BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 1008 HEARING: 8/21/13
AUTHOR: Buchanan FISCAL: No
VERSION: 7/8/13 TAX LEVY: No
CONSULTANT: Weinberger
ALAMEDA HEALTH SYSTEM'S SERVICE CONTRACTS
Specifies conditions under which the Alameda Health System
can privatize services provided by physicians and surgeons.
Background and Existing Law
Special legislation allowed Alameda County to form a public
hospital authority, now known as the Alameda Health System
(AHS), to manage, administer, and control the Alameda
County Medical Center (AB 2374, Bates, 1996). AHS is
governed by a board of trustees appointed by the Alameda
County Board of Supervisors and employs more than 3,000
people, including 500 physicians, at facilities throughout
Alameda County. Major components of the countywide system
include:
Highland Hospital, a major regional trauma center
and teaching hospital,
John George Psychiatric Hospital, an acute and
emergency care facility,
Fairmont Hospital, an acute rehabilitation hospital
and skilled nursing facility, and
ambulatory wellness centers in the cities of
Oakland, Newark and Hayward.
Nearly 100 of the more than 500 physicians working for AHS
are employed under a collectively-bargained memorandum of
understanding negotiated by AHS and representatives of the
Union of American Physicians and Dentists.
In response to potential changes in the way that AHS plans
to contract for physicians' services, union members and
officials want the Legislature to specify conditions under
which AHS can privatize work done by physicians currently
employed by the authority.
Proposed Law
AB 1008 -- 7/8/13 -- Page 2
Assembly Bill 1008 prohibits Alameda Health Systems from
privatizing any work performed as of March 31, 2013, by
physicians and surgeons employed by AHS without clear and
convincing evidence that the needed medical care can only
be delivered cost-effectively by a private contractor.
AB 1008 requires, before those services are privatized,
that AHS must negotiate with the representative of its
physician and surgeon employees over the decision to
privatize. If any dispute cannot be resolved through
negotiations, the bill requires AHS to submit the matter to
final binding arbitration.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . AB 1008 seeks to limit the
conditions under which the Alameda Health System can
privatize the jobs of nearly 100 physicians who are
employed pursuant to a collectively-bargained memorandum of
understanding. The union representing these physicians has
learned that AHS is considering a new integrated physician
organization under which the authority would privately
contract for jobs currently performed by union members. To
provide basic protections for represented employees, union
officials want state law to require AHS to negotiate any
privatization plans and to demonstrate the
cost-effectiveness of privatization. The 1996 Bates
legislation establishing the governing authority for the
Alameda County Medical Center contained protections for
union-represented county employees whose functions were to
be transferred to the authority. Similarly, AB 1008
protects current union members by ensuring that AHS must
demonstrate a clear and convincing reason for contracting
out positions currently held by represented employees.
2. Local control . The responsibility for ensuring that
AHS fulfills its responsibilities to the public lies with
the members of its board of trustees and with the elected
officials who appoint them. Public health care agencies
AB 1008 -- 7/8/13 -- Page 3
operate in a challenging environment. As hospitals, they
face market pressures to compete with other health care
providers in a rapidly changing and unforgiving
marketplace. However, as local governments, they must
follow the Brown Act, the Public Records Act, the Political
Reform Act, public contracting laws, and other statutory
restrictions. In navigating through these substantial
challenges, public health care agencies' governing boards
need broad discretion to determine what types of contracts
and business structures best meet the needs of the
communities they serve. AHS is considering a new
integrated physician organization to manage its
relationships with physicians as part of its efforts to
implement the Affordable Care Act (ACA). AHS officials
express concern that AB 1008 may hinder their
implementation of the ACA and block their ability to expand
AHS' network by contracting with new physicians. The
Committee may wish to consider whether AB 1008 imposes
requirements that will unnecessarily constrain the
discretion of AHS' governing board to contract for services
in a manner that best responds to Alameda County residents'
health care needs.
3. Let's be clear . While AB 1008 proponents' assert that
the bill is intended to protect the status of Alameda
Health Systems employees who are currently employed
pursuant to the collectively bargained MOU, the bill's
language could be read more broadly to apply to nearly all
of Alameda Health System's current or future employment
contracts. Because the bill does not define the terms
"privatize" or "employee," it may unintentionally require
Alameda Health Systems to negotiate with the union and
enter binding arbitration for every physician and surgeon's
contract. To clarify the bill's purpose, the Committee may
wish to consider amending AB 1008 to define the term
"privatize" and specify that "employee" refers to
union-represented employees as of March 31, 2013.
4. Necessary ? AHS officials deny that they have any
immediate plans to privatize positions currently held by
union-represented employees. They suggest that the
concerns motivating AB 1008 are best addressed through
direct negotiation between AHS and the union and have
agreed to meet with union officials to discuss these
issues. The Committee may wish to consider whether AB 1008
is necessary in light of AHS' apparent willingness to
AB 1008 -- 7/8/13 -- Page 4
engage in negotiations and refrain from rapidly privatizing
union-represented employees' positions.
5. Special legislation . The California Constitution
prohibits special legislation when a general law can apply
(Article IV, §16). AB 1008 contains findings and
declarations explaining the need for legislation that
applies only to the health authority in Alameda County.
6. Gut and amend . As introduced and passed in the
Assembly, AB 1008 amended statutes governing court clerks'
duties. The Committee never heard that version of the
bill. The July 8 amendments deleted the bill's contents
and inserted the language relating to the hospital
authority for the Alameda County Medical Center.
7. Double-referral . The Senate Rules Committee has
ordered a double-referral of AB 1008, first to the Senate
Governance & Finance Committee which has policy
jurisdiction over the statutes governing local government
contracting powers, and then to the Senate Health
Committee, which has jurisdiction over legislation related
to health care services.
Assembly Actions
Not relevant to the July 7, 2013 version of the bill.
Support and Opposition (8/15/13)
Support : American Federation of State, County, and
Municipal Employees, AFL-CIO; Union of American Physicians
and Dentists/AFSME Local 206.
Opposition : Alameda Health Systems.