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Post-Mortem on Physician Hiring Bills

A pilot program that has allowed some direct hiring of physicians in rural areas of California apparently generated a lot of interest in Sacramento. Three different bills were introduced to expand the scope of that pilot program, and all three of those bills failed.

In California, hospitals are not allowed to employ physicians directly, in order to maintain a kind of firewall between hospital administrators and the health care providers who make medical decisions.

But there is also a shortage of primary care physicians in rural areas of the state, so some medical centers were granted an exception to the no-direct-hiring rule, so that they could hire on their own doctor for their own facility. Many hospital administrators felt that suspension of the rule gave them a competitive hiring advantage.

Two of the three bills introduced this year died in committee, while one of them, SB 726 by Roy Ashburn, R-Bakersfield, passed both the Senate and Assembly. The version that passed the Assembly was so different from the original, though, that it did not make it back to the Senate for a concurrence vote. Instead it was referred to the Senate Business and Professions Committee where it was defeated.

“We supported the pilot program, and the bill that created it,” California Medical Association spokesman Andrew LaMar said. “Our problem was with way folks were trying to do things in the new bill.”

SB 726 extended the definition for hospitals eligible for the exemption, and that included urban hospitals.

“There are other issues in urban areas,” LaMar said, “but there’s not generally a physician shortage.” The idea of including urban areas, proponents have said, is to help medical centers in underserved areas hire and retain good primary care physicians.

But SB 726 left out an important requirement, LaMar said.

“The whole issue is having physicians where there are none, so the underserved can get care. But there was a provision that required 50% of patients to be underserved, and they took that provision out of the bill. It was something we didn’t agree with,” LaMar said.

As California gets closer to some of the major reform changes due to start in 2014, the demand for primary care physicians will rise — particularly in rural areas.

“Everyone recognizes the physician shortage, and the need to do something about it,” LaMar said. “So this issue is not going away, I’m sure we’ll hear this again.”

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