June 30, 2010

A controversial bill to allow hospitals in underserved areas of the state to hire physicians has passed the Assembly.

SB 726 by Senator Roy Ashburn (R-Bakersfield) passed 43 to 24 in the Assembly but will have a difficult reception in the Senate, especially given opposition by the California Medical Association.

“We will have a fight in the senate,” said Tom Petersen, director of government relations for the Association of California Healthcare Districts. “The CMA is very powerful and we were quite surprised they spent as much as they did on outside consultants. We can only assume they’ll move their army of opposition to the Senate,” he said.

The bill seeks to expand a pilot project which currently allows qualified district hospitals to employ up to two physicians and surgeons with contracts limited to four years. And the number of   total physicians and surgeons that can be hired is capped at 20.

The proposed expansion of that pilot under SB 726 would allow qualified hospitals to hire up to two physicians and surgeons and three additional ones if the district can demonstrate clear need following a public hearing. That pilot would expire on Jan. 1, 2018.

California is one of only about five states that prohibit corporations or other legal entities from employing doctors and surgeons.

The CMA supports the original concept of the bill and the continuation of the pilot project, said Andrew LaMar, a CMA spokesman.

“But they’ve taken the scope off the original focus, now it could apply to urban hospitals,” LaMar said.

CMA supported a version of SB 726 last year that allowed fewer physicians to be hired and provided more monitoring. But that got amended in the Assembly and CMA withdrew its support.

Because the bill is now substantially different than when it left the Senate originally, there may not be as much support for the bill in the Senate, acknowledged Andrew LaFlamme, Capital Director for Senator Ashburn. The Assembly Health Committee amended the bill to remove many of the changes that the CMA had managed to make to the bill, which narrowed its scope, LaFlamme said. He does not anticipate any activity with SB 726 in the next two weeks.

“We’re just trying to get doctors into rural and underserved areas of the state,” LaFlamme said. He said proponents of the bill have requested that the opposition produce evidence from the 48 other states allowing hospitals to hire doctors showing that there is a higher incidence of malpractice or declining quality of patient care. “We’ve asked for two years now and we’ve received nothing,” he said.

CMA maintains there is a basic conflict of interest when hospitals with financial bottom lines and beds to fill become the employers of physicians.

But with 6.5 million people on Medi-Cal today, at a time when only 30 percent of physicians will treat Medi-Cal patients, the problem of underserved patients in California will worsen very quickly,” Petersen said. And healthcare reform will add an estimated 2.5 million patients to Medi-Cal, he added.

Two other bills that would allow hospitals to hire doctors in medically underserved areas have been introduced. One of those, AB 646 by Assembly member Sandre Swanson (D-Alameda) failed in the Senate Business and Professions Committee on Monday. That bill is now dead, Petersen said.

The other bill, AB 648 by Assembly member Wesley Chesbro (D-North Coast) and supported by the California Hospital Association, is currently in the Senate Business and Professions Committee.