Text of Senate Bill No. 697
Chapter 812

•  An act to add Part 1.98 (commencing with Section 449.10) to Division 1 of the Health and Safety Code, relating to health facilities.

[Approved by Governor September 25, 1994 . Filed with
Secretary of State September 27, 1994 .]

LEGISLATIVE COUNSEL'S DIGEST

SB697, Torres. Health facilities.

Existing law establishes the California Health Policy and Data Advisory Commission to, in part, advise the Office of Statewide Health Planning and Development and the Health and Welfare Agency relating to health policy and the collection of health data. Existing law, the Voluntary Health Facility and Clinic Philanthropic Support Act, declares that under any reform measure for certain reasons, including, but not limited to, that philanthropy allows voluntary nonprofit institutions to conduct research and to engage in other innovative efforts to improve healthcare, and that philanthropy pays for necessary expenditures that otherwise would have to be paid by patients or by government. The act declares the intent of the Legislature to create an environment in which philanthropy and voluntarism in the healthcare field is encouraged, and exclude certain items constituting gifts or grants from treatment as revenue to health facilities or clinics for the purposes of certain reporting requirements.

This bill would require each hospital, as defined, to reaffirm its mission statement, as defined, that requires its policies to integrate and reflect the public interest by July 1, 1995.

This bill would require each hospital, by January 1, 1996 , to complete a community needs assessment, as defined, and by April 1, 1996 adopt a community benefits plan, and to thereafter annually update the community benefits plan.

The bill would require each hospital to file a report on its community benefits plan and the activities undertaken to address community needs with the Statewide Office of Health Planning and Development. The bill would require the statewide office to make the plans available to the public and file a report with the Legislature by October 1, 1997 .  

The people of the State of California do enact as follows:

SECTION 1. Part 1.98 (commencing with Section 449.10) is added to Division 1 of the Health and Safety Code, to read:

PART 1.98 HOSPITALS: COMMUNITY BENEFITS

498.10 The Legislature finds and declares all of the following:

1. Private not-for-profit hospitals meet certain needs of their communities through the provision of essential healthcare and other services. Public recognition of their unique status has led to favorable tax treatment by the government. In exchange, nonprofit hospitals assume a social obligation to provide community benefits in the public interest.
2. Hospitals and the environment in which they operate have undergone dramatic changes. The pace of change will accelerate in response to the healthcare reform. In light of this, significant public benefit would be derived if private not-for-profit hospitals reviewed and reaffirmed periodically their commitment to assist in meeting their communities' health needs by identifying and documenting benefits provided to the communities which they serve.
3. California 's private not-for-profit hospitals provide a wide range of benefits to their communities in addition to those reflected in the financial data reported to the state.
4. Unreported community benefits that are often provided but not otherwise reported include, but are not limited to, all of the following:
   1. Community-oriented wellness and health promotion.
   2. Prevention services, including, but not limited to, health screening, immunizations, school exams, and disease counseling education.
   3. Adult day care.
   4. Child care.
   5. Medical research.
   6. Medical education.
   7. Nursing and other professional training.
   8. Home delivered meals to the homebound.
   9. Sponsorship of free food, shelter, and clothing to the homeless.
   10. Outreach clinics in socioeconomically depressed areas.
5. Direct provision of goods and services, as well as preventive programs, should be emphasized by hospitals in the development of community benefit plans.

449.15 . As used in this part, the following terms have the following meanings:

1. "Community benefits plan" means the written document prepared for annual submission to the Office of Statewide Health Planning and Development that shall include, but shall not be limited to, a description of the activities that the hospital has undertaken in order to address identified community needs within its mission and financial capacity, and the process by which the hospital developed the plan in consultation with the community.
2. "Community" means the service areas or patient populations for which the hospital provides health care services.
3. Solely for the planning and reporting purposes of this part, "community benefit" means a hospital's activities that are intended to address community needs and priorities primarily through disease prevention and improvement of health status, including but not limited to, any of the following:
   1. Health care services, rendered to vulnerable populations, including, but not limited to, charity care and the unreimbursed cost of providing services to the uninsured, underinsured, and those eligible for Medi-Cal, Medicare, California Childrens Services Program, or county indigent programs.
   2. The unreimbursed cost of services included in subdivision (d) of Section 449.10.
   3. Financial or in-kind support of public health programs.
   4. Donation of funds, property, or other resources that contribute to a community priority.
   5. Health care cost containment.
   6. Enhancement of access to health care or related services that contribute to a healthier community.
   7. Services offered without regard to financial return because they meet a community need in the service area of the hospital, and other services including health promotion, health education, prevention, and social services.
   8. Food, shelter, clothing, education, transportation, and other foods or services that help maintain a person's health.
4. "Community needs assessment" means the process by which the hospital identifies, for its primary service area as determined by the hospital, unmet community needs.
5. "Community needs" means those requisites for improvement or maintenance of health status in the community.
6. "Hospital" means a private not-for-profit acute hospital licensed under subdivision (a), (b), or (f) of Section1250 and is owned by a corporation that has been determined to be exempt from taxation under the United States Internal Revenue Code. "Hospital" does not mean the following:
   1. Hospitals that are dedicated to serving children and that do not receive direct payment for services to any patient.
   2. Small and rural hospitals as defined in Section 1188.855.
7. " Mission statement" means a hospital's primary objectives for operation as adopted by its governing body.
8. "Vulnerable populations" means any population that is exposed to medical or financial risk by virtue of being uninsured, underinsured, or eligible for Medi-Cal, Medicare, California Childrens Services Program or county indigent programs.

449.20 Each hospital shall do all of the following:

1. By July 1, 1995 , reaffirm its mission statement that requires its policies integrate and reflect the interest in meeting its responsibilities as a not-for-profit organization.
2. By January 1, 1996, complete, either alone, in conjunction with other health care providers, or through other organizational arrangements, a community needs assessment evaluation the health needs of the community serviced by the hospital, that includes, but is not limited to, a process for consulting with community groups and local government officials in the identification and prioritization of community needs that the hospital can address directly, in collaboration with others, or through other organizational arrangement. The community needs assessment shall be updated at least once every three years.
3. By April 1, 1996 , and annually thereafter adopt and update a community benefits plan for providing community benefits either alone in conjunction with other health care providers, or through organizational arrangements.
4. Annually submit its community benefits plan, including, but not limited to, the activities that the hospital has undertaken in order to address community needs within its mission and financial capacity to the Office of Statewide Health Planning and Development. The hospital shall, to the extent practicable, assign and report the economic value of community benefits provided in furtherance of its plan. Effective with hospital fiscal years, beginning on or after January 1, 1996 , each hospital shall file a copy of the plan with the office not later than 150 days after the hospital's fiscal year ends. The reports filed by the hospitals shall be made available to the public by the office. Hospitals under the common control of a single corporation or another entity may file a consolidated report.

449.25 . The hospital shall include all of the following elements in its community benefits plan:

1. Mechanisms to evaluate the plan's effectiveness including, but not limited to, a method for soliciting the views of the community served by the hospital and identification of community groups and local government officials consulted during the development of the plan.
2. Measurable objectives to be achieved within specified timeframes.
3. Community benefits categorized into the following framework.
   1. Medical care services.
   2. Other benefits for the vulnerable populations.
   3. Other benefits for the broader community.
   4. Health research, education, and training programs.
   5. Non-quantifiable benefits.

449.30. Nothing in this part shall be construed to authorize or require specific formats for hospital needs assessments, community benefit plans, or reports until recommendations pursuant to Section 449.35 are considered and enacted by the Legislature.

Nothing in this part shall be used to justify the tax-exempt status of a hospital under state law. Nothing in this part shall preclude the office from requiring hospitals to directly report their charity activities. 449.35.The Office of Statewide Health Planning and Development shall prepare and submit a report to the Legislature by October 1, 1997 , including all of the following:

1. The identification of all hospitals that did not file plans on a timely basis.
2. A statement regarding the most prevalent characteristics of plans in terms of identifying and emphasizing community needs.
3. Recommendations for standardization of plan formats, and recommendations regarding community benefits and community priorities that should be emphasized. The recommendations shall be developed after consultation with representatives of the hospitals, local governments, and communities.

SB697 Glossary

Community Benefits Plan - The written document prepared for annual submission to the Office of Statewide Health Planning and Development that shall include, but shall not be limited to, a description of the activities that the hospital has undertaken in order to address identified community needs within its mission and financial capacity, and the process by which the hospital developed the plan in consultation with the community.

Community - The service areas or patient populations for which the hospital provides health care services.

Community Benefit - A hospitals activities that are intended to address community needs and priorities primarily through disease prevention and improvement of health status.

Community Needs Assessment - The process by which the hospital identifies, for its primary service area as determined by the hospital, unmet community needs.

Community Needs - Those requisites for improvement or maintenance of health status in the community.

Hospital - A private not-for-profit acute hospital licensed under subdivision (a), (b), or (f) of Section 1250 and is owned by a corporation that has been determined to be exempt from taxation under the United States Internal Revenue Code.

Mission Statement - A hospital's primary objectives for operation as adopted by its governing body.

Vulnerable Populations - Any population that is exposed to medical or financial risk by virtue of being uninsured, underinsured, or eligible for Medi-Cal, Medicare, California Childrens Services Program or county indigent programs.

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