Health care system consolidation: Attorney General approval and enforcement.

This bill would require a health care system, as defined, to provide written notice to, and obtain the written consent of, the Attorney General prior to an affiliation or acquisition between the health care system and a health care facility or provider, as those terms are defined. The bill would require the Attorney General to deny consent to an affiliation or acquisition between a health care system and a nonhospital health care facility, provider, or both, unless the health care system demonstrates that the affiliation or acquisition will result in a substantial likelihood of clinical integration, a substantial likelihood of increasing the availability and access of services to an underserved population, or both. The bill would authorize a health care system located in a rural area, as defined, to request a waiver of this prohibition. The bill would authorize the Attorney General to deny consent to an affiliation or acquisition between a health care system and a nonhospital health care facility, provider, or both, if there is a substantial likelihood of anticompetitive effects that outweigh the benefits of a substantial likelihood of clinical integration, a substantial likelihood of an increase in services to an underserved population, or both.

This bill would require the Attorney General, beginning July 1, 2021, to establish the Health Policy Advisory Board, composed of specified appointed members, for the purpose of evaluating and analyzing health care markets in California and providing recommendations to the Attorney General’s office. The bill would authorize the board to review a written notification submitted by a health care system, as described above, and provide the Attorney General with written information with regard to whether to grant or deny consent to the affiliation or acquisition.

Existing law authorizes the Attorney General to bring an action, seeking civil penalties, against any person who engages, has engaged, or proposes to engage in unfair competition. Existing law authorizes the Attorney General to bring the civil action in a court of competent jurisdiction.

This bill would make it unlawful for one or more health care systems, either independently or dependently, to use their market power to, among other things, cause anticompetitive effects, as described, and would authorize the Attorney General to bring a civil action for a violation of this unlawful conduct. The bill would require a court to impose civil fines for these violations, calculated either as $1,000,000 or as twice the gross gain to the health care system or gross loss to any other party multiplied by 2, whichever is greater. The bill would require the fines to be deposited into the Attorney General antitrust account within the General Fund. The bill would require a court to impose monetary relief for the state in the amount of 3 times the total damage sustained, as specified.