BILL ANALYSIS �
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Date of Hearing: August 30, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 276 (Alejo) - As Amended: August 22, 2012
SUBJECT : Central Coast Hospital Authority.
SUMMARY : Authorizes the Monterey County Board of Supervisors
(Board of Supervisors) to establish the Central Coast Hospital
Authority (CCHA) as specified, and prohibits the Board of
Supervisors from establishing the CCHA until an agreement to
affiliate or consolidate the Natividad Medical Center (NMC) with
at least one other health care facility is reached.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Authorize the Board of Supervisors to establish the CCHA as a
public entity separate from the Monterey County (County) and
any other public entity, subject to specific requirements.
2)Require the CCHA to provide management, administration, and
other controls to continue to operate as a designated public
hospital and provide health care to maintain the viability of
the health care safety net in the County.
3)Prohibit the Board of Supervisors from establishing the CCHA
until an agreement is reached with the governing board of at
least one other health facility on terms and conditions
satisfactory to both parties to affiliate or consolidate the
facilities.
4)Require the terms and conditions of the agreement to be
binding upon the CCHA and require the Board of Supervisors,
after an agreement is reached, to adopt an ordinance to
establish the CCHA that authorizes the CCHA to exercise its
powers and duties, as specified.
5)Permit the governing board or the Board of Supervisors and the
CCHA with mutual consent to amend the agreement as
appropriate.
6)Permit the agreement to include, but not be limited to, the
transfer of the following:
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a) Real estate and personal property, and assets and
liabilities from the County and the other health care
facility to the CCHA;
b) Employees from the County and the other health facility
to the CCHA;
c) Maintenance, operation, and management or ownership of
the medical center, pursuant to provisions of existing law,
or of the other health care facility; and,
d) Other matters the Board of Supervisors and the governing
board deem necessary and appropriate.
7)Require the agreement to include provisions addressing the
following:
a) Require the CCHA to take title to all assets associated
with the medical center, including, but not limited to all
real and personal property, funded pension assets, and
accounts receivable;
b) Require the CCHA to either assume or immediately
extinguish, defease, or satisfy, all obligations and
liabilities directly or indirectly associated with the
medical center, including, but not limited to related or
associated debt, accounts payable, accrued liabilities,
unfunded pension liabilities, or financial or contractual
obligations of any kind;
c) Require the CCHA to take any other actions necessary so
that the County has no continuing financial obligation or
responsibility over the CCHA or its operations;
d) Require any contract between the Public Employees
Retirement System (PERS) and the CCHA to be separate from
the County; and,
e) Prohibit the County from being in custody or control of
CCHA funds and prohibits the CCHA from depositing funds
with the County.
8)Require the agreement to include a transition plan for
personnel that includes the following:
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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 following:
i) A timeframe for which the transfer of personnel
occurs; and,
ii) A specified period of time during which employees of
the County affected by the establishment of the CCHA may
elect to be considered for appointment to vacant
positions and exercise reinstatement rights for which
they are qualified and eligible.
c) Acknowledgment that the CCHA is bound by the terms of
the memoranda of understanding (MoU), to the extent
permitted by state and federal law, executed between the
County and its exclusive employee representatives that are
in effect as of the date the County adopts the ordinance
that establishes the CCHA. Specifies that a subsequent MoU
is subject to approval only by the CCHA.
9)Provide rights and benefits for NMC employees upon transfer to
the CCHA, as follows:
a) To retain the existing or equivalent classification,
seniority status, job descriptions, salaries, and benefits,
including but not limited to accrued and unused vacation,
sick leave, personal leave, health and pension benefits,
retiree health benefits, and deferred compensation plans;
and,
b) To recognize the exclusive representative of the
employees bargaining unit.
10)Require the CCHA for 24 months after the term end date of any
medical center MoU in existence when the County establishes
the CCHA to continue to:
a) Recognize each exclusive representative of each
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bargaining unit;
b) Provide at least the same level of employee benefits to
CCHA employees who were medical center employees; and,
c) Be bound by any existing medical center MoU including
the level of wages and benefits, unless modified by mutual
agreement with each of the exclusive representatives, and
specifies any conflicts in the existing agreement as to
wages and other terms and conditions of employment to be
resolved only by mutual agreement between the CCHA and each
of the exclusive representatives.
11)Authorize the CCHA to determine 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, except as provided in the transfer
agreement described in 8) and 26).
12)Specify 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.
13)Exempt the CCHA from the jurisdiction of a local agency
formation commission, pursuant to the Cortese-Knox-Hertzberg
Local Government Reorganization Act of 2000.
14)Require the CCHA to contract with PERS, to the extent
permitted by federal law, to provide membership for CCHA
employees.
15)Prohibit the CCHA from participating in PERS if the PERS
Board determines that their participation could jeopardize the
PERS tax qualified or governmental plan status under federal
law.
16)Require the CCHA be governed by a board of trustees who must
reflect the expertise necessary to maximize the quality and
scope of care at the CCHA in a fiscally responsible manner and
to reflect the communities of interest that they serve.
17)Specify that the membership of the board of trustees is nine
members, appointed as follows:
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a) By the Board of Supervisors, one trustee for a two-year
term, two trustees for a three-year term, two trustees for
a four-year term; and,
b) By the governing board, two trustees for a two-year
term, one trustee for a three-year term, and one trustee
for a four-year term.
18)Require the governing board and the Board of Supervisors to
continue appointments to the trustee positions for which they
made initial appointments, including to fill a vacancy.
19)Permit the Board of Supervisors and the governing board to
remove their respective appointee for cause, with a majority
vote.
20)Permit the Board of Supervisors and the governing board to
modify the number and length of terms, either during or after
the formation of the CCHA, if the following conditions are
met:
a) The board of trustees consists of at least five members;
and,
b) The board of trustees includes appointees of the Board
of Supervisors and the governing board.
21)Requires the board of trustees to adopt bylaws with a
majority vote for the CCHA that specify the officers of the
board of trustees, time place and conduct of meetings, and
other matters deemed necessary and appropriate to conduct the
CCHA's activities.
22)Provide the CCHA with the following powers:
a) To incur indebtedness and to borrow money and issue
tax-free bonds, including revenue bonds, (if pursuant to
state law any indebtedness, notes, bonds, or other
securities require voter approval than the approval of the
Board of Supervisors is required);
b) To request that the Board of Supervisors levy a tax on
behalf of the CCHA, with the approval of the Board of
Supervisors to place the measure on the ballot and subject
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to voter approval;
c) To have the duties and rights of a local unit of
government;
d) To have perpetual existence;
e) To sue and be sued;
f) To purchase, lease, hold or sell real and personal
property of any kind necessary;
g) To appoint and employ a chief executive officer and
other employees as necessary and to establish compensation,
retirement, and other benefits for those employees;
h) To provide sufficient funds for achieving its purposes;
i) To pursue its own credit rating;
j) To engage in contracts or agreements;
aa) To establish policies relating to its purpose;
bb) To contract for and to accept grants, gifts, loans of
funds, property, or any other aid from the federal
government, state, state agency, or other source;
cc) To invest surplus money in its own treasury, manage
investments, and engage third-party investment managers;
dd) To establish nonprofit, for profit, or other entities
necessary to carry out its duties;
ee) To enter into joint powers agreements;
ff) To contract with the County for the provision of
indigent care services; and,
gg) To engage in other activities that may be in the best
interests of the CCHA in order to respond to changes in the
health care industry, as determined by the board of
trustees.
23)Specify that the CCHA must:
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a) Be a government entity separate from the county and any
other public agency that is not governed by or subject to
the policies or operational rules of the county or any
other public entity;
b) Be subject to state and federal taxation laws that are
applicable to public entities, except to apply from
exemption from social security taxation with an agreement
with the exclusive representatives of the affected
employees, pursuant to federal law;
c) Comply with the Meyers-Milias-Brown Act, the Public
Records Act, the Ralph M. Brown Act, and other existing
laws that apply to public agencies and laws relating to
peer review;
d) Carry professional and general liability insurance or
programs to the extent sufficient to cover its activities;
e) Comply with current law regarding the settlement of
terminated employment contracts;
f) Meet all local, state, and federal data reporting
requirements; and,
g) Be subject to the jurisdiction of the Public Employment
Relations Board.
24)Prohibit the liabilities or obligations of the CCHA from
becoming the County's responsibility.
25)Prohibit the transfer of NMC from the County to the CCHA from
affecting the eligibility of the County to authorize the CCHA
to participate in the financing of and receipt of funds that
would otherwise be available to a county provider or
designated public hospital, as specified.
26)Grant the board of trustees of the CCHA the authority over
procurement and contracts and to adopt written, rules,
regulations, and procedures regarding contacts.
27)Prohibit the CCHA from subcontracting work performed by
classifications represented by employee organizations, unless
the CCHA and exclusive representatives have reached a mutual
agreement.
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28)Require the CCHA to be responsible for human resources
functions pursuant to written rules, regulations, and
procedures adopted.
29)Prohibit a member of the CCHA's administrative staff from
engaging in activities inconsistent and incompatible with his
or her duties as a result of prior employment or affiliation
with the County or the governing board.
30)Establish the process for the board of trustees and Board of
Supervisors to terminate the CCHA.
31)Define the following terms:
a) "Governing board" to mean the governing body of any
other health care facility;
b) "Other health care facility" to mean one or more health
care facilities, districts, or systems in the County of
Monterey, including, but not limited to general acute care
hospitals, public hospital districts, and related health
care programs, facilities, care organizations, and delivery
systems, but does not include the medical center; and,
c) "Medical center" to mean the NMC and related public
health care programs, facilities, care organizations, and
delivery systems that exist or are established by the board
of trustees.
32)Make findings and declarations that a special statute is
necessary and that a general law cannot be made applicable
because of the particular needs of Monterey County.
EXISTING LAW :
1)Requires counties to relieve and support 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)Defines a "designated public hospital" as one of a list of
county and UC hospitals, including NMC.
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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.
AS PASSED BY THE ASSEMBLY , this bill increased penalties for
local agencies, including specified joint powers agencies, that
fail to file their annual financial transaction reports with the
California State Controller's Office in a timely manner, and
makes other specified changes to local agency financial
reporting requirements.
FISCAL EFFECT : None
COMMENTS :
1)According to Monterey County, "NMC is a 172 bed acute care
hospital that is owned and operated by Monterey County. NMC
is a successful designated public safety net provider serving
the residents of Monterey County for over 126 years providing
health care access to all patients regardless of their ability
to pay. As a county hospital, it is currently a department
within the County and is thus subject to all the rules,
regulation, policies and oversight inherent in being within a
county governmental structure."
2)The Board of Supervisors has determined that in the era of
health care reform and the competitive nature of the health
care environment, and in order to continue providing people of
the County access to affordable, high-quality health care
services, NMC needs the ability to function with increased
flexibility, responsiveness and innovation. To accomplish this
goal, the Board of Supervisors wants NMC to be affiliated or
consolidated with one or more healthcare facilities in
Monterey County and operated by a separate and distinct
Hospital Authority apart from the County.
3)This bill is permissive and allows the Board of Supervisors to
establish the CCHA if an agreement is reached with another
health care facility to merge or consolidate those facilities.
This bill contains several provisions to ensure that
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healthcare services remain accessible to patients regardless
of their ability to pay and that the CCHA as a separate entity
from the County will still continue to serve as a designated
hospital. This bill also provides requirements for the CCHA
upon the transfer of NMC employees. The California Nurses
Association argues that this bill "ensures that the employees
have a seamless transition of wages, benefits, and contracts
without loss of rights or status." One may argue that these
protections are vital for both patients and NMC employees as
the bill establishes the board of trustees as the governing
board of the CCHA removing the immediate decision-making out
of the hands of the elected Board of Supervisors. Supporters
argue that the board of trustees will be appointed and
skill-based therefore having the authority to effectively and
independently run the CCHA.
4)According to the author, "This bill provides a viable solution
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. This Authority will also
allow the region to become more competitive for federal
dollars." This bill is author-sponsored.
5)The Legislature has granted several counties the ability to
create health authorities including Alameda, San Luis Obispo,
Santa Barbara, and Sonoma (for dental).
AB 2374 (Bates), Chapter 816, Statues of 1996 authorized the
County of Alameda to establish a hospital authority to manage
the respective county hospitals and county programs currently
known as the Alameda County Medical Center.
SB 538 (O'Connell), Chapter 899, Statues of 1999 authorized San
Luis Obispo County to establish a health authority to
administer its hospital and family health centers.
6)This bill differs from past legislation to create hospital
authorities in several ways. First, previous health
authorities were established with existing county-run and
operated hospitals and programs. This bill allows the Board of
Supervisors to establish the CCHA, but only if an agreement is
reached with the Board of Supervisors and another health care
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facility to consolidate or merge the facilities. The
definition for "other health care facility" includes
facilities that are not county-run or operated and does not
give a clear indication what facility will be consolidated to
establish the CCHA, unlike past legislation. The second
difference is that this bill authorizes the CCHA to issue
bonds and levy taxes, subject to voter approval. AB 2374
(Bates) initially provided the Alameda Hospital Authority with
the power to issue bonds without voter approval, but the
provision was removed in a later version of the enacting
legislation.
7)This bill authorizes the CCHA to issue bonds and levy taxes.
While the Legislature has not yet granted this power to a
hospital authority, health care districts can levy taxes and
issue general obligation bonds subject to voter approval.
Health care districts like Salinas Valley Memorial Hospital
(which is part of the Salinas Valley Memorial Healthcare
System) already have the ability to utilize those financial
mechanisms.
8)On July 26, 2012, the Salinas Valley Memorial Hospital board
of directors unanimously rejected a proposal to merge with
NMC. A local news station reported that Salinas Valley
Memorial Hospital voted to continue as a stand-alone public
district hospital, but are open to merging in the future. This
bill prohibits the CCHA from being established unless there is
an agreement reached between the Board of Supervisors and a
governing board. Absent an agreement in place to consolidate
or merge, the Legislature may wish to consider whether there
is a need for this bill. The author argues that NMC can
continue to pursue a merger in the future and that this bill
will help ease concerns by granting the Board of Supervisors
the ability to establish the CCHA in statute.
9)Support arguments: Supporters argue that the formation of the
CCHA is the best long-term strategic and operational model for
the sustainability of NMC and its affiliation partners, and
that the CCHA will continue the safety net mission of NMC,
including providing services to low income residents and
populations with special needs.
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Opposition arguments: With no agreement in place, a case could
be made that this legislation is unnecessary at this time.
10)This bill was substantially amended in the Senate and the
Assembly-approved provisions of this bill were deleted. The
subject matter of this bill, as amended in the Senate, has not
been heard in any Assembly policy committee this legislative
session.
REGISTERED SUPPORT / OPPOSITION :
Support
California Nurses Association
Central California Alliance for Health
Natividad Medical Center
Monterey County Board of Supervisors
Monterey County Registered Nurses' Association
Service Employees International Union
Service Employees International Union, Local 521
Opposition
None on file
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958