BILL ANALYSIS �
AB 1360
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Date of Hearing: April 12, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1360 (Swanson) - As Introduced: February 18, 2011
SUBJECT : Physicians and surgeons: employment.
SUMMARY : Permits, until December 31, 2022, a health care
district (HCD) to employ physicians and surgeons and charge for
their professional services. Specifically, this bill :
1)Permits a HCD 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
all of the following conditions are met:
a) The service area of the HCD includes a medically
underserved area (MUA) or a medically underserved
population (MUP), as defined in current law, or has been
federally designated as a Health Professional Shortage Area
(HPSA);
b) The HCD board conducts a public hearing and adopts a
formal resolution declaring that a need exists for the HCD
to recruit and directly employ one or more physicians to
serve unmet community need;
c) The resolution shall include all of the following
findings and declarations:
i) Patients living within the community have been
forced to seek care outside the community, or have faced
extensive delays in access to care, due to the lack of
physicians and surgeons;
ii) The communities served by the HCD lack sufficient
numbers of physicians and surgeons to meet community need
or have lost or are threatened with the impending loss of
one or more physicians and surgeons due to retirement,
planned relocation, or other reasons;
iii) The HCD has been actively working to recruit one or
more physicians and surgeons to address unmet community
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need, or to fill an impending vacancy, for a minimum of
12 consecutive months, beginning July 1, 2010, without
success; and,
iv) The direct employment of one or more physicians and
surgeons by the HCD is necessary in order to augment or
preserve access to essential medical care in the
communities served by the HCD.
d) The resolution shall also do the following:
i) Directs the HCD's executive officer to begin
actively recruiting one or more physicians and surgeons,
up to the limits specified in this chapter, as HCD
employees;
ii) Prohibits the executive officer from actively
recruiting a physician and surgeon who is currently
employed by a federally qualified health center, rural
health center, or other community clinic not affiliated
with the HCD; and,
e) Upon adoption of the resolution by the HCD board, the
executive officer shall submit an application to the
Medical Board of California (MBC) certifying the HCD's
inability to recruit physicians and surgeons, as specified.
2)Requires, upon receipt and review of the application, adopted
resolution, and all relevant documentation of the HCD's
inability to recruit a physician and surgeon, the MBC to
approve and authorize the employment of up to five primary or
specialty care physicians and surgeons by the HCD.
3)Requires, upon receipt and review of subsequent documentation
of the need for additional primary or specialty care
physicians and surgeons by the HCD, the MBC to approve and
authorize the employment of up to five additional primary or
specialty care physicians and surgeons by the HCD.
4)Provides that employment contracts with physicians and
surgeons issued pursuant to the bill shall be for a period of
not more than 10 years, but may be renewed or extended. HCDs
may enter into, renew, or extend employment contracts with
physicians and surgeons until December 31, 2022.
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5)Requires the Office of Statewide Health Planning and
Development, in consultation with the State Department of
Public Health and MBC, to conduct an efficacy study of the
program under the bill to evaluate improvement in physician
and surgeon recruitment and retention in the HCDs
participating in the program, impacts on physician and surgeon
and health care access in the communities served by these
HCDs, impacts on patient outcomes, degree of patient and
participating physician and surgeon satisfaction, and impacts
on the independence and autonomy of medical decision-making by
employed physicians and surgeons. This study shall be
completed and its results reported to the Legislature no later
than June 1, 2020.
6)Provides that the bill applies to HCDs and to any clinic owned
or operated by a HCD, provided the HCD meets the criteria of,
and ensures compliance with, the requirements of the bill.
7)Provides that a HCD authorized to employ physicians and
surgeons pursuant to the bill shall not interfere with,
control, or otherwise direct a physician and surgeon's
professional judgment in a manner prohibited by current law
pertaining to the corporate practice of medicine (CPM) or any
other provision of law. Violation of this prohibition is
punishable as a violation of current law pertaining to the
practice of medicine without a license, by a fine not
exceeding ten thousand dollars ($10,000), by imprisonment in
the state prison, by imprisonment in a county jail not
exceeding one year, or by both the fine and either
imprisonment.
EXISTING LAW
1)Prohibits corporations and other artificial legal entities
which are not owned by physicians from having any professional
rights, privileges, or powers (known as the prohibition
against CPM), and further provides that the Division of
Licensing of the MBC may, pursuant to regulations it has
adopted, grant approval for the employment of physicians on a
salaried basis by a licensed charitable institution,
foundation, or clinic if no charge for professional services
rendered to patients is made by that institution, foundation,
or clinic.
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2)Exempts medical or podiatry professional corporations
organized and practicing pursuant to the Moscone-Knox
Professional Corporations Act from the CPM prohibition,
providing that a majority of the owners or shareholders of the
corporation are licensed physicians or podiatrists,
respectively.
3)Exempts the following clinics from the prohibition
against CPM:
a) Clinics operated primarily for the purpose of
medical education by a public or private nonprofit
university medical school to charge for professional
services rendered to teaching patients by licensed
physicians and surgeons who hold academic appointments
on the faculty of the university if the charges are
approved by the physician and surgeon in whose name
the charges are made;
b) Certain nonprofit clinics organized and operated
exclusively for scientific and charitable purposes,
that have been conducting research since before 1982,
and that meet other specified requirements to employ
physicians and surgeons and charge for professional
services. These clinics must not interfere with,
control, or otherwise direct a physician and surgeon's
professional judgment in a manner prohibited by the
CPM prohibition or any other provision of law; and,
c) A narcotic treatment program regulated by the
Department of Alcohol and Drug Programs to employ
physicians and surgeons and charge for professional
services rendered by those physicians and surgeons.
These clinics must not interfere with, control, or
otherwise direct a physician and surgeon's
professional judgment in a manner prohibited by the
CPM prohibition or any other provision of law.
4)Defines a MUA as an area as defined in federal
regulations or an area of the state where unmet priority
needs for physicians exist as determined by the
California Healthcare Workforce Policy Commission, as
specified. Defines a MUP as the Medi-Cal, Healthy
Families and uninsured population.
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5)Establishes, under federal regulations, criteria for the
designation of MUAs and MUPs. MUAs and MUPs identify
areas or populations with a shortage of health care
services. Documentation of medically underserved is
based on four factors: health care provider to
population ratio; infant mortality rate; percentage of
population below 100% of the federal poverty rate; and,
percentage of population aged 65 or over.
6)Permits the establishment of local HCDs to provide health care
services and authorizes HCDs to establish, maintain, and
operate, or provide assistance in the operation of, one or
more health facilities or health services, including, but not
limited to, outpatient programs, services, and facilities;
retirement programs, services, and facilities; chemical
dependency programs, services, and facilities; or other health
care programs, services, facilities and activities at any
location within or without the HCD for the benefit of the HCD
and the people served by the HCD.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "The
communities served by California Health Care Districts, public
hospitals, and nonprofit hospitals and clinics have suffered
from a chronic shortage of physicians for decades. This
shortage is most acute in California's rural and underserved
urban communities where Medi-Cal and Medicare are the primary
"payers" for health care services. In rural communities,
doctors cannot support themselves financially in independent
practice. In urban areas, physicians are increasingly declining
to accept Medi-Cal and Medicare patients.
"This makes it extremely difficult for Districts to attract and
keep the physicians they need to serve in these communities.
Many physicians now working in these communities are planning to
retire within the next two to three years."
Background . The 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
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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. They 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.
SB 326 (Chesbro) Chapter 411, Statutes of 2003, established a
pilot project permitting HCD hospitals meeting specific
requirements to hire and employ up to two physicians each, for a
total of 20 physicians statewide, if the HCD hospital met the
following conditions:
" operated in a county with a population of 750,000 or
less;
" reported net operating losses in fiscal year 2000-01;
and,
" had 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."
While several bills during the past two years attempted to
extend or expand the pilot project, none were successful and the
pilot expired at the beginning of this year.
Support .
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The sponsors, American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO, state, "Due to the large number of
uninsured and underinsured Californians, a number of California
communities are experiencing difficulty recruiting and retaining
physicians and surgeons. In particular, the rural and
underserved urban communities served by California's Health Care
Districts suffer from a long-standing shortage of doctors?. In
order to recruit professionals to provide medically necessary
services in these communities, many district hospitals must
directly employ them in order to provide adequate economic
security?.
"All Californians should have the right to accessible medical
facilities and qualified medical professionals in the areas in
which they live. Assembly Bill 1360 will better enable district
hospitals across the state to guarantee this right, while
assuring patients that the professional judgment of their
physicians and surgeons will not be influenced by the district
hospital."
Opposition .
The California Society of Anesthesiologists (CSA) writes, "(AB
1360) would undermine existing legal protections of physician
independence from corporate and hospital CEO influences. The
physician-patient relationship already comes under pressure from
managed care plans and health insurers with respect to decisions
of medical necessity and quality care. While existing law also
bans the denial or conditioning of hospital medical staff
membership on whether a physician will participate in managed
care/insurer plans, the subtle coercive contracting that
presently exists would be increased by weakening the corporate
bar."
The California Medical Association states, "This bill may
actually result in reduced access and increased costs. Hospital
employment of physicians eliminates competition for outpatient
services and instead forces all care to be delivered through the
hospital. As hospitals gain market share in small communities,
physicians not employed will likely be forced out of business.
This results in increased costs as the hospital is able to
negotiate higher rates from third party payers for both
physician and hospital services."
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Double-referred . This bill is double-referred to the Assembly
Health Committee.
Related legislation .
AB 824 (Chesbro) of 2011, establishes, until January 1, 2022, a
pilot project authorizing specified rural hospitals to employ up
to 10 physicians and surgeons at one time. This bill is set for
hearing in the Assembly Health Committee on April 26.
AB 926 (Hayashi) of 2011, establishes, until January 1, 2022, a
pilot project to provide for the direct employment of a total of
50 physicians and surgeons by qualified district hospitals in
rural and other MUAs. This bill is pending in Assembly Business
and Professions Committee.
Previous legislation .
AB 646 (Swanson) of 2009, permits HCDs and certain public
hospitals, independent community nonprofit hospitals, and
clinics, as specified, to directly employ physicians and
surgeons, as specified. This bill was held in Senate Business,
Professions and Economic Development Committee.
SB 726 (Ashburn) of 2009, revises the pilot project allowing
qualified HCDs 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. This
bill was held in Senate Business, Professions and Economic
Development Committee.
AB 648 (Chesbro) of 2009, establishes a pilot project to permit
certain rural hospitals to directly employ physicians and
surgeons. This bill was held in Senate Business, Professions,
and Economic Development Committee.
AB 1944 (Swanson) of 2008, allows HCDs to employ a physician and
surgeon. This bill was held in Senate Health Committee.
SB 1294 (Ducheny) of 2008, expands the pilot project enabling
HCDs to directly employ physicians. This bill was held in
Assembly Appropriations Committee.
SB 1640 (Ashburn) of 2008, expands the pilot project enabling
HCDs to directly employ physicians. This bill was held in
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Senate Business, Professions, and Economic Development
Committee.
SB 326 (Chesbro) Chapter 411, Statutes of 2003, establishes a
pilot project permitting HCD hospitals meeting specific
requirements to hire and employ up to two physicians each, for a
total of 20 physicians statewide, if the HCD hospital meets
specified conditions.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO (sponsor)
Association of California Healthcare Districts
Health Access California
Opposition
California Medical Association (CMA)
California Society of Anesthesiologists (CSA)
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301