BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 1544
A
AUTHOR: Committee on Health
B
AMENDED: As Introduced
HEARING DATE: July 15, 2009
1
CONSULTANT:
5
Hansel/cjt
4
4
SUBJECT
Health facilities: licensure
SUMMARY
Permits a hospital in good standing to apply to the
Department of Public Health (DPH) to establish an
outpatient clinic, without a prior onsite survey by DPH, if
certain conditions are met. Limits the scope of services
that an outpatient clinic that is the subject of the
application may provide, as specified. Requires DPH to
approve a completed initial application and issue a license
within 30 days, if the hospital and the proposed outpatient
service meet specified conditions.
CHANGES TO EXISTING LAW
Existing law:
Provides for the licensing and regulation of health
facilities, including general acute care hospitals, acute
psychiatric hospitals, and special hospitals, as well as
for clinics, including community clinics and primary care
clinics, by DPH.
Defines in law and regulations a number of special and
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
Page 2
supplemental services that a hospital may offer, including
several that require a special permit from DPH, including
basic emergency medical services, a burn center, a
psychiatric unit, a intensive care newborn nursery,
cardiovascular surgery services, chronic dialysis, and
radiation therapy.
Defines in regulations a hospital outpatient service as the
rendering of non-emergency health care services to patients
who remain in the hospital less than 24 hours with
appropriate staff, space, equipment and supplies.
Requires DPH, upon the issuance and renewal of a license
for a general acute care hospital, acute psychiatric
hospital, or special hospital to separately identify on the
license each supplemental service, including the address of
where each outpatient service is provided and the type of
services provided at each outpatient location. Requires
DPH, on or before July 1, 2010, to make this information
available on its website.
Authorizes a primary care clinic that has held a valid,
unrevoked, and unsuspended license for at least the last
five years and that meets certain other requirements to
apply for, and be issued, a license to establish an
affiliate clinic, without the necessity of the department
first conducting an initial onsite survey, as specified.
This bill:
Permits a hospital in good standing to apply to DPH to
establish an outpatient clinic, without a prior onsite
survey by DPH, if certain conditions are met.
Limits the scope of services that an outpatient clinic that
is the subject of the application may provide to primary
care services to patients who remain in the clinic less
than 24 hours. Further specifies that outpatient services
may not include chronic dialysis treatment, outpatient
surgeries, or alternative birthing services. Specifies the
information to be included in the DPH application.
Requires DPH, upon receipt of a completed initial
application by an acute care, psychiatric, or special
hospital to add a new, or modify an existing, outpatient
service as a supplemental service, to within 30 days of
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
Page 3
receipt of the initial application, approve the additional
or modified outpatient service, add it to the hospital
license, and issue a new license, if the applicant meets
the following conditions:
The hospital owns and operates the outpatient service
that is the subject of the application;
The hospital has held a valid, unrevoked, or unsuspended
license for a minimum of five years;
The hospital does not have a demonstrated history of
repeated or uncorrected violations of state licensing or
federal certification requirements that pose immediate
jeopardy to patients; and,
The hospital does not have any pending actions against it
to suspend or revoke its license or terminate Medicare or
Medi-Cal certification.
Requires DPH, if the hospital does not meet the conditions
specified above, to provide the hospital, in writing, the
basis for that determination.
Provides that nothing shall prohibit DPH from conducting a
licensing application or complaint investigation after
receipt of the completed application.
FISCAL IMPACT
According to the Assembly Appropriations Committee,
one-time fee-supported special fund costs of $200,000 to
promulgate regulations and establish the processes
contained in
this bill. Ongoing fee-supported special fund costs of
$50,000. This bill increases hospitals' ability to care
for patients in a less costly environment and in a more
timely way than under current law.
BACKGROUND AND DISCUSSION
According to background information submitted by the
Assembly Committee on Health, AB 1544 would streamline the
approval process for outpatient primary care clinics
operated by hospitals, if the hospital maintains an
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
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existing hospital license in good standing. The committee
states that timely access to primary and preventive care is
critical to reducing health care costs and improving health
care access. At this point, outpatient clinic services
need to be expanded, yet the current system of approving
new hospital-based clinics is often lengthy, making it more
costly and difficult for hospitals to offer these services.
The author notes that legislation passed in 2003 and 2008
allows primary care clinics to offer new or ancillary
services by means of a streamlined approval process,
without having to have an onsite survey and that AB 1544
would simply adopt a similar process for hospitals.
DPH licensing functions
DPH's Licensing and Certification Division (L&C) is
responsible for licensing health care facilities and
primary care clinics, including conducting licensing
inspections (called "surveys") of new facilities and
reviewing license applications. In addition to the initial
onsite survey, DPH L&C conducts periodic follow-up surveys
of health facilities to ensure their ongoing compliance
with licensing requirements.
Affiliate clinic licensing provisions
In response to complaints from primary care clinics about
the amount of time it was taking L&C to review applications
and conduct initial surveys of new clinics, the Legislature
enacted SB 937 (Ducheny) in 2003. Among other things, SB
937 allows a primary care clinic that has held a valid,
unrevoked, and unsuspended license for at least the
immediately preceding five years, with no demonstrated
history of repeated or uncorrected licensing violations
that pose immediate jeopardy to a patient, and that has no
pending action to suspend or revoke its license, to file an
application to establish
a primary care clinic at an additional site, referred to as
an "affiliate clinic." The department must approve a
license for the affiliate clinic, within 30 days of receipt
of a completed application, without the necessity of first
conducting an initial onsite survey, if several conditions
are met, including that the parent and affiliate clinics'
corporate officers are the same, the parent and affiliate
clinics are both owned and operated by the same nonprofit
organization with the same board of directors, and the
parent clinic submits evidence of compliance with minimum
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
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construction standards for clinics.
Arguments in support
The California Hospital Association (CHA) states that
hospitals are frustrated at the amount of time it takes for
their clinics to be approved by DPH. A hospital operated
clinic in Reedley had to wait seven months to be surveyed,
during which time it had to forego 2,800 patient visits.
In Modesto, Fairfield, Clear Lake, and Lodi similar delays
have been encountered. CHA states that hospitals are
attempting to respond to the health care needs of their
communities by opening and expending outpatient primary
care clinics, as a means of relieving overcrowded emergency
departments and providing access to health care services
for uninsured and underinsured patients. CHA argues that
the expedited approval process outlined in the bill would
provide hospitals that are seeking to provide these
services parity with non-hospital based primary care
clinics, and would reduce the amount of time that new and
expanded clinics must wait for surveys before they can
commence operations.
Arguments in opposition
DPH states that under AB 1544, even if it chose to conduct
an initial onsite survey within 30 days after an
application by a hospital to start or expand a clinic, and
found licensing deficiencies, it would be required to
approve the special permit, because the bill provides no
option to deny the application, which could jeopardize
patient safety. DPH also argues that the bill would give
preferential treatment to clinics that are
hospital-operated vis-?-vis other primary clinics (except
for affiliate clinics), which would be subject to the 100
day timeline in existing law for receipt of licenses. DPH
also expresses concern that it is inappropriate to apply
the same standards to outpatient settings of hospitals and
affiliate clinics of primary care clinics. While the
operational standards for affiliate clinics are the same as
those of primary care clinics that seek to establish them,
the standards for primary care clinics are fundamentally
different from those of hospitals. Thus, the fact that a
hospital is in good standing on its hospital license is not
indicative of its ability to operate an outpatient clinic.
Finally, DPH states that it would need to promulgate
regulations in order to implement the bill.
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
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Prior legislation
AB 2010 (DeSaulnier), Chapter 90, Statutes of 2008,
clarifies that affiliate clinics are exempt from
provisional licensing requirements that otherwise apply to
clinics that have not previously been licensed.
AB 937 (Ducheny), Chapter 602, Statutes of 2003, among
other provisions, authorizes a primary care clinic that has
held a valid, unrevoked, and unsuspended license for at
least the last five years, and that meets certain other
requirements, to apply for, and be issued, a license to
establish an affiliate clinic, without the necessity of the
department first conducting an initial onsite survey, in
accordance with criteria set forth by the bill.
AB 951 (Florez), Chapter 525, Statutes of 2001, creates the
Centralized Application
Unit in the Licensing and Certification Division within
DPH. Requires all applications for clinic licenses to be
reviewed for completeness by the Unit within two weeks and
requires completed applications to be scheduled for surveys
within 30 days of receipt. Requires DPH to routinely
review the Unit and its regional offices to determine if
applications for clinic licenses are processed in a timely
and effective manner.
PRIOR ACTIONS
Assembly Floor: 79-0
Assembly Appropriations:17-0
Assembly Health: 18-0
COMMENTS
1. Suggested amendments to reflect author's intent.
Staff suggest a number of amendments to ensure the bill
reflects the author's intent. These would include
amendments to clarify that the scope of services that can
be offered in a hospital outpatient clinic is limited to
primary care services, that outpatient clinics meet all
applicable operating standards that otherwise apply to
outpatient services offered by hospitals, and that DPH
would not be precluded from conducting an on-site survey
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
Page 7
prior to approving an application, and could deny an
application if it found licensing deficiencies.
Suggested amendments:
a. On page 3, lines 18 - 29, amend as follows:
(b) Within 30 days after receipt of a completed
application by a
licensed general acute care hospital, acute psychiatric
hospital, or
a special hospital that meets the requirements of
subdivision (c) to
add or modify an outpatient service as a supplemental
service, the
department shall approve the additional or modified
outpatient
service, add it to the hospital license, and issue a new
license,
unless the applicant does not meet the requirements of
this section.
Notwithstanding any other law, the issuance of a new
license pursuant
to this section shall not require an initial onsite
survey. If the
department determines that the applicant does not meet
the
requirements of this section, the department shall
provide the
hospital, in writing, the particular basis for this
determination. Nothing
shall preclude the department from conducting an on-site
inspection
prior to issuing a license pursuant to this section, and
from denying
an application if it finds licensing deficiencies as a
result of that
inspection.
b. On page 4, lines 18 - 27, amend as follows:
(e) The outpatient service that is the subject of the
application
shall provide be limited to providing primary health care
service to
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
Page 8
patients who remain in the outpatient clinic for less
than 24 hours.
(f) The outpatient service that is the subject of the
application
shall not provide chronic dialysis treatment or
alternative birthing
services or perform outpatient surgeries that are
provided by a
surgical clinic, or any other service not identified in
subdivision (e).
(g) Nothing in this section shall prohibit the
department from
conducting a licensing inspection or complaint
investigation after
receipt of the completed application.
(h) The outpatient service that is the subject of the
application shall
comply with all applicable standards that apply to
outpatient services,
including all requirements that apply to the hospital,
including, but
not limited to requirements applicable to life safety,
building standards,
infection control, medical records, personnel policies,
governance,
and patient rights.
POSITIONS
Support: Adventist Health
Catholic Healthcare West
California Hospital Association
Chapman Medical Center
Chino Valley Medical Center
Colusa Regional Medical Center
Desert Valley Hospital
Hospital Association of San Diego and Imperial
Counties
Montclair Hospital Medical Center
Pacific Hospital of Long Beach
Palomar Pomerado Health
Private Essential Access Community Hospitals
STAFF ANALYSIS OF ASSEMBLY BILL 1544 (Committee on Health)
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San Antonio Community Hospital
San Dimas Community Hospital
Scripps Mercy Hospital
Shasta Regional Hospital
Sierra Kings District Hospital
Victor Community Hospital
Oppose: California Department of Public Health
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