California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Hospital Groups Set Up Foundations To Employ Doctors, Pool Resources

After months of deliberation, the Hospital Association of Southern California and the Hospital Council of Northern and Central California have established two private, not-for-profit foundations to help small and independent hospitals contract with physicians, the Los Angeles Daily Journal reports.

Daniel Settelmayer -- a partner at the firm Latham & Watkins -- said the two California foundations will be established in Northern California and in Southern California. He has not said how many hospitals have agreed to participate in the foundations.

The not-for-profit foundation model is viewed as a way to share resources and control health care costs to align with the goals of the federal health reform law. The reform law encourages health care providers to form accountable care organizations, which seek to bring together hospital systems and physicians to provide coordinated care.

Unique to California

California law bans most hospitals from employing physicians directly, requiring them instead to create affiliated arrangements with physician groups who contract with doctors.

In most circumstances, the federal government grants foundation status to academic facilities or hospitals that have community clinics.

Advocates say that establishing "master" medical foundations would help a larger number of facilities streamline care and improve efficiency.


Many physician groups oppose the creation of not-for-profit medical foundations. Members of the California Medical Association have said the medical foundation model could provide hospitals with greater control over health care decisions

In addition, City of Hope Medical Group -- which represents many physicians at City of Hope National Medical Center in Duarte -- has filed a lawsuit over the hospital's plans to establish a medical foundation.

Robert Berenson, a fellow at the Urban Institute, has said that medical foundations could help smaller facilities gain more leverage in the market to increase premium costs (Gallegos, Los Angeles Daily Journal, 11/2).

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