CALIFORNIA: WILSON VETOES HOSPITAL TAKEOVER BILL
Gov. Pete Wilson (R) has vetoed a bill that would have madeThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
it harder for large, for-profit health care systems to buy
"public district hospitals" in California, San Diego Union
Tribune reports. The bill "would have required voter approval
before any transfer or lease of 35% or more of a hospital
district's health-care assets to a for-profit corporation."
Advocates had "hoped [it] would slow down efforts by for-profit
health-care companies to gobble up" such public facilities.
"Communities should have a right to say if their hospitals are
going to be taken over by a huge corporation," said Assemblywoman
Liz Figueroa (D), sponsor of the vetoed bill.
Wilson and the Association of California Hospitals opposed
the measure, arguing that it "would make state law inconsistent."
Current law requires voter approval only when nonprofit systems
acquire 50% or more of a public hospital district's assets; no
public approval is required for for-profit acquisitions.
Defending his veto, Wilson said, "The same standards and criteria
that apply to a transaction involving a nonprofit corporation
should also apply to a for-profit corporation."
BULLY OR BUDDY?
Advocating Figueroa's bill, Consumers Union staff attorney
Julio Mateo Jr. explained, "A for-profit will sometimes acquire a
hospital only to obtain market share and then close the
institution. Without public scrutiny, these deals can limit
availability of health care for Californians, especially those
who live in rural areas." Wilson, however, has signed a separate
bill designed to ensure that for-profits "don't gain an unfair
advantage." The bill, introduced by state Sen. Steve Peace (D),
prohibits "any board member of a nonprofit facility who
negotiates a sale with a commercial hospital company" from
receiving "compensation from the for-profit hospital."
A LOCAL ISSUE
Union-Tribune notes that Tri-City Medical Center in
Oceanside, CA, "has entertained lease proposals from two for-
profit groups, Tenet HealthSystem and Columbia." In addition, La
Mesa-based Grossmont Hospital "is suing to leave the nonprofit
Sharp HealthCare system, with some Grossmont officials having
said in the past the facility was considering joining a for-
profit firm" (Ainsworth, 10/15).