AB 76, a Trailer Bill that Makes a Difference

AB 76 is a 120 page trailer bill that made it through the legislature to the Governor's desk without a public hearing. Trailer bills are expected to be limited to technical changes and are not expected to contain substantive language that should be presented in public hearings.

AB 76 was introduced on January 10, 2013 by the Committee on Budget.  It was amended in the State Senate on June 12, 2013.  In between these dates there were no public hearings.

On page 61 there is mention of "a return-to-work program administered by the director, funded by one hundred twenty million dollars ($120,000,000) ... for the purpose of making supplemental payments  to workers whose permanent disability benefits are disproportionately low in comparison to their earnings loss. Moneys shall remain available for use by the return-to-work program without respect to the fiscal year."

The bill then says "eligibility for payments and the amount of payments shall be determined by regulations adopted by the director  ... subject to review at the trial level of the appeals board  upon the same grounds as prescribed for petitions of reconsideration ... on or after July 1, 2013, all civil penalties collected pursuant to this chapter shall be deposited in the Labor Enforcement and Compliance Fund."

AB 76 deprives  injured workers of benefits if they were injured prior to 2013. The bill states re eligibility that "this section shall apply only to injuries sustained on or after January 1, 2013." 

We are at a loss to explain why language of this importance wasn't deemed worthy of a public hearing. We notice that all of the Democrats voted for the bill while all of the Republicans voted against it.  So the bill passed on partisan or strict party lines -- nothing astonishing about that, is there? What's quizzical in this instance is that organizations representing injured workers did not testify at public committee hearings since there weren't any.  All of the Democrats voted for the bill, all of the Republicans voted against, a traditional and routine party-line vote.   Pundits who find that the language on page 61 is harmful to injured workers should seek comment from organizations that represent injured workers such as the California Labor Federation.  

In the meantime, it can be stated with reasonable political probability that page 61 and the interests of injured workers weren't of top concern  in the consideration of this bill.  Injured workers took back seat to everything else in the other 119 pages.

"Equal Work with Unequal Pay" Revisited

In a recent communique sent privately, I was asked about the meaning of  "equal work with unequal pay" from an earlier blog about pending legislation in California re SB 491, 492, and 493 where nurse practitioners, optometrists, and pharmacists would be equated with physicians. The writer asks "in what sense is the work of a nurse practitioner ever quite the same as the work of a board-certified neurologist?" The writer said "I personally would not be willing to pay a nurse practitioner as much as I would cheerfully pay my neurologist. How about you?"

I agree with the challenger that nurse practitioner education and training is not comparable to the training of a physician, much less  to a physician who  has also done additional specialty training. I agree with the writer.  I would not expect to pay the same for the lesser trained practitioner.

But since that wasn't the point of my editorial I'll take another whack at it. My point is that if SB 491 et al pass in California, the decision as to who gets paid and at what rate will pass into new and untested hands. Unless the nurses' union is asleep at the switch, once SB 491 passes, it can be expected that the nurses' union will lobby to make sure that the newly minted nurse-physicians get paid the same as graduate physicians. The argument will be a legal one, namely, that the legislature, having designated nurses as equivlalent to physicians, is now obligated to see that they get equivalent pay.

In this case I asked my challenger to explain why a certain physicians and surgeons organization wasn't lobbying against SB 491. I was told that the group was "focused on other things." My response is that if the Hernandez series,  SB 491, 492, and 493 get signed into law it won't be long before there are no "other things" on which to focus.

Physicians' groups should oppose SB 491 et al in the interest of making sure that optimal medical care remains the goal, not watered down versions thereof.  So far we know that the California Medical Association, the Union of American Physicians and Dentists, and the California Neurology Society have taken up the campaign and so have many individual physicians.

Why Is Private Practice On the Road to Obsolesence?

Physicians have always wielded a certain amount of power in hospitals by being able to control admissions of patients to hospitals on which they participate as medical staff members.  

Hospitals compete to have as many physicians on staff who will admit as many patients as possible to highly competitive hospitals. Physicians pay medical staff dues on an annual basis  for admitting privileges (that's the privilege to admit one's patients to a specific hospital) and become medical staff members as independent contractors. They are not employees or salaried.  Generally, physicians seek admitting privileges  to more than one hospital and decide to which hospital to admit patients. The choice is presumably based on which hospital the physician feels will best serve the needs of his patients. But that's not the only criterion.

Because of a corporate practice prohibition in California, hospitals, with some exceptions, for instance state hospitals,  may not employ physicians. The reason is potential conflict of interest, e.g., the worry that some physicians might succumb to pressure from hospitals for rapid patient turn around or to unnecessary admissions to enhance corporate profit for the hospital. The corporate practice prohibition is supposed to make sure that physicians remain responsible to the patient, not to the corporate entity.

That is why corporate entities want to reduce the power of individual physicians to influence the hospital's corporate bottom line and to find an alternative way to admit patients. That problem  has been solved: one way to get around the corporate practice act is to hire a physician to develop a department and to have that physician choose the physicians who'll work at the hospital. In this scenario a chief physician hires other physicians. This scenario doesn't violate the corporate practice prohibition.

Patients can buy insurance policies that tie them to large corporate entities such as foundations,  exchanges, or Accountable Care Organizations (ACOs).  These business entities  may then hire physicians and assign them to groups of patients at designated locations such as clinics or hospitals and get around the corporate practice prohibition. It also takes away the authority of physicians to select their own patients and to admit them to a wide choice of hospitals. This method gives increased power and ultimately increased financial remuneration to the foundations, exchanges, and Accountable Care Organizations (ACOs) and to a lesser extent to each individual hospital since the hospitals will be obliged to affiliate with increasingly larger corporate entities which will compete with each other.

The physician is now an expense to the foundation,  exchange, or ACO. It makes corporate sense for the foundation,  exchange, or ACO  to negotiate the lowest possible remuneration for  physicians who are salaried workers and who will be as obliged as any other worker to negotiate for higher pay, health care insurance, vacation pay, and retirement benefits. Physicians are subject to "economic credentialing," i.e., a corporate record that compares how much each physician spends on diagnostic tests and treatment for each patient. At the end of the year, if Physician A has ordered diagnostic testing and treatment averaging $25,000 per patient  while Physician B has made the hospital or foundation pay $50,000 per patient, the physician who made his plan pay twice as much for patient care is less likely to be offered a renewal contract.

As the provision of healthcare becomes an expense to the business plan, it also becomes an impediment to corporate profit. Physicians, in this scenario, are the gatekeepers to their employers' banks. That is why physicians are quitting private practice -- they can't keep up with advances in healthcare at the same time as they need to compete economically with each other and also with increasingly better oiled business organization.

Health Care Corporation of America is HCA on the New York Stock Exchange (NYSE).  In Northern California, in Santa Clara County, HCA owns Good Samaritan Hospital and Regional Medical Center. UnitedHealth Group is UNH on the NYSE and purchased Monarch Health Group in Southern California while its Optimum business group bought ApplcCare Medical Group and Memorial HealthCare.  Meanwhile, Humana, listed on the NYSE as HUM, took over Metropolitan Health with its network of physicians who render care to Medicare patients and Concentra with 300 clinics in 40 states. Health  Management Associates, listed as HMA on the NYSE, recently featured on CBS' 60 Minutes, is under investigation. In this environment, individual physicians whose primary attention is to comparatively small groups of patients may be sliding into obsolescence.