BILL ANALYSIS
AB 646
Page 1
ASSEMBLY THIRD READING
AB 646 (Swanson)
As Amended May 5, 2009
Majority vote
BUSINESS & PROFESSIONS 6-4 HEALTH 14-0
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|Ayes:|Eng, Hernandez, Nava, |Ayes:|Jones, Ammiano, Block, |
| |Niello, | |Carter, Conway, De La |
| |John A. Perez, Price | |Torre, De Leon, Hall, |
| | | |Hernandez, Bonnie |
| | | |Lowenthal, Nava, V. Manuel |
| | | |Perez, Salas, |
| | | |Audra Strickland |
| | | | |
|-----+--------------------------+-----+---------------------------|
|Nays:|Hayashi, Emmerson, | | |
| |Conway, Smyth | | |
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APPROPRIATIONS 15-0
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|Ayes:|De Leon, Nielsen, | | |
| |Ammiano, | | |
| |Charles Calderon, Davis, | | |
| |Duvall, Fuentes, Hall, | | |
| |Harkey, John A. Perez, | | |
| |Price, Skinner, Solorio, | | |
| |Audra Strickland, | | |
| |Torlakson | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Permits health care districts (districts) to directly
employ physicians and surgeons, as specified. Specifically, this
bill :
1)Permits a district to employ physicians and surgeons and charge
for their professional services, if the physician and surgeon in
whose name the charges are made approves the charges, and if:
a) The service area of the district includes a Medically
Underserved Area or a Medically Underserved Population, or has
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been federally designated as a Health Professional Shortage
Area; and,
b) Requires the chief executive officer of the district to:
i) Document that the district has been actively attempting
and unable to recruit a primary or specialty care physician
and surgeon for any 12 consecutive month period, beginning on
or after July 1, 2008; and,
ii) Submit an application to the Medical Board of California
(MBC) certifying the district's inability to recruit one or
more physicians and surgeons, including all relevant
documentation, certifying that the inability to recruit
primary or specialty care physicians and surgeons has
negatively impacted patient care in the community, and that
the employment of physicians and surgeons by the district
would meet a critical, unmet need in the community based upon
a number of factors, including, but not limited to, the
number of patients referred for care outside of the
community, the number of patients who experienced delays in
treatment, the length of treatment delays, and negative
patient outcomes.
2)Requires the MBC to approve and authorize the employment of up to
ten primary or specialty care physicians and surgeons by the
district, upon receipt and review of the certification and
subsequent certification of the district's inability to recruit a
physician and surgeon.
3)Requires that employment contracts with physicians and surgeons be
for a period of not more than 10 years, but provides that they may
be renewed or extended until December 31, 2020.
4)Requires the Office of Statewide Health Planning and Development,
in consultation with the State Department of Public Health and the
MBC, to conduct an efficacy study of this program to evaluate and
report to the Legislature no later than June 1, 2018:
a) Improvement in physician and surgeon recruitment and
retention in the districts participating in the program;
b) Impacts on physician and surgeon and health care access in
the communities served by these districts;
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c) Impacts on patient outcomes;
d) Degree of patient and participating physician and surgeon
satisfaction; and,
e) Impacts on the independence and autonomy of medical
decisionmaking by employed physicians and surgeons.
5)Prohibits districts authorized to employ physicians and surgeons
from interfering with, controlling, or otherwise directing a
physician and surgeon's professional judgment, as specified, under
penalty of punishment.
6)Deletes the 2003 pilot project permitting certain hospitals to
directly employ physicians and surgeons, as specified.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
this bill requires unknown fee-supported special fund cost of less
than $50,000 to OSHPD to complete the evaluation and submit a report
to the Legislature in 2019.
COMMENTS : The corporate practice of medicine (CPM) is typically
referred to in the context of a prohibition, banning hospitals from
employing physicians. CPM evolved in the early 20th century when
mining companies had to hire physicians directly to provide care for
their employees in remote areas. However, problems arose when
physicians' loyalty to the mining companies conflicted with
patients' needs. Eventually, physicians, courts, and legislatures
prohibited CPM in an effort to preserve physicians' autonomy and
improve patient care.
California's 75 health care districts (HCDs) are voter-created local
government entities governed by publicly elected boards of trustees.
HCDs currently operate 46 of California's 72 public hospitals,
providing health care services to over 2 million Californians
annually. HCDs are subject to California's CPM prohibition. This
bill would enable 46 HCD hospitals and approximately 130 other
public, independent community nonprofit hospitals and clinics to
hire physicians directly.
Advocates argue that physician recruitment is essential to the
continued existence of HCDs. According to a 2007 California Medical
Association report, the average age of physicians in the rural and
underserved urban communities is approaching 60, with many of those
planning to retire in the next two years. Co-sponsors of this bill,
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the Association of California Healthcare Districts (ACHD) reports
that, "In their struggle to recruit and keep physicians, rural and
underserved urban communities in California must compete with large
physician groups, Kaiser, the state Department of Corrections, rural
hospitals in almost every other state in the nation as well as other
entities that may directly employ physicians."
Proponents of the bill argue that exempting HCDs from the CPM ban
will enable them to attract physicians by absorbing all of the
overhead and administrative duties of establishing a medical
practice, and providing a stable, competitive salary.
Opponents argue that the bar on CPM is an important public policy
provision to ensure physician independence and the ability to
practice in the patient's best interests. Some argue that the
difficulty in recruiting physicians in some parts of California is
more likely the result of declining reimbursement than physicians'
employment status. This decline in reimbursement is driven by the
increased market dominance of large health care plans and insurers,
which would in no way be affected by this bill.
SB 326 (Chesbro) Chapter 411, Statutes of 2003, established a pilot
project permitting district hospitals meeting specific requirements
to hire and employ up to two physicians each, for a total of 20
physicians statewide, if the district hospital met the following
conditions: operates in a county of 750,000 or less population;
reported net operating losses in fiscal year 2000-01; and, has a
patient base of at least 50% combined Medi-Cal, Medicare, and
uninsured patients.
SB 326 required the MBC to administer and evaluate the project prior
to its sunset on January 1, 2011. In its 2008 report, the MBC
stated that it was "challenged in evaluating the program and
preparing this report because the low number of participants did not
afford us sufficient information to prepare a valid analysis of the
pilot. ?[W]hile the Board supports the ban on the corporate practice
of medicine, it also believes there may be justification to extend
the pilot so that a better evaluation can be made.
"However, until there is sufficient data to perform a full analysis
of an expanded pilot, the Board contends that the statutes governing
the corporate practice of medicine should not be amended as a
solution to solve the problem of access to healthcare."
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Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0000893