Local health care districts: operation of facility by another entity.

Existing law, the Local Health Care District Law, provides for the formation of local health care districts and, until January 1, 2011, authorizes each local district to transfer, at fair market value, any part of its assets to one or more corporations to operate and maintain the assets. Commencing January 1, 2011, existing law, instead, restricts these transfers only to nonprofit corporations. This bill would, notwithstanding any provision of law, require, with certain exceptions, when a district is under contract with a public or private entity to operate a district facility, the district and the public or private entity that operates the district facility to (1) require that assets of any facility within the geographic boundaries of the district and owned by the district be used exclusively for the benefit of a facility owned by the district, except as specified, (2) require the hospital and the operating entity to annually undergo an independent financial audit and that the resulting report be made public, and (3) preclude, in the case of a subsequent sale of the facility or any assets of the district to the operating entity, any losses incurred by the entity in the operation of the facility from being used as a credit against the purchase price of the facility or other district assets. Existing law permits a health care district board of directors to provide for the operation and maintenance through tenants of the whole or any part of a hospital acquired or constructed by it, and for that purpose may enter into a lease agreement that it believes will best serve the interest of the district. This bill would, instead, permit those lease agreements only to the extent that the agreement does not provide benefits to the tenants beyond those reasonably necessary to ensure the operation of the hospital for the benefit of the district and allow the tenant to recoup its capital investments made during the lease agreement. By requiring that districts comply with these requirements, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. This bill would incorporate additional changes in Section 32126 of the Health and Safety Code, proposed by S.B. 894, to be operative only if S.B. 894 and this bill are both chaptered and become effective on or before January 1, 2011, and this bill is chaptered last.