Public Health Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-351

Title:

AN ACT CONCERNING MATTERS AFFECTING PHYSICIANS AND HOSPITALS.

Vote Date:

3/21/2016

Vote Action:

Joint Favorable Substitute

PH Date:

3/7/2016

File No.:

SPONSORS OF BILL:

Public Health Committee

REASONS FOR BILL: This bill sets limits on physician non-compete agreements. The bill requires the DPH commissioner to study and report on the possible licensure of limited service health clinics. Lastly several changes are made concerning medical foundations.

RESPONSE FROM ADMINISTRATION/AGENCY:

Commissioner of The Department of Public Health, Raul Pino, M.D., M.P.H.: The Department is concerned with sections 2 and 3 of the bill that impose a certificate of need requirement on any entity that seeks to acquire a large group practice. This would result in an increase of applications filed with the Department's Office of Health Care Access (OHCA) that cannot be accomplished within existing resources. Sec 7 mandates the Commissioner of Public Health to study the licensure of limited service health clinics and report to the Public Health Committee by December 1, 2016. This section is duplicative of the work currently being done at DPH.

Sen. Len Fasano: Section 1: limits the use of non-compete agreements in the physician practice. The use of non-competes in the health care setting often raises serious public policy concerns as they restrict competition, disrupt continuity of care and deprive the public of access to care. Section 2: of the bill establishes guidelines for the employment of physicians by business entities and help to improve transparency regarding these entities. The bill will require businesses that hire physicians to disclose various types of information, to ensure there is no interference in their employed physician's practice of medicine. This allows the state and public sectors to monitor this portion of the healthcare market.

Sen. Martin Looney: This bill as it will prohibit restrictive covenants between hospitals and physicians with the only exception being if the physician's new employer is another hospital. This will improve continuity of patient care and increase access to high quality care. Also the bill will regulate non-hospital corporations that wish to employ physicians. CT's current regulatory framework does not sufficiently address this current business model. Regulation would require a certificate of need and reporting that is required when hospitals purchase group practices. This bill will also require the Commissioner of the DPH to study licensure of retail clinics and submit suggestions to the General Assembly. This study is important as many of these clinics currently operate in the CT with little oversight. Lastly this bill will increase transparency regarding costs to charge ratios on any bill sent to patients.

NATURE AND SOURCES OF SUPPORT:

Connecticut Orthopaedic Society: Is in support specifically of section 6 that deletes the requirement for referring physicians to provide the patient with the Internet Web Site and toll free number of the health carrier. Deletion of this burdensome requirement will alleviate administrative hassle in the physicians' office. In reality it should be the responsibility of the

health insurance carrier and the patient.

Medical Specialties of Ophthalmology, Otolaryngology, Dermatology and Urology: Supports the bill with certain changes. The Society is concerned that the proposed ceilings in regards to restrictive covenants may function as targets instead. The Society proposes that the bill relies on guidelines and impartial arbitration as these methods would allow for greater flexibility, minus the cost associated with legal battles. The Society also has concerns regarding Certificate of Need. The bill as it would prevent a solo physician from controlling or purchasing a large group. The Society continues to support solo physician's rights to acquire and purchase groups. Lastly the Society reiterates its strong support for a prohibition on the corporate practice of medicine. Current language in the bill is too broadly worded and would allow the corporate practice of medicine to exist.

Dr. Cynthia Heller, VP of Primary Care Hartford Healthcare Medical Group:

Supports the bill but is strongly opposed Sec. 1 of the bill dealing with physicians non-compete agreements. Language limiting the number of miles for a non-compete to not more than 15 miles is unrealistic give our states small size. Further making non-competes a public policy matter ignores the business realities of recruiting doctors to CT.

Robert E. Patricelli, CEO Of Women's Health USA: Supports the bill but has concerns with several parts of the bill. Repealing the corporate practice of medicine would go a long way toward giving CT a competitive edge against other states, by making our state a hub of healthcare innovation. Does not see the need for the committee to single out physician non-competes for special treatment. Therefore the committee should let the marketplace and current laws determine what is permissible in non-competes. Lastly he opposes the provisions in the bill that will expand CON authority in reference to the regulation of transfers of ownership of group practices. Expansion of CON authority smacks of anti-competitive behavior and makes it together to conduct business in the state.

NATURE AND SOURCES OF OPPOSITION:

Connecticut Hospital Association: Takes issue with Sections 1, 2, 3, 4, and 8 of the bill. Section 1: treats physician contracts with hospitals, health systems, medical schools, and medical foundations differently than physician contracts with other entities and groups that contract for a physician's identical services. Sections 2 and 3 only partly close the loophole that allows an entity that does not have a healthcare license or act through licensed providers, including an insurer, to purchase or assume business control of a physician practice and not be subject to the Certificate of Need laws or the reporting requirement to the Attorney General. Section 4: permits any business to practice medicine legally, as long as does so through hired physicians. This is contrary to long-established rules that permit only corporate entities that are licensed or affiliated with a licensed entity or provider, to practice medicine and employ physicians. The Association is unsure of the need for section 8, as there is not a cost to charge ratio for every item billed.

Connecticut State Medical Society (CSMS): Concerned that the non-compete clause of the bill as it will establish fixed standards for the non-compete clause that will not be applicable to numerous physicians and their employment situations. CSMS over the past 10 years has strongly opposed the corporate practice of medicine and continues to do so today. CSMS stance is that “the board room does not belong in the examining room where the bond of trust between a patient and his or her physician is paramount”.

Yale New Haven Health System (YNHHS): The bill makes various changes and additions to public health statutes that are arbitrary and do not promote a level playing field for all. The scope of permissible non-compete covenants should be the same regardless of who the physicians employer is. Sec. 4: of the bill that seeks to prohibit the corporate practice of medicine will make it difficult for medical foundations and hospitals to require their physicians to follow particular protocols that are in the interest of the patients. Sec. 5: language attempts to regulate captive professional entities by requiring annual reports. The language here is broad and in many instances requires duplicate reporting. Additionally the language will also be misinterpreted as “authorizing captive professional entities to practice medicine.” The YNHHS ask that the Committee works with the CT Hospital Assoc. to ameliorate these problems.

Reported by: Walter L. Morton IV

Date: 03/29/2016