BILL ANALYSIS Ó
AB 2546
Page 1
ASSEMBLY THIRD READING
AB 2546 (Salas)
As Amended May 15, 2014
Majority vote
LOCAL GOVERNMENT 9-0
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|Ayes:|Achadjian, Levine, Alejo, | | |
| |Bradford, Gordon, | | |
| |Melendez, Mullin, Rendon, | | |
| |Waldron | | |
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SUMMARY : Authorizes the Kern County Board of Supervisors (Board
of Supervisors) to establish the Kern County Hospital Authority
(Authority), as specified, and prohibits the Board of
Supervisors from establishing the Authority until an agreement
to affiliate or consolidate the Kern Medical Center (KMC) with
at least one other health care facility is reached.
Specifically, this bill :
1)Establishes the Kern County Hospital Authority Act (Act) and
authorizes the Board of Supervisors to establish the Authority
as a public entity separate from Kern County (County) and any
other public entity, subject to specific requirements.
2)Prohibits the Board of Supervisors from establishing the
Authority until an agreement is reached with the governing
board of at least one other health facility on terms and
conditions satisfactory to both parties to affiliate or
consolidate the facilities.
3)Requires the Authority to provide management, administration,
and other controls to continue to operate as a designated
public hospital and provide health care to maintain the
viability of the health care safety net in the County.
4)Requires the Authority to provide management, administration,
and other controls for the continued operation of one or more
other health care facilities that may be affiliated or
consolidated with the KMC.
5)Allows the agreement, between the Board of Supervisors and
government board of another health facility, to include, but
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not be limited to, the transfer of the following:
a) Real and personal property, and assets and liabilities
from the County and the other health care facility to the
Authority;
b) Employees from the County and the other health facility
to the Authority;
c) Maintenance, operation, and management or ownership of
the medical center, pursuant to provisions of existing law,
or of the other health care facility; and,
d) Other matters of the Board of Supervisors and the
governing board deem necessary and appropriate.
6)Requires the terms and conditions of the agreement to be
binding upon the Authority and requires the Board of
Supervisors, after an agreement is reached, to adopt an
ordinance to establish the Authority that authorizes the
Authority to exercise its powers and duties, as specified.
7)Allows the governing board of the Board of Supervisors and the
Authority with mutual consent to amend the agreement as
appropriate.
8)Requires the agreement, upon adoption of the ordinance to
establish the Authority, to do the following:
a) Take title to all assets associated with KMC, including,
but not limited to all real and personal property, funded
pension assets, and accounts receivable;
b) Assume or immediately extinguish, defease, or satisfy,
all obligations and liabilities directly or indirectly
associated with KMC, including, but not limited to, related
or associated debt, accounts payable, accrued liabilities,
unfunded pension liabilities, or financial or contractual
obligations of any kind; and,
c) Take any other actions necessary so that the continuing
financial obligation or responsibility over the Authority
or its operations is not disrupted.
9)Prohibits the County from being in custody or control of
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Authority funds and prohibits the Authority from depositing
funds with the County.
10)Requires the agreement to include a transition plan for
personnel that includes the following:
a) Ongoing communication to employees and recognized
employee organizations regarding the impact of the
transition on existing medical center and other health care
facility employees and employee classifications;
b) Meeting and conferring by the County and the other
health care facility with affected employee bargaining
units on the following:
i) A timeframe for which the transfer of personnel
occurs; and,
ii) A specified period of time during which employees of
the County affected by the establishment of the Authority
may elect to be considered for appointment to vacant
positions and exercise reinstatement rights for which
they are qualified and eligible.
c) Acknowledgment that the Authority is bound by the terms
of the memoranda of understanding (MoU), to the extent
permitted by state and federal law, executed between the
County and its exclusive employee representatives that are
in effect as of the date the County adopts the ordinance
that establishes the Authority. Specifies that a
subsequent MoU is subject to approval only by the
Authority.
11)Specifies that an agreement for the maintenance, operation
and management or ownership of KMC, whether accompanied by a
change in licensing, shall not relieve the County of the
ultimate responsibility for indigent care pursuant to
provisions of existing law.
12)Requires an agreement for the maintenance, operation, and
management or ownership of the medical center to conform with
the following requirements:
a) To comply with existing law which authorizes county
hospitals to integrate services with other hospitals into a
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system of community service which offers free choice of
hospitals;
b) Allows the board of supervisors and governing board to
mutually agree on terms and conditions; and,
c) To comply with public notice requirements in existing
law which establish requirements for medical facilities
prior to closing or eliminating for reducing medical
services.
13)Exempts the Authority from the jurisdiction of a local agency
formation commission, pursuant to the Cortese-Knox-Hertzberg
Local Government Reorganization Act of 2000.
14)States that upon an agreement between the Authority and each
affected employee bargaining unit:
a) Requires permanent employees of the medical center on
the effective date of affiliation to be deemed qualified
for employment or retention and prohibits any other
qualifications from being required. Requires that
probationary employees on the effective date of affiliation
to retain their probationary status and rights and
prohibits probationary employees from having to serve a new
probationary period;
b) Requires employment seniority of an employee of the
medical center upon affiliation to be counted toward
seniority in the Authority, as specified. Requires the
Authority to provide for the maintenance of benefits that
accompany seniority, including, but not limited to,
preference in vacations and scheduling, when applicable;
c) Prohibits the implementation of this Act from being a
cause for the modification of the level of employment
benefits. Requires employees, as specified, upon
consolidation or affiliation, to retain the existing or
equivalent classification, job descriptions, comparable
pension benefits, at least their existing salaries, and
other benefits, including, but not limited to, accrued and
unused vacation, sick leave, personal leave, health and
pension benefits, retiree health benefits, and deferred
compensation plans;
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d) Allows the Authority to contract with the California
Public Employees' Retirement System (PERS), to the extent
permitted by federal law, to provide membership for
Authority employees, as specified;
e) Requires the transfer of function from county employee
classifications to Authority employees established to
result in the recognition by the Authority of the exclusive
representative of the classifications performing those
functions at the time of transfer; and,
f) Requires the Authority, notwithstanding any other law,
to do both of the following for 24 months after the term
end date of a KMC MoU in existence when the County
establishes the Authority:
i) Continue to recognize each exclusive representative
of each bargaining unit; and,
ii) Roll over and continue to be bound by any existing
KMC MoU or agreement covering the terms and conditions of
employment.
15)Authorizes the Authority to determine the number of
employees, the number of full-time equivalent positions, job
descriptions, the nature and extent of classified employment
positions and salaries of employees, except as provided in the
transfer agreement described above.
16)Requires the Authority to be governed by a board of trustees
who must reflect the expertise necessary to maximize the
quality and scope of care at the Authority in a fiscally
responsible manner and to reflect the communities of interest
that they serve.
17)Requires the board of trustees to consist of nine members,
appointed as follows:
a) By the Board of Supervisors, one trustee for a two-year
term, two trustees for a three-year term, two trustees for
a four-year term; and,
b) By the governing board, two trustees for a two-year
term, one trustee for a three-year term, and one trustee
for a four-year term.
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18)Requires the governing board and the Board of Supervisors to
continue appointments to the trustee positions for which they
made initial appointments, including to fill a vacancy.
19)Permits the Board of Supervisors and the governing board to
remove their respective appointee for cause, with a majority
vote.
20)Authorizes the Board of Supervisors and the governing board
to modify the number and length of terms, either during or
after the formation of the Authority, if the following
conditions are met:
a) The board of trustees consists of at least five members;
and,
b) The board of trustees includes appointees of the Board
of Supervisors and the governing board.
21)Requires the board of trustees to adopt bylaws with a
majority vote for the Authority that specify the officers of
the board of trustees, time place and conduct of meetings, and
other matters deemed necessary and appropriate to conduct the
Authority's activities.
22)Provides that the board of trustees created and appointed by
this Act are a duly constituted governing body of a general
acute care hospital.
23)Provides the Authority with the following powers:
a) To have the duties and rights of a local unit of
government;
b) To have perpetual existence;
c) To sue and be sued;
d) To purchase, lease, hold or sell real and personal
property of any kind necessary;
e) To appoint and employ a chief executive officer and
other employees as necessary and to establish compensation,
retirement, and other benefits for those employees;
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f) To pursue its own credit rating;
g) To enter into contracts or agreements, as specified;
h) To purchase supplies, equipment, materials, property,
and services;
i) To establish policies relating to its purpose;
j) To contract for and to accept grants, gifts, loans of
funds, property, or any other aid from the federal
government, state, state agency, or other source;
aa) To invest surplus money in its own treasury, manage
investments, and engage third-party investment managers;
bb) To arrange for guarantees or insurance of its bonds,
notes, or other obligations by the federal or state
government or by a private insurer, and to pay the premiums
thereof;
cc) To engage in managed care contracting, joint ventures,
affiliations with other health care facilities, providers,
payers, and management agreements to participate in
alliances, purchasing consortia, health insurance pools,
accountable care, organization, alternative delivery
systems, or other cooperative arrangements with any public
or private entity;
dd) To establish nonprofit, for profit, or other entities
necessary to carry out its duties;
ee) To enter into joint powers agreements;
ff) To elect to transfer funds to the state and incur
certified public expenditures in support
of the Medi-Cal program and other programs for which federal
financial participation is available;
gg) To use a computerized management information system,
including an electronic health records system, in
connection with the administration of its facilities;
hh) To contract with the County for the provision of
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indigent care services; and,
ii) To engage in other activities that may be in the best
interests of the Authority in order to respond to changes
in the health care industry, as determined by the board of
trustees.
24)Requires the Authority to conform to the following:
a) Be a government entity separate from the County and any
other public agency that is not governed by or subject to
the policies or operational rules of the County or any
other public entity;
b) Be subject to state and federal taxation laws that are
applicable to public entities, except to apply from
exemption from social security taxation with an agreement
with the exclusive representatives of the affected
employees, pursuant to federal law;
c) Comply with the Meyers-Milias-Brown Act, the Public
Records Act, the Ralph M. Brown Act, and other existing
laws that apply to public agencies and laws relating to
peer review;
d) Carry professional and general liability insurance or
programs to the extent sufficient to cover its activities;
e) Comply with current law regarding the settlement of
terminated employment contracts; and,
f) Meet all local, state, and federal data reporting
requirements.
25)Authorizes the Authority to participate in the financing of,
and receive funding related to indigent health care services,
Medicaid, Medi-Cal, Low Income Health Program, and other
funding available to a county provider or designated public
hospital.
26)Requires the Authority to be responsible for human resources
functions pursuant to written rules, regulations, and
procedures adopted.
27)Prohibits a member of the Authority's administrative staff
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from engaging in activities inconsistent and incompatible with
his or her duties as a result of prior employment or
affiliation with the County or the governing board.
28)Establishes the process for the board of trustees and Board
of Supervisors to terminate the Authority.
29)Defines the following terms:
a) "Medical center" to mean KMC and related public health
care programs, facilities, care organizations, and delivery
systems that exist or are established by the board of
trustees;
b) "Governing board" to mean the governing body of any
other health care facility; and,
c) "Other health care facility" to mean one or more health
care facilities, districts, or systems in the County,
including, but not limited to, general acute care
hospitals, public hospital districts, and related health
care programs, facilities, care organizations, and delivery
systems, but does not include the medical center.
30)Finds and declares that a special statute is necessary and
that a general law cannot be made applicable because of the
particular needs of the County.
31)Finds and declares that KMC, a constituent department of the
County, is a designated public hospital and a critical
component of the state's health care safety net.
EXISTING LAW :
1)Requires counties to relieve and support all incompetent,
poor, indigent persons, and those incapacitated by age,
disease, or accident, lawfully resident therein, when such
persons are not supported and relieved by their relatives or
friends, by their own means, or by state hospitals or other
state or private institutions.
2)Defines a "designated public hospital" as one of a list of
county and University of California (UC) hospitals, including
KMC.
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FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill. This bill is permissive and allows the
Board of Supervisors to establish the Authority if an
agreement is reached with another health care facility to
merge or consolidate those facilities. This bill contains
several provisions to ensure that healthcare services remain
accessible to patients regardless of their ability to pay and
that the Authority, as a separate entity from the County, will
still continue to serve as a designated hospital. This bill
also establishes requirements for the Authority upon the
transfer of Kern Medical Center employees. This bill is
author-sponsored.
2)Previous legislation. The Legislature has granted several
counties the ability to create health authorities, including
Alameda [AB 2374 (Bates), Chapter 816, Statues of 1996], San
Luis Obispo [SB 538 (O'Connell), Chapter 899, Statues of
1999], Santa Barbara, and Sonoma (for dental).
This bill is substantially similar to AB 276 (Alejo), Chapter
686, Statutes of 2012, which authorized the Monterey County
Board of Supervisors to establish the Central Coast Hospital
Authority (CCHA) and prohibited the Monterey County Board of
Supervisors from establishing the CCHA until an agreement to
affiliate or consolidate the Natividad Medical Center with at
least one other health care facility was reached. Prior to AB
276, previous health authorities were established with
existing county-run and operated hospitals and programs.
Similar to AB 276, this bill allows the Board of Supervisors to
establish the Authority, but only if an agreement is reached
with the Board of Supervisors and another health care facility
to consolidate or merge the facilities. The definition for
"other health care facility" includes facilities that are not
county-run or operated and does not specify what facility will
be consolidated to establish the Authority. However, unlike
AB 276, this bill does not authorize the Authority to issue
bonds and levy taxes, and contains different language
regarding employee benefits, like PERS.
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3)Author's statement. According to the author, "Existing state
law requires counties to be the "provider of last resort" for
indigent individuals with no other means. KMC has fulfilled
this role for the County of Kern as a vital community
resource: it provides the only trauma care between Los
Angeles and Fresno, and is vital to training physicians
through academic residency and education programs. Over the
years, the County has invested significant public resources to
secure the hospital's future. However, recent investigations
have revealed that the hospital is in poor fiscal condition.
There have been interests in modifying the way KMC is
governed. Creating a Hospital Authority to govern the KMC is
only one option of several currently being explored."
4)Kern Medical Center. According to KMC's website, "Since our
beginning in 1867, Kern Medical Center has been striving for
excellence in serving the community in which we operate.
Employing an average of 1,800 staff members, Kern Medical
Center is an integral part of the community. Kern Medical
Center is a 222 bed acute care teaching hospital. The Medical
Center serves a community of approximately 650,000, and the
hospital is owned and operated by the County of Kern. The
health of the citizens of Kern County is a priority to Kern
Medical Center, and it is the only hospital dedicated to
physician resident training."
On May 12, 2014, The Bakersfield Californian reported that
"It's [KMC] projected to have lost $25 to $30 million this
fiscal year, which ends June 30. County officials are
pursuing creation of a hospital authority - an independent
agency run by an appointed board - to take over control of
KMC." KMC currently contracts with a privately owned company
to provide management for the county-owned hospital.
5)Policy considerations. The Legislature may wish to encourage
the author to consider the following:
a) This bill authorizes the Board of Supervisors to
establish the Authority, but only if an agreement is
reached between the Board of Supervisors and another health
care facility to consolidate or merge the facilities. The
Legislature may wish to ask the author if the County is
engaged in any conversations to consolidate or merge KMC,
and to provide reasoning for the need of this contingency
in the bill.
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b) This bill states "upon an agreement between the
Authority and each affected bargaining unit" and then lists
a number of protections for employees. The Legislature may
wish to ask the author to clarify his intent and amend this
provision to make it clear if these employee protections
are in fact intended to be requirements.
6)Arguments in support. None on file.
7)Arguments in opposition. None on file.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0003473