BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 787    
           --------------------------------------------------------------- 
          |AUTHOR:        |Bates                                          |
          |---------------+-----------------------------------------------|
          |VERSION:       |January 5, 2016                                |
           --------------------------------------------------------------- 
           --------------------------------------------------------------- 
          |HEARING DATE:  |January 13,    |               |               |
          |               |2016           |               |               |
           --------------------------------------------------------------- 
           --------------------------------------------------------------- 
          |CONSULTANT:    |Vince Marchand                                 |
           --------------------------------------------------------------- 
          
           SUBJECT  :  Hospitals:  closures

           SUMMARY  :  Permits Saddleback Memorial Medical Center to operate an  
          emergency department at its San Clemente campus, subject to  
          approval by the California Department of Public Health (CDPH),  
          even if the San Clemente campus stopped providing acute care  
          services, thereby permitting a freestanding emergency  
          department, subject to specified conditions.
          
          Existing law:
          1)Licenses general acute care hospitals under CDPH. Defines  
            general acute care hospitals as hospitals that provide 24-hour  
            inpatient care, including the following basic services:  
            medical, nursing, surgical, anesthesia, laboratory, radiology,  
            pharmacy, and dietary services.

          2)Permits general acute care hospitals, in addition to the basic  
            services all hospitals are required to offer, to be approved  
            by CDPH to offer special services, including, but not limited  
            to, a radiation therapy department, a burn center, an  
            emergency center, a hemodialysis center or unit, psychiatric  
            services, intensive care newborn nursery, cardiac surgery,  
            cardiac catheterization laboratory, and renal transplant.

          3)Requires CDPH to issue a single consolidated license to a  
            general acute care hospital that includes more than one  
            physical plant maintained and operated on separate premises or  
            that has multiple licenses for a single health facility on the  
            same premises if the general acute care hospital meets certain  
            criteria and applicable requirements of licensure. 

          4)Requires any hospital that provides emergency medical services  







          SB 787 (Bates)                                      Page 2 of ?
          
          
            to provide notice no later than 90 days prior to a planned  
            reduction or elimination of the level of emergency medical  
            services of the intended change to CDPH, the local emergency  
            medical services agency, and all health care service plans or  
            other entities under contract with the hospital to provide  
            services to enrollees. Additionally requires the hospital to  
            provide notice of the intended change in a manner that is  
            likely to reach a significant number of residents of the  
            community served by the facility.

          Existing regulations:
          1.Requires an emergency medical service to be so located in the  
            hospital as to have ready access to all necessary services.

          2.Requires a hospital that is approved to offer emergency  
            medical service to have the following service capabilities:

               a)     Intensive care service with adequate monitoring and  
                 therapeutic equipment;
               b)     Laboratory service with the capability of performing  
                 blood gas analysis and electrolyte determinations;
               c)     Radiological service to be capable of providing the  
                 necessary support for the emergency service;
               d)     Surgical services immediately available for  
                 life-threatening situations;
               e)     Post-anesthesia recovery service; and,
               f)     The services of a blood bank containing common types  
                 of blood and blood derivatives readily available, with  
                 blood storage facilities in or adjacent to the emergency  
                 service.
          
          This bill:
          1)Permits Saddleback Memorial Medical Center, notwithstanding  
            any other law, to operate an emergency department (ED) at its  
            San Clemente campus, subject to the approval by CDPH and all  
            of the conditions specified in this bill.

          2)Requires the San Clemente ED to operate under the consolidated  
            license of Saddleback Memorial Medical Center and to meet all  
            of the requirements imposed under that license, including  
            being within 15 miles of its parent hospital.

          3)Requires the San Clemente ED to be a conversion from a  
            previously existing acute care campus and prohibits it from  
            being a newly developed freestanding ED.








          SB 787 (Bates)                                      Page 3 of ?
          
          

          4)Requires the San Clemente ED to be open 24 hours a day, 365  
            days a year.

          5)Requires the San Clemente ED to be staffed by at least one  
            board-certified emergency physician at all times.

          6)Requires the San Clemente ED to be staffed with properly  
            trained emergency room nurses and meet the minimum staffing  
            requirements for EDs in this state.

          7)Requires the San Clemente ED to have a complete range of  
            laboratory and diagnostic radiology services, including a  
            complete array of laboratory test, basic X-ray, computerized  
            tomography (CT) scan, and ultrasound capabilities.

          8)Requires the San Clemente ED to meet the specialty call  
            requirements, as defined by the Orange County emergency  
            medical services agency, under its consolidated license.

          9)Requires the San Clemente ED to have transfer agreements with  
            specialty centers, such as trauma, burn, and pediatric  
            centers, to meet the needs of the injury or patient population  
            served in the community.

          10)                                     Requires the San  
            Clemente ED to have the capabilities to stabilize patients  
            with emergency medical conditions and to transport them to its  
            parent hospital or other higher level of care facilities in a  
            safe and timely manner, consistent with the standards of care  
            in the local communities.

          11)                                     Requires the San  
            Clemente ED to have a fully functioning transport program with  
            a proven track record of safely transporting patients who  
            require admission to its parent hospital or other higher level  
            of care and specialty services facilities, such as trauma,  
            burn, and pediatric facilities.

          12)                                     Requires all applicable  
            federal and state regulatory requirements to be met under the  
            consolidated license of Saddleback Memorial Medical Center,  
            including all applicable regulations of the Centers for  
            Medicare and Medicaid Services and Title 22 of the California  
            Code of Regulations. 








          SB 787 (Bates)                                      Page 4 of ?
          
          

          13)                                     Requires the San  
            Clemente ED to satisfy any other site-specific criteria that  
            CDPH deems necessary.

          14)                                     Prohibits anything in  
            this bill from being construed to require Saddleback Memorial  
            Medical Center to provide for concomitant acute care service  
            at the San Clemente campus or to seek additional licensure for  
            operation of the San Clemente ED that is authorized pursuant  
            to this bill.

          15)                                     States legislative  
            findings and declarations that a special law is necessary and  
            that a general law cannot be made applicable within the  
            meaning of a specified provision of the California  
            Constitution because of the unique circumstances regarding the  
            provision of emergency medical services to the communities of  
            San Clemente, Dana Point, and San Juan Capistrano.

          16)                                     Contains an urgency  
            clause that will make this bill effective upon enactment.

           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1)Author's statement.  According to the author, the operator of  
            Saddleback Memorial Medical Center's San Clemente campus ("San  
            Clemente Hospital") is considering plans to convert the  
            hospital into an ambulatory health care campus that would  
            provide outpatient surgery and urgent care services. This plan  
            would eliminate the hospital's 73-bed hospital and emergency  
            room. This bill authorizes San Clemente Hospital to continue  
            to provide emergency medical services to patients in the  
            region if it otherwise transforms its delivery of services.

          San Clemente Hospital has served South Orange County for more  
            than 40 years, and operates the only emergency facility  
            between Mission Viejo and Oceanside. While the converted San  
            Clemente Hospital would have an urgent care center, state law  
            does not allow 911 patients to be transported to urgent care  
            centers. Ambulances transporting 911 patients to the closest  
            facilities that could take patients in need of emergency  
            services from the area that is presently served by San  








          SB 787 (Bates)                                      Page 5 of ?
          
          
            Clemente Hospital would face longer distances on roads and  
            highways that are frequently congested with traffic. The  
            longer ambulance rides could risk the lives of patients.  
            Additionally, the nearest emergency rooms are already strained  
            by the number of patients that come in, and could be forced to  
            turn away additional emergency patients.

          2)Background on San Clemente hospital. San Clemente Hospital is  
            part of MemorialCare Health System, which is a nonprofit  
            health care delivery system with six hospitals, as well as a  
            number of surgical centers and outpatient clinics in Los  
            Angeles and Orange County. San Clemente Hospital is licensed  
            for 73 beds, and operates under a consolidated license with  
            Saddleback Memorial Medical Center - Laguna Hills, which has  
            252 licensed beds. The Laguna Hills campus is located about 14  
            miles north of San Clemente Hospital, with both hospitals  
            adjacent to the Interstate 5 highway. According to newspaper  
            articles, MemorialCare Health System announced in August of  
            2014 that they were planning to replace San Clemente Hospital  
            with a new facility that would offer a wide range of  
            outpatient services, including an advanced urgent care. 

          According to the Office of Statewide Health Planning and  
            Development's Annual Utilization Report for San Clemente  
            Hospital, the hospital's ED was placed on diversion (meaning  
            the ED was closed to ambulances because it was full) for a  
            total of 112 hours in 2014. The following table is San  
            Clemente Hospital's emergency utilization data for 2014:
          
          
           -------------------------------------------------------------- 
          |  ED Visit Type  |     (1)      |     (2)      |     (3)      |
          |                 |              |              |              |
          |                 |  Visits not  |Admitted from |   Total ED   |
          |                 | Resulting in |     ED       |   Traffic    |
          |                 |  Admission   |              |  (1) + (2)   |
          |                 |              |              |              |
          |-----------------+--------------+--------------+--------------|
          |Minor            |          548 |            0 |              |
          |-----------------+--------------+--------------+--------------|
          |Low/Moderate     |        4,626 |            4 |              |
          |-----------------+--------------+--------------+--------------|
          |Moderate         |        5,403 |           29 |              |
          |-----------------+--------------+--------------+--------------|
          |Severe without   |        1,798 |        1,006 |              |








          SB 787 (Bates)                                      Page 6 of ?
          
          
          |threat           |              |              |              |
          |-----------------+--------------+--------------+--------------|
          |Severe with      |          423 |          591 |              |
          |threat           |              |              |              |
          |-----------------+--------------+--------------+--------------|
          |TOTAL            |       12,798 |        1,630 |14,428        |
          |                 |              |              |              |
          |                 |              |              |              |
           -------------------------------------------------------------- 

            Other hospitals in the surrounding region include: 

               a)     Mission Hospital Laguna Beach, with 123 acute care  
                 beds with somewhat similar ED utilization rates and is  
                 located seven miles north of San Clemente Hospital on  
                 Highway 1;
               b)     Mission Hospital Regional Medical Center, with 345  
                 acute care beds, a Level II trauma center, and an ED that  
                 is about three times the size of San Clemente Hospital's  
                 ED which went on diversion status for 683 hours in 2014.  
                 Mission Hospital Regional Medical Center is located about  
                 nine miles north of San Clemente Hospital along I-5, in  
                 Mission Viejo; and,
               c)     Saddleback Memorial Medical Center - Laguna Hills,  
                 the parent hospital of San Clemente Hospital, with 252  
                 acute care beds and an ED that is roughly the size of  
                 Mission Hospital Regional Medical Center, which went on  
                 diversion for a total of 308 hours in 2014. This hospital  
                 is located about 14 miles north of San Clemente Hospital  
                 along I-5.

            Under existing law, a hospital that offers emergency medical  
            services is required to provide CDPH, among others, with at  
            least 90 days notice of any planned reduction or closure of  
            the emergency medical service. According to CDPH, San Clemente  
            Hospital has not provided this notice, but that the  
            MemorialCare Health System is currently working on a  
            feasibility study to determine the future of the hospital.

          1)Background on freestanding EDs.  There are currently no  
            freestanding EDs licensed in California, although they do  
            operate in other states. According to an article in Kaiser  
            Health News in July of 2013, the number of freestanding EDs  
            doubled to more than 400 between 2009 and 2013. According to a  
            2013 information paper published by the American College of  








          SB 787 (Bates)                                      Page 7 of ?
          
          
            Emergency Physicians, there are two distinct types of  
            freestanding EDs: those that are operated by, or licensed  
            through, medical centers or hospital systems but are  
            geographically separate from the hospital, and those that are  
            independent of a hospital. As an example of the latter, First  
            Choice ER is a for-profit chain of freestanding, 24-hour  
            emergency rooms that operate in Texas and Colorado. CHCF  
            published an issue brief in July of 2009, entitled  
            "Freestanding Emergency Departments: Do They Have a Role in  
            California" (CHCF report).  According to the CHCF report, the  
            growth of freestanding EDs has prompted discussions regarding  
            their regulation and effect on the health care system. The  
            CHCF report states that these facilities differ from urgent  
            care centers in that they can accommodate additional  
            procedures such as defibrillation, intubation, and conscious  
            sedation. Additionally, most freestanding EDs are staffed by  
            trained emergency physicians and nurses, and some have been  
            permitted to receive ambulance patients. In California, in  
            order to offer emergency medical services, a facility must  
            provide certain services, such as intensive care, radiology,  
            and surgical services that are immediately available for  
            life-threatening situations, which essentially require an ED  
            to be part of a full-fledged hospital.

          2)Pilot project at Centinela Airport Clinic. Using statutory  
            authority that authorizes a local EMSA to "approve or conduct  
            any scientific or trial study of the efficacy of the  
            pre-hospital emergency use of any drug, device, or treatment  
            procedure within the local EMS system," the Los Angeles County  
            EMSA approved a two-year pilot project beginning in 2004 to  
            allow the Centinela Airport Clinic at Los Angeles  
            International Airport to receive 911 transports of basic  
            life-support patients. This was apparently the first time that  
            an emergency medical services system in California was allowed  
            to transport patients from 911 dispatch to a facility that was  
            not part of a hospital. However, both CDPH and the statewide  
            California EMSA Medical disagreed that the local EMS agency  
            had the authority to permit the operation of such a facility.  
            Ultimately, this "freestanding ED" pilot project ended after  
            one year, partly as a result of low volume that resulted from  
            a restrictive county ambulance triage policy that limited the  
            severity of patients that could be transported to this  
            location.

          3)Related legislation. AB 911 (Brough), is nearly identical to  








          SB 787 (Bates)                                      Page 8 of ?
          
          
            this bill. AB 911 is currently pending in Assembly Health  
            Committee.
          
            AB 579 (Obernolte) permits a general acute care hospital to  
            operate an ED located more than 15 miles from its main  
            physical plant, if all applicable requirements of licensure  
            are satisfied. The bill would also permit a closing general  
            acute care hospitals' ED to continue to be operated at the  
            same location or locations by an acquiring general acute care  
            hospital, as specified.  AB 579 creates an exception to permit  
            the acquiring general acute care hospital to operate the  
            closing general acute care hospitals' ED at that location or  
            locations, even if located more than 15 miles from the  
            acquiring general acute care hospital's main physical plant,  
            if all applicable requirements of licensure are satisfied.  AB  
            579 is currently pending in Assembly Health Committee.
          
          4)Prior legislation. AB 717 (Gordon of 2005) would have allowed  
            the Centinela Airport Clinic to receive private and government  
            reimbursement rates equivalent to that of a contiguous  
            emergency department of a general acute care hospital if  
            certain specified requirements were met.  AB 717 failed  
            passage in the Senate Health Committee.

          AB 1050 (Gordon of 2005) would have created a demonstration  
            project that required the Department of Health Services to  
            issue a special permit to up to four general acute care  
            hospital applicants in Los Angeles County to operate  
            freestanding emergency receiving centers.  AB 1050 was never  
            heard in Committee.

          5)Support.  This bill is supported by Saddleback Memorial  
            Medical Center (Saddleback), which operates both the larger  
            hospital in Laguna Hills as well as San Clemente Hospital  
            under a consolidated license. According to Saddleback,  
            aggressive investments have been made in chronic disease  
            management infrastructure and care navigation personnel aimed  
            at finding new and innovate ways to care for patients in  
            non-acute care settings. A consequence of these efforts has  
            been that their inpatient volumes have contracted in  
            proportion to the growth of their ambulatory care services.  
            Saddleback states that the San Clemente campus doesn't perform  
            more sophisticated services such as interventional cardiology  
            or neonatal intensive care, and therefore has had a smaller  
            inpatient census than many hospitals. For the last decade, the  








          SB 787 (Bates)                                      Page 9 of ?
          
          
            average inpatient census has been around 25, but in recent  
            years, it has dropped below 14 on average, with many days  
            being below 10.                         Saddleback states that  
            as a result of their governing board, a study is being  
            conducted to evaluate transforming the San Clemente campus to  
            an array of coordinated, state of the art ambulatory care  
            services. Pursuant to this effort, Saddleback states that it  
            has had numerous discussions with various stakeholders, and it  
            became very clear that there was a strong desire to maintain  
            emergency services on the San Clemente campus. Saddleback  
            states that preserving emergency services is currently  
            dependent upon preserving the acute care service under current  
            law, but that maintaining acute care with a very small census  
            is becoming increasingly difficult given the market forces.

          The City of San Clemente states in support that without this  
            bill, their residents and the residents of the surrounding  
            area will be forced to travel 15 miles north on I-5 to the  
            nearest emergency room, a road whose access and travel time is  
            uncertain due to traffic congestions and road construction.  
            The City of San Clemente notes that this bill does not propose  
            changing the hospital and emergency structure throughout the  
            state, but proposes a standalone emergency department solely  
            for this unique geographic region in South Orange County.  The  
            City of San Clemente states that it will leave a 40-mile void  
            in emergency care access between Oceanside and Mission Viejo  
            if it closes.

          This bill is also supported by a group of several physicians who  
            have formed "Save Saddleback San Clemente Hospital" (SSSCH).  
            According to SSSCH, San Clemente Hospital's ED serves 15,000  
            people yearly and is the second busiest ER in the region.  
            SSSCH states that their community is effectively a peninsula,  
            with Camp Pendleton south, protected forest to the east, the  
            ocean to the west, and only one road north, I-5, to access  
            emergency services. According to SSSCH, an I-5 widening  
            project has just started closing shoulders and ramps  
            intermittently, and that this project will last three years.  
            SSSCH states that in 2013 and 2014, the average transport  
            times from a typical San Clemente residence was 17 minutes to  
            the next closest hospital, Mission Hospital Regional Medical  
            Center in Mission Viejo, and now that construction has begun,  
            transport times to this facility can exceed 30 minutes.  
            According to SSSCH, Mission Hospital, which will get their  
            15,000 patients, leads all 26 hospitals in Orange County in  








          SB 787 (Bates)                                      Page 10 of ?
          
          
            wall time (when emergency personnel must wait in the ED with  
            their patients while waiting for a bed to open up) and  
            diversion time (when the ED is closed to paramedic traffic  
            because the ED is full). SSSCH states that with San Clemente  
                                                       Hospital closing, their community will be left with 75 ED beds  
            to cover more than 400,000 people. SSSCH states that this bill  
            is critical to keep access to emergency care in their  
            community.

          6)Opposition. The California Nurses Association (CNA) opposes  
            this bill, and points to arguments by the owner of the  
            hospital that local 911 calls for patients who may have a  
            heart attack, stroke, or trauma currently bypass San Clemente  
            hospital to go to cardiac receiving centers, stroke receiving  
            centers, and trauma centers. According to CNA, in other words,  
            San Clemente hospital's ED is being bypassed by Orange County  
            emergency medical services because its ED is insufficiently  
            supported by certain necessary and specialized urgent support  
            services, and that this bill would exacerbate such  
            insufficiency by diminishing even further those support  
            services while simultaneously holding itself out to the public  
            as an ED. The California State Council of the Service  
            Employees International Union (SEIU California) states in  
            opposition that under existing law, in order to provide  
            emergency services in California, emergency services must be  
            located within a hospital so as to have access to all  
            necessary services. SEIU California states that the reason for  
            these requirements is that it is difficult to predict the  
            severity of the medical needs of patients presenting at an ED.  
            Should an individual require immediate surgery to save his or  
            her life, for example, SEIU California states that those  
            services should be as close and readily available to the  
            patient as possible. The California Labor Federation states in  
            opposition that health care consumers have a reasonable  
            expectation that when they visit an emergency department, they  
            will have access to more services than when they visit an  
            urgency care center. This expectation extends to billing  
            procedures as well, and the California Labor Federation notes  
            that patient cost-sharing for emergency departments are often  
            much higher than for urgent care. Patients may end up with  
            much higher bills because they assumed the freestanding  
            emergency department was an urgent care center, or conversely,  
            may end up at the freestanding emergency department expecting  
            a full range of services, only to be transported to a  
            hospital. 








          SB 787 (Bates)                                      Page 11 of ?
          
          
          
          7)Oppose unless amended.  The California Chapter of the American  
            College of Emergency Physicians (CalACEP) opposes this bill  
            unless amended to include important, more specific patient  
            safety protections. According to CalACEP, their concerns  
            center around allowing facilities to contain the word  
            "emergency" in their title without ensuring that the facility  
            will treat all patients regardless of their ability to pay, as  
            well as their ability to provide patients with full-scope  
            emergency department care. CalACEP is also concerned about  
            placing freestanding emergency departments in areas with  
            little community need where the highest paying patients can be  
            siphoned away from the payer mix of a nearby emergency  
            department, which has a critical effect on the community  
            safety net. As a result, CalACEP states that they are opposed  
            to legislation which would allow for a freestanding emergency  
            department unless it contained important protections to ensure  
            that the freestanding emergency department complied with the  
            Emergency Medical Treatment and Active Labor Act, it is open  
            24/7, the ownership is open to all, there are reasonable  
            transfer agreements in place, there are minimum standards to  
            ensure quality care, there is an established community need,  
            and there are minimum education and training requirements for  
            providers. CalACEP states that while there are provisions in  
            this bill which seek to address these concerns, it believes  
            more specificity is needed.

           SUPPORT AND OPPOSITION  :
          Support:  City of Dana Point
          City of San Clemente
          Saddleback Memorial Medical Center
          Several individuals
          
          Oppose:   California Chapter of the American College of  
                    Emergency Physicians (Unless Amended)
                    California Labor Federation
                    California Nurses Association
                    California State Council of Service Employees  
                    International Union
                    

                                      -- END --
          










          SB 787 (Bates)                                      Page 12 of ?