BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 276
AUTHOR: Alejo
AMENDED: June 19, 2012
HEARING DATE: June 27, 2012
CONSULTANT: Marchand
SUBJECT : Central Coast Hospital Authority.
SUMMARY : Permits Monterey County (County) to establish the
Central Coast Hospital Authority (Authority) to take over
management of Natividad Medical Center (NMC), and requires the
County Board of Supervisors to reach agreement to merge or
affiliate with at least one other health care facility in the
County before the Authority can be established.
Existing law:
1.Requires every county to be a "provider of last resort," by
supporting 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.Permits the board of supervisors of each county to prescribe
rules which authorize the county hospital to integrate its
services with those of other hospitals into a system of
community service. Permits the board of supervisors of any
county to transfer the maintenance, operation and management
or ownership of the county hospital to the University of
California or any other public agency or community nonprofit
corporation empowered to operate a hospital facility upon a
finding that the community services provided by the hospital
could be more efficient, effectively or economically provided
by the transferee than the county.
3.Establishes the Alameda County Hospital Authority as a
separate public entity, established by the Alameda County
Board of Supervisors, to manage the Alameda County Medical
Center.
4.Defines "designated public hospital" as one of a list of
county and UC hospitals, including NMC and the Alameda County
Medical Center.
Continued---
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5.Establishes the Medi-Cal Hospital/Uninsured Care Demonstration
Project Act, which revises hospital supplemental payment
methodologies under Medi-Cal. This demonstration project
provides funding to various hospitals, including designated
public hospitals.
This bill:
1.Permits the County to establish the Authority by ordinance,
and requires the Authority to be a public entity separate and
apart from the County. Prohibits the Authority from being
established until an agreement is reached to affiliate or
consolidate NMC with at least one other health care facility
in the County.
2.Requires the purpose of the Authority to be to provide
management and administration for NMC to continue to serve as
a designated public hospital and ensure the viability of the
health care safety net in the County, and to provide
management and administration for the continued operation of
one or more other health care facilities that may be
affiliated or consolidated with NMC.
3.Requires, in order for the Authority to be established, the
Board of Supervisors of the County and at least one governing
board of another health facility to reach agreement regarding
affiliation or consolidation. Permits this agreement to
include, but not be limited to, a transfer of the following:
a. Real estate 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; and
c. Maintenance, operation, and management or ownership of
NMC, pursuant to provisions of existing law, or of the
other health care facility;
4.Requires the terms and conditions of the agreement to be
binding on the Authority, and requires the Board of
Supervisors of the County, after agreement is reached, to
adopt an ordinance to establish the Authority. Permits the
agreement to be amended from time to time upon the mutual
consent of the Authority and the governing board of the other
health care facility or the Board of Supervisors, or both.
5.Requires an agreement concerning the transfer of personnel to
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include a transition plan that requires all of 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 timeframe for which the transfer of personnel
occurs, and 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 (requires an employee
who first elects to remain with the County, but who
subsequently seeks employment with the Authority within 30
days of this election, to be subject to the provisions of
this bill); and
c. Acknowledgment that the Authority is bound by the terms
of the memoranda of understanding (MoU) executed between
the County and its exclusive employee representatives, and
between the other health care facility and its respective
employee organizations, that are or will be in effect as of
the date the County adopts the ordinance that establishes
the Authority. Specifies that subsequent MoU are subject to
approval only by the Authority.
6.Specifies that an agreement for the maintenance, operation and
management or ownership of NMC, 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.
7.Exempts the Authority from the jurisdiction of the local
agency formation commission, as specified.
8.Provides for the retention of various rights and benefits for
employees of NMC, including the following:
a. Deems permanent employees of NMC on the effective date
of affiliation as qualified for employment or retention,
and prohibits any other qualifications from being required
(probationary employees retain their probationary status
and rights and do not have to serve a new probationary
period);
b. Protects seniority rights of NMC employees;
c. Protects NMC employees' job classifications and
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descriptions, and at least their existing salaries and
benefits, including accrued vacation and health and retiree
benefits; and
d. Requires the Authority to become a contracting agency of
the Public Employees' Retirement System (PERS) for the
purpose of continuing or providing membership in PERS for
those employees represented by the exclusive representative
of the former NMC employees who transferred to the
Authority.
9.Requires the Authority to do all of the following for 24
months after the expiration of the NMC MoU in existence when
the County establishes the Authority:
a. Continue to recognize each exclusive representative of
each bargaining unit;
b. Continue to provide at least the same level of employee
benefits to employees who were NMC employees;
c. Continue to be bound by any existing MoU or agreement
covering the terms and conditions, including the level of
wages and benefits, of those employees for up to 24 months
after the expiration of any MoU, unless modified by mutual
agreement with each of the exclusive representatives.
10.Prohibits anything in this bill, except for the transfer
agreement described in 5) above, from being construed as
prohibiting the Authority from determining 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.
11.Requires the Authority to be governed by a board of trustees,
consisting of the following nine members, appointed for
staggered terms, of which the Board of Supervisors of the
County appoints five, and the governing board of the other
medical facility appoints the remaining four. Permits the
Board of Supervisors and the governing board to modify the
size and length of terms of the board of trustees, as long as
it has a minimum of five members.
12.Provides the Authority with certain powers, including having
the duties and rights of a local unit of government; to sue
and be sued; to purchase, lease, hold or sell real and
personal property of any kind necessary; to appoint and employ
a chief executive officer and other employees as necessary; to
incur indebtedness and to borrow money and issue tax-free
bonds, including revenue bonds, to provide sufficient funds
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for achieving its purposes; to engage in contracts; to
establish nonprofit, for profit, or other entities necessary
to carry out its duties; to levy taxes and assessments within
the incorporated and unincorporated areas of the county,
subject to compliance with the applicable provisions of the
California Constitution; and to contract with the County for
the provision of indigent care services.
13.Requires the Authority to conform to various requirements of
existing law, including open meeting laws and other laws that
apply to public agencies, and laws relating to peer review.
14.Requires the Authority to assume the liabilities for the PERS
benefits, workers' compensation, and other employee benefits
and liabilities with respect to employees of the Authority,
unless otherwise agreed to by the Authority, the County, and
the governing board of the other health care facility.
15.Prohibits the transfer of NMC from the County to the
Authority from affecting the eligibility of the County to
authorize the Authority to do any of the following:
a. Participate in and receive allocation pursuant to the
California Healthcare for the Indigent Program, as
specified;
b. Participate in and receive allocations of local revenue
fund amounts as may be earmarked by the County for indigent
health care services;
c. Participate in the financing of, and receive, Medicaid
disproportionate share hospital payments available to a
county hospital or designated public hospital;
d. Participate in the financing of, and receive, Medi-Cal
supplemental payments made pursuant to specified provisions
of existing law;
e. Participate in the financing of, and receive, safety net
care pool funding, stabilization funding, delivery system
reform incentive pool payments, and any other funding
available to a county provider or designated public
hospital, as specified;
f. Participate in the financing, administration, and
provision of services under the Low Income Health Program,
as specified;
g. Participate in and receive direct grant and payment
allocations under the Medi-Cal Hospital Provider Rate
Improvement Act of 2011, as specified;
h. Receive Medi-Cal capital supplements pursuant to
specified provisions of existing law relating to qualified
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disproportionate share hospitals pursuing capital
improvement projects; and
i. Receive any other funds that would otherwise be
available to a county provider or designated public
hospital.
16.Requires the Authority to be responsible for human resource
functions, including position classification, compensation,
hiring and termination. Permits the Authority to contract with
the County or the governing board of the other health care
facility for services and personnel.
17.Permits the board of trustees of the Authority to find and
declare that the Authority shall cease to exist, and to
request that the Board of Supervisors and the governing board
of the other health care facility, if that governing board
still exists, to negotiate with the Authority for a
disposition of the Authority's assets and liabilities, and for
a transfer of the Authority's duties and responsibilities. If
the board of trustees, the Board of Supervisors, and the
governing board reach agreement, the Board of Supervisors is
required to rescind the ordinance that established the
Authority, at which point it will cease to exist.
18.Makes various legislative findings and declarations,
including the following:
a. NMC, currently a constituent department of the County,
is a designated public hospital and a critical component of
the state's health care safety net;
b. The Board of Supervisors of the County has determined
that the needs of the citizens of the County would best be
served if NMC, while continuing as a designated public
hospital, is affiliated or consolidated with one or more
health care facilities in the County and operated by a
separate and distinct public hospital authority that is
separate and apart from the County;
c. The Board of Supervisors has determined that the
creation of an Authority to manage NMC is the best way to
fulfill the County's commitment to its residents, including
low-income, the medically indigent, and special needs
populations of the County; and
d. Because there is no general law under which this public
hospital authority could be formed for these purposes, the
formation of a special authority by the Legislature is
required.
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FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee in its current form.
PRIOR VOTES : Prior votes not relevant.
COMMENTS :
1.Author's statement. We need to find viable solutions to
maintain the hospital's mission of improving the health of the
people in Monterey County through access to affordable, high
quality health care services. It is necessary that Natividad
Medical Center continue to improve its ability to function
with increased flexibility, responsiveness and innovation.
This Authority will allow our region to become more
competitive for federal dollars. AB 276 is needed to ensure
the viability of the health care safety net in Monterey
County. The majority of the patients are women, children and
families of Monterey County who can least afford health care
services.
The needs of the citizens of the County will be best served if
Natividad Medical Center is affiliated or consolidated with
one or more healthcare facilities in Monterey County and
operated by a separate and distinct Central Coast Public
Hospital Authority separate and apart from the County. This
bill is permissive to allow Natividad Medical Center to merge
with another hospital if both entities agree to a merger. The
Salinas Valley Medical Hospital has been considering this
option. I understand that the decision must be made with
careful deliberation. Their process should continue with input
from the community. This bill does not mandate that the two
hospitals merge, it simply creates the authority to make that
option viable. The bill ensures that the employees have a
seamless transition of wages, benefits, and contracts without
loss of rights or status.
2.Background on NMC. NMC is a 172-bed acute care hospital owned
and operated by the County. According to the County, it is a
successful designated public safety net provider serving the
residents of the County for more than 126 years, and providing
access to health care for all patients regardless of their
ability to pay. As a county hospital, NMC is currently a
department within the County, and is thus subject to all the
rules, regulations, policies, and oversight inherent in being
within a county governmental structure. The County states that
the Board of Supervisors has determined that the needs of its
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citizens will best be served if NMC, while continuing as a
designated safety net hospital and maintaining its mission, is
affiliated or consolidated with one or more health care
facilities in the County, and operated by a separate and
distinct authority separate and apart from the County. The
County argues that in an era of health care reform and a
constantly evolving competitive health care marketplace, it is
necessary that NMC continue to improve its ability to function
with increased flexibility, responsiveness and innovation.
3.Double referral. This bill is double referred. Should it pass
out of this committee, it will be referred to the Senate
Committee on Governance and Finance.
4.Prior legislation. AB 2374 (Bates), Chapter 816, Statutes of
1996, authorized the County of Alameda to establish a hospital
authority to manage the respective county hospitals and county
programs of the Alameda County Medical Center. Much of the
language in this bill is similar to AB 2374.
5.Support. The County supports this bill, stating that it
believes the formation of the Authority is the best long-term
strategic and operational model for the sustainability of NMC
and its affiliation partners. The NMC Board of Trustees also
supports this bill, stating that the Authority is a unique
opportunity to create a "best in class" health care
organization with best practices and principles in local
governance, high-quality care, high patient/employee
satisfaction as well as efficient and effective business
practices. The Services Employees International Union (SEIU)
states in support that its members who provide care at NMC and
its clinics are dedicated to helping our safety net hospital
system prepare for health care reform, and that this bill can
be an important building block in that preparedness. SEIU
states that this bill also ensures that NMC employees
transferring from County to Authority status will have a
seamless transition of their wages, benefits and contracts,
without loss of rights or status. The California Nurses
Association also supports this bill, stating that it provides
a viable solution to maintain the hospital's mission of
improving the health of the people in the County through
access to affordable, high-quality health care services.
SUPPORT AND OPPOSITION :
Support: California Nurses Association
Monterey County Board of Supervisors
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Natividad Medical Center Board of Trustees
Service Employees International Union
Oppose: None received.
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