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CA Hospitals Fight for Right to Hire Docs on Constitutional Grounds

Cheryl Clark, for HealthLeaders Media, September 2, 2009

The CMA's chief objection is its fear that hospitals acting as employers would tell doctors what kinds of care their patients should get. They suggest that such direction might depend more on the allowances in the patients' insurance policies, even though specific language in the bills would prohibit that.

Another CMA argument is a fiscal one. In a letter Aug. 21 to the Assembly Appropriations Committee, CMA lobbyist Brett Michelin says such a bill would increase costs to the state with higher charges for Medi-Cal (Medicaid) patients.

"If SB 726 is allowed to become law and physician services are delivered in the hospital or hospital owned clinic, the hospital or district may become eligible for reimbursement for services provided by the facility," Michelin wrote. "This would increase costs to the Medi-Cal system for every enrolled patient that receives services at a hospital or district owned facility instead of at a physician office."

Michelin added that the ban on hospitals hiring doctors "has been preserved by the Legislature and the courts since the 1930s."

Currently, only teaching hospitals, prisons, and county hospitals are exempt from the state law. California is only one of a handful of states that has such a rule. And prohibitions in other states are rarely enforced.

Hospitals are allowed to offer physicians a minimum income guarantee for the first two years they come to certain underserved communities to start a practice.

But, Ott says the questions out of these doctors' mouths are: "That's great for two years. But what do I do after that if I can't get the volume to be self-sustaining? Why would I stay here if I can go to another state and know I could be gainfully employed, regardless of the patient care volumes I have in the future?"

Several hospital officials who have lobbied for bills similar to this one in Sacramento say every time legislation gets to the floor for a vote, a few days before, every legislator got a call from his or her personal physician.

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