BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1008
AUTHOR: Buchanan
AMENDED: July 8, 2013
HEARING DATE: August 21, 2013
CONSULTANT: Marchand
SUBJECT : Alameda County Medical Center: privatization of
services.
SUMMARY : Prohibits the Alameda County Medical Center hospital
authority 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.
Existing law:
1.Establishes the Alameda County Medical Center hospital
authority (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 Alameda Health System, or 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.Provides for a personnel transition plan for the time the
hospital authority was created, but prohibits anything in the
personnel transition plan from being construed as prohibiting
the hospital authority from determining the number of
employees, the number of full-time equivalent positions, the
job descriptions, and the nature and extent of classified
employment positions.
5.Requires the hospital authority to have sole authority to
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AB 1008 | Page 2
negotiate memorandums of understanding with appropriate
employee organizations.
This bill:
1.Prohibits the hospital authority from privatizing any work
performed as of March 31, 2013, by physicians employed by the
authority without clear and convincing evidence that the
needed medical care can only be delivered cost-effectively by
a private contractor.
2.Requires the hospital authority, prior to privatization of any
services pursuant to 1) above, to negotiate with the
representative of its physician employees over the decision to
privatize and, if unable to resolve any dispute through
negotiations, to submit the matter to final binding
arbitration.
3.Makes legislative findings and declarations that a special law
is necessary and that a general law cannot be made applicable,
within the meaning of the California Constitution, as
specified, because of the unique needs faced by Alameda County
with respect to the operation and administration of AHS.
FISCAL EFFECT : This bill has been keyed non-fiscal.
PRIOR VOTES : Not Relevant
COMMENTS :
1.Author's statement. According to the author, this bill is
necessary to clarify the protections afforded to the
physicians employed by AHS. AHS was created as a hospital
authority by statute in 1996 and is subject to state law
rather than county charter. While it is important that AHS
focus on implementing administrative efficiencies and
improving patient care, it is also essential that they respect
the needs of the employees and the collective bargaining
process. This bill would require that prior to privatizing
medical services, the hospital authority demonstrate that the
needed medical care can only be delivered cost effectively by
a private contractor. It would also require that the hospital
authority negotiate with the representative of the physicians,
the Union of American Physicians and Dentists, over the
decision to privatize and would require unresolved disputes to
be submitted to final binding arbitration. This
district-specific bill would only apply to the AHS.
AB 1008 | Page
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2.Background on the Alameda Health System. According to its
website, AHS is an integrated public health care system with
475 beds and 500 physicians across six 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:
John George Psychiatric Hospital, with 80 licensed beds
in San Leandro;
Fairmont Hospital, with a 50-bed Acute Rehabilitation
Center as well as a 109-bed skilled nursing facility; and,
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.
Creation of the hospital authority. In response to growing
budget problems, the Alameda County Board of Supervisors
sponsored legislation in 1996 [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.
Plan to develop an integrated physician organization. In 2012,
AHS began taking steps to develop an integrated physician
organization, which AHS describes as part of its effort to
meet patient needs and to modernize the management structure
to respond to the Affordable Care Act implementation.
Initially described as a physician operating model, AHS is now
describing this proposed structure as a physician-hospital
organization (PHO). It is the planned formation of this PHO,
and the possible effect of this PHO on currently-employed
physicians, that is the motivating force behind this
legislation.
The author and sponsor state that this new PHO, with a
AB 1008 | Page 4
separate governance structure, could facilitate the
contracting out of all of the physician's positions, including
those represented by the Union of American Physicians and
Dentists. The author and sponsor state that if this were to
occur, these employees would no longer be public employees and
would lose the protections and benefits currently afforded
them.
For its part, AHS has indicated that it anticipates the PHO to
be a wholly-owned subsidiary of AHS, with its board appointed
by and reporting to the AHS Board of Trustees. AHS states
that while there is a plan to have the organization
operational by February 2014, it expects that both employee
and contracted physicians would transfer in over the next
several years, and some physicians will likely always remain
outside the employed group. According to AHS, approximately
87 of its physicians are represented by the Union of American
Physicians and Dentists, of which 22 are full-time employees.
1.Drafting concern. According to the author and sponsors, the
intent of this bill is to protect existing employed physicians
who are represented by a collective bargaining agent from
effectively losing their jobs or their status as employees of
AHS. However, this bill prohibits the privatization of any
work performed as of March 31, 3013. By linking the
prohibition to the work or services performed, rather than the
actual employees, this bill could potentially make it
difficult to contract with additional physicians to perform
work of a similar nature at other facilities. The committee
may wish to consider whether the language in this bill should
be drafted more narrowly so that the existing employees could
not be replaced through privatization or contracting out their
services.
2.Double referral. This bill will be heard in the Senate
Governance and Finance Committee on the morning of August 21,
2014. Should it pass out of Governance and Finance Committee,
it will be referred to this committee for a hearing that
afternoon.
3.Prior legislation. AB 2374 (Bates), Chapter 816, Statutes of
1996, authorized the Alameda County Board of Supervisors to
establish a hospital authority to manage the hospitals and
county programs operating as the AHS.
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4.Support. This bill is sponsored by the Union of American
Physicians and Dentists - Local 206 (UAPD), which states that
it has learned that AHS is planning to contract-out all 100 of
its employed physicians which are represented by UAPD by
January 2, 2014, but because AHS denies having formed such
intent, nothing can be done about it in court or before the
Public Employee Relations Board. UAPD states that this bill
proposes to both clarify that the decision to privatize at AHS
is negotiable, and to provide for disputes arising in such
negotiations to be resolved by a neutral arbitrator.
The American Federation of State, County and Municipal
Employees, AFL-CIO (AFSCME), is co-sponsoring this bill, and
states that it is in response to AHS' repeated attempts to
bust the physicians' union by contracting out all 100 employed
physicians. According to AFSCME, AHS has attempted
privatization several times over the past two decades, but was
blocked by courts or arbitration rulings. AFSCME states that
this bill will ensure that the jobs of health workers are not
contracted out unless AHS can provide a clear and convincing
reason that the needed care can only be delivered
cost-effectively by a private contractor.
5.Opposition. The Alameda County Medical Center, doing business
as AHS, is opposed to this bill. According to AHS, it is
planning on acquiring San Leandro Hospital, and to also
establish an affiliate relationship with Alameda Hospital.
AHS states that San Leandro Hospital is planning on closing
without AHS' assumption of it, and Alameda Hospital will be at
significant risk of closure without the affiliation. AHS
states that central to the relationship with both of these
facilities is for AHS to be able to contract with the
physicians at those locations for services. With respect to
the planned affiliation with San Leandro Hospital, AHS
anticipates that employment and contractual relationships with
physicians would be transferred from that institution to AHS,
and since there are physicians performing services at San
Leandro Hospital that are of the same type as services
currently performed by AHS employed physicians, the provisions
of this bill would apply. AHS states that the structure of the
Alameda Hospital affiliation is still to be determined, but
the current plan is for employment and contractual
relationships to be retained by Alameda Hospital, with AHS
contracting with that hospital for services. AHS states that
this in itself could be construed as "privatization," so there
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too the provisions of this bill would be triggered.
AHS states that this bill would allow a small segment of the
existing physician force to control all decisions on what work
could be performed at those facilities or if AHS could add
additional relationships with community physicians to better
serve its clientele. AHS states that this bill presumes that
all health decisions are about saving money, but notes that
last year only four percent of AHS patients had commercial
insurance, and that providing quality access to care cannot be
limited to only a cost of service evaluation.
SUPPORT AND OPPOSITION :
Support: Union of American Physicians and Dentists (sponsor)
American Federation of State, County and Municipal
Employees, AFL-CIO (co-sponsor)
Oppose: Alameda County Medical Center (doing business as
Alameda Health System)
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