Bill Aims To Cut Back on Transfer of Funds out of Health Care Districts

The Assembly Appropriations Committee is slated to vote on legislation (SB 1240) that would forbid private entities from transferring funds or assets out of hospital districts, Payers & Providers reports.

The bill -- authored by Sen. Ellen Corbett (D-San Leandro) and sponsored by the California Nurses Association -- also would require hospital operators and their districts to publicize annual audits.

In addition, the legislation would bar a private operator of a district hospital from using its losses as credits in purchasing a district hospital or any of its assets.

Impetus for Legislation

SB 1240 stemmed from complaints about the way the not-for-profit organization Sutter Health managed hospitals in Greenbrae's Marin Healthcare District and Castro Valley's Eden Township Healthcare District.

Marin and CNA officials allege that Sutter transferred as much as $200 million in assets out of Marin Healthcare District.

However, Sutter officials said the organization is entitled to recoup the roughly $235 million it invested in Marin General Hospital during the 14 years that it managed the facility.

Marin Healthcare District regained control of Marin General Hospital from Sutter Health in June.

Opposition From CHA

The California Hospital Association opposes SB 1240, arguing that existing law adequately regulates the management of health care districts (Payers & Providers, 8/12).