and local education agencies, and other
community groups, through public hearings and other means that
the district deems appropriate.
2.Permits the community health needs assessment to include
information gathered from reports generated by other agencies
that address health needs within the geographic area.
3.Requires, commencing January 1, 2019, the report required in
2) above to address the progress made in meeting the
community's health needs pursuant to the community health
needs assessment required by this bill.
4.Requires a LAFCO, as part of an existing requirement to
conduct a review of the municipal services provided in the
area, in the case of a health care district, to include in its
written statement of its determinations any community health
needs assessment developed pursuant to this bill.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill does not appear to be a reimbursable
mandate. Although select health districts may be eligible for
reimbursement generally under existing law, the community health
assessment only needs to be completed if a district chooses to
lease or transfer its assets, as specified, and the
discretionary nature of that decision excludes it from
reimbursement.
PRIOR VOTES :
Assembly Local Government: 9- 0
Assembly Health 19- 0
Assembly Appropriations: 17- 0
Assembly Floor: 74- 0
Senate Governance and Finance: 6- 0
COMMENTS :
1.Author's statement. This bill will bring additional
accountability and transparency to specific health care
districts. It would provide for additional public input into
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the districts' planning processes to help guide local health
investments, and it would provide LAFCOs with additional
information for evaluating the services and effectiveness of
these districts. This bill provides a critical statewide
framework for additional accountability and transparency of
local health care districts, while maintaining district
autonomy and allowing for the local determination of varying
community health needs.
This bill would require specific districts, which already must
annually report on "progress made in meeting the community's
health needs," to conduct assessments of those needs every
five years as the basis for the annual reports. The bill
would require that citizens, public agencies, civic
organizations, local education agencies, and other community
groups be allowed to provide input into the assessment
process. A health needs assessment would serve several
purposes. First, it would provide a district with an analysis
of community needs to help guide local health investments and
activities, and establish a baseline and framework for already
required annual reports. A second benefit is that the
assessment process would engage the public - enriching the
process by generating community support and raising general
awareness of and engagement with the district. A third benefit
would be the availability of these assessments to LAFCOs. The
unique services a health care district provides are dissimilar
from other local agencies generally reviewed by LAFCOs. These
assessments will provide extremely helpful information in
completing Municipal Service Reviews of these districts and in
subsequently establishing Spheres of Influence.
2.LAO Overview of health care districts. The Legislative
Analyst's Office provided a document entitled, "Overview of
Health Care Districts," to the Assembly Accountability and
Administrative Review Committee in April of 2011, which
included the following information:
History
The Local Hospital District Law was established in 1945 to
authorize special districts to build and operate hospitals and
other health care facilities in underserved areas.
Legislation in 1994 renamed it the Local Health Care District
Law to reflect the fact health care was increasingly being
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provided outside of the hospital setting. Health care
districts are a form of special district. Special districts
are local governments that are legally separate from counties
and cities, and they have the authority to build public works
projects and run programs, and the power to impose taxes to
raise funds to pay for these services. Special districts have
the ability to enter into contracts, purchase property,
exercise eminent domain, issue debt, and hire staff. Each
health care district is governed by a locally elected
five-member board of directors, and are subject to state
policies and regulations as applied by each county's LAFCO.
Current number of health care districts
There are currently 73 health care districts serving 40
counties, and most of these were established in the first two
decades following enactment of the Local Hospital District
Law. Of these, 43 districts currently operate hospitals, and
30 do not currently operate hospitals. Some districts
established legally separate non-profit hospital corporations,
and transferred ownership or operation of facilities to public
and private systems, such as Grossmont Healthcare District and
San Gorgonio Memorial Health Care District in San Diego
County. Others have closed their hospitals, or never operated
one to begin with.
Revenue
Most health care districts receive a share of local property
taxes, which varies among districts. Some health care
districts have received two-thirds approval to levy special
"parcel taxes," such as Alameda Health Care District, which
was formed in 2002 when voters approved a $296 annual parcel
tax to assume operation of Alameda Hospital. Health care
districts can also generate revenues from other resources,
including property lease income and interest earnings from
investments, or by creating debt to borrow money for capital
projects.
Issues health care districts are facing
Five health care districts have been dissolved or otherwise
reorganized by their respective LAFCO since 2000, and Contra
Costa County LAFCO has considered in the past consolidating or
dissolving health care districts that do not operate
hospitals. El Camino Hospital District in Santa Clara County
was the subject of a civil grand jury report in 2011, raising
concerns over whether the district had used property tax or
corporation revenues to purchase a facility outside of its
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boundaries. Seven health care districts have declared
bankruptcy since 2000, while others have reserve balances in
the tens of millions of dollars. Peninsula Health Care
District and Beach Cities Health District have each reported
more than $45 million in unrestricted net assets at the end of
June 2011.
3.Double Referral. This bill was heard in the Senate Governance
and Finance Committee on June 19, 2013, and passed with a 6-0
vote.
4.Prior legislation. SB 804 (Corbett), Chapter 684, Statutes of
2012, required health care districts to include, in an
agreement transferring more than 50 percent of the health care
district's assets, the appraised fair market value of any
asset transferred to a non-profit corporation, as defined.
Further requires the appraisal of the fair market value to be
performed within the six months preceding the date on which
the district approves the transfer agreement.
5.Support. The Association of California Healthcare Districts
(ACHD) states that this bill fosters good governance by
codifying best practices for districts and the communities in
which they serve. According to ACHD, 15 healthcare districts
will be impacted by the requirements in this bill, and that
while many of these districts are currently conducting needs
assessments, this bill will ensure districts are using a
formalized and objective process to develop strategies for
addressing community needs. The California Association of
Local Agency Formation Commissions supports this bill, stating
that it views the assessment as a tool for LAFCOs to use in
the municipal service review process to better determine the
district's effectiveness in delivering services that meet the
needs of the community. Health Access California states that
the implementation of the Affordable Care Act will
substantially improve the health status of Californians, but
even after full implementation, many communities will continue
to have significant health care needs.
SUPPORT AND OPPOSITION :
Support: Association of California Healthcare Districts
California Association of Local Agency Formation
Commissions
California Special Districts Association
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Health Access California
Oppose:None received
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