CALIFORNIA: WILSON SIGNS FOR-PROFIT OVERSIGHT BILL

      Gov. Pete Wilson (R) signed a bill last week that gives the
 state attorney general power to closely examine and "even reject"
 business deals involving the transfer of tax-exempt health care
 assets to for-profit companies.  The law takes effect January 1,
 and will cover joint ventures and for-profit conversions of
 nonprofit hospitals and deals under which for-profit companies
 lease or buy nonprofit hospitals (Shinkman, MODERN HEALTHCARE,
 10/7 issue).  The bill passed the California Legislature
 unanimously last month (see AHL 8/27).  Under the law's "review
 process" the attorney general must consider the following: 
 whether the purchase price reflects a "fair market value" and is
 fair to the nonprofit entity; the effects on health care
 "resources and services in the community" served by the hospital;
 "whether the future use of charitable assets will be consistent
 with their original purpose;" and whether the deal is in the
 public interest.  Before making a decision, the attorney general
 must hold "at least one" public hearing in the county where the
 hospital is located.
      WHAT THEY'RE SAYING:  MODERN HEALTHCARE reports that "while
 some health care business experts" said the new law would have no
 effect on the "fast pace of dealmaking among California's 600 or
 so hospitals," others disagreed.  "It gives one man the
 replacement power of a nonprofit's board of directors.  It could
 have a chilling effect," said Wanda Jones, president of the San
 Francisco-based consulting firm New Century Healthcare Institute. 
 Andy Demetriou, an attorney with the Los Angeles firm of Jones,
 Day, Reavis & Pogue, said, "I don't know whether a 'chilling
 effect' is the word, but it will raise the bar in terms of the
 things that are going to be necessary to do these types of
 conversions."  Referring to state Attorney General Dan Lungren's
 (R) recent history of closely watching such deals, Demetriou
 continued, "This is more of a codification of an ongoing process
 than a new thing for sellers to face" (10/7 issue).