BILL ANALYSIS
SB 726
Page 1
SENATE THIRD READING
SB 726 (Ashburn)
As Amended August 20, 2009
Majority vote
SENATE VOTE : 36-3
BUSINESS & PROFESSIONS 10-0 HEALTH 14-1
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|Ayes:|Hayashi, Emmerson, |Ayes:|Jones, Ammiano, Block, |
| |Conway, Eng, | |Carter, Conway, De Leon, |
| |Hernandez, Nava, Niello, | |Gaines, Hall, Hernandez, |
| |Ruskin, | |Bonnie Lowenthal, |
| |Smyth, Monning | |Nava, V. Manuel Perez, |
| | | |Salas, |
| | | |Audra Strickland |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Adams |
| | | | |
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APPROPRIATIONS 15-1
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|Ayes:|De Leon, Ammiano, | | |
| |Charles Calderon, Coto, | | |
| |Davis, | | |
| |Fuentes, Hall, Miller, | | |
| |Nielsen, | | |
| |John A. Perez, Skinner, | | |
| |Solorio, Audra | | |
| |Strickland, Torlakson, | | |
| |Hill | | |
| | | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey | | |
| | | | |
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SUMMARY : Revises an existing pilot project allowing qualified
health care districts and qualified rural hospitals, as specified,
to directly employ physicians and extends the sunset date for the
pilot project from January 1, 2011, to January 1, 2018.
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Specifically, this bill :
1)States that, notwithstanding the bar on the corporate practice of
medicine (CPM), a qualified health care district or a qualified
rural hospital may employ a licensee, as specified, and may charge
for professional services rendered by the licensee if the
physician and surgeon approves the charges. However, the district
or hospital shall not interfere with, control, or otherwise
influence or direct the physician and surgeon's professional
judgment in any manner prohibited by law.
2)Removes the 20 physician and surgeon limit on the pilot project.
3)Deletes prior provisions of the pilot project relating to:
a) The hospital's net losses; and,
b) The percentage of care a hospital provides to Medicare,
Medi-Cal, and uninsured patients.
4)States that a "qualified health care district" (District) is a
health care district organized and governed pursuant to the Local
Health Care District Law. A District shall be eligible to employ
physicians and surgeons, as specified, if all of the following
requirements are met:
a) The District health care facility at which the physician and
surgeon will provide services meets both of the following
requirements:
i) Is operated by the district itself, and not by another
entity; and,
ii) Is located within a medically underserved population or
medically underserved area, as specified, or within a
federally designated Health Professional Shortage Area;
b) The chief executive officer (CEO) of the District has
provided certification to the Medical Board of California (MBC)
that the district has been unsuccessful, using commercially
reasonable efforts, in recruiting a physician and surgeon to
provide services at the facility for at least 12 continuous
months beginning on or after July 1, 2008;
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c) The District CEO certifies to MBC that the hiring of a
physician and surgeon will not supplant physicians and surgeons
with current privileges or contracts with the facility;
d) The District enters into or renews a written employment
contract with the physician and surgeon prior to December 31,
2017, for a term not to exceed 10 years. The contract shall
provide for mandatory dispute resolution under the auspices of
MBC for disputes directly relating to the physician and
surgeon's clinical practice;
e) The total number of physicians and surgeons employed by the
District does not exceed two at any time. However, MBC shall
authorize the District to hire up to three additional
physicians and surgeons if the District makes a showing of
clear need in the community following a public hearing duly
noticed to all interested parties, including, but not limited
to, those involved in the delivery of medical care;
f) The District notifies MBC in writing that the district plans
to enter into a written contract with the physician and
surgeon, and MBC has confirmed that the physician and surgeon's
employment is within the maximum number permitted by this
section. MBC shall provide written confirmation to the District
within five working days of receipt of the written notification
to MBC; and,
g) The District CEO certifies to MBC that the District did not
actively recruit a physician and surgeon who, at the time, were
employed by a federally qualified health center, a rural health
center, or other community clinic not affiliated with the
District.
5)Defines a "qualified rural hospital" (QRH) as any of the
following:
a) A general acute care hospital located in an area designated
as nonurban by the United States Census Bureau;
b) A general acute care hospital located in a rural-urban
commuting area code of four or greater as designated by the
United States Department of Agriculture;
c) A small and rural hospital, as defined in the Health and
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Safety Code; or,
d) A rural hospital located within a medically underserved
population or medically underserved area, so designated by the
federal government, or within a federally designated Health
Professional Shortage Area.
6)Requires a QRH to meet all of the following requirements to be
eligible to employ physicians and surgeons:
a) The QRH CEO has provided certification to MBC that the QRH
has been unsuccessful, using commercially reasonable efforts,
in recruiting a physician and surgeon for at least 12
continuous months beginning on or after July 1, 2008;
b) The QRH CEO certifies to MBC that the hiring of a physician
and surgeon shall not supplant physicians and surgeons with
current privileges or contracts with the QRH;
c) The hospital enters into or renews a written employment
contract with the physician and surgeon prior to December 31,
2017, for a term not in excess of 10 years. The contract shall
provide for mandatory dispute resolution under the auspices of
the board for disputes directly relating to the physician and
surgeon's clinical practice;
d) The total number of physicians and surgeons employed by the
QRH does not exceed two at any time. However, MBC shall
authorize the hospital to hire up to three additional
physicians and surgeons if the QRH makes a showing of clear
need in the community following a public hearing duly noticed
to all interested parties, including, but not limited to, those
involved in the delivery of medical care;
e) The QRH notifies MBC in writing that the QRH plans to enter
into a written contract with the physician and surgeon, and the
MBC has confirmed that the physician's and surgeon's employment
is within the maximum number permitted by this section. MBC
shall provide written confirmation to the QRH within five
working days of receipt of the written notification to the MBC;
and,
f) The QRH CEO certifies to the MBC that the QRH did not
actively recruit a physician and surgeon who, at the time, were
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employed by a federally qualified health center, a rural health
center, or other community clinic not affiliated with the QRH.
7)Requires MBC to provide a preliminary report to the Legislature no
later than July 1, 2013, and a final report no later than July 1,
2016, evaluating the effectiveness of the pilot project in
improving access to health care in rural and medically underserved
areas and the project's impact on consumer protection as it
relates to intrusions into the practice of medicine. MBC shall
include in the report an analysis of the impact of the pilot
project on the ability of nonprofit community clinics and health
centers located in close proximity to participating health care
district facilities and participating rural hospitals to recruit
and retain physicians and surgeons.
8)States that nothing in this bill shall exempt a District or QRH
from any reporting requirements or affect MBC's authority to take
action against a physician and surgeon's license.
9)Sunsets the pilot on January 1, 2018, and as of that date is
repealed, unless a later enacted statute enacted before January 1,
2018, deletes or extends that date.
10)Makes legislative findings and declarations.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
absorbable workload to the MBC to continue oversight of physicians
practicing in California and to complete the impact report by 2016.
COMMENTS : 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 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
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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 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,
the Association of California Healthcare Districts reports, "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 this 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:
1)Operates in a county of 750,000 or less population;
2)Reported net operating losses in fiscal year 2000-01; and,
3)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
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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."
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0002575