SECTIONS 37600-37625 - California Statutes

GOVERNMENT CODE

SECTION 37600-37625

37600. This article applies only to cities where a municipal
hospital has not been established.

37601. Upon receiving a petition signed by 15 percent of the city
electors, the legislative body shall submit to the electors at a
general or special election the question whether a municipal hospital
shall be established in the city.

37602. If a majority of the votes cast at the election is for the
proposition, the municipal hospital is established.

37603. With the consent of the legislative body, the mayor shall
appoint a board of seven hospital trustees to manage the hospital.
Trustees may be residents or nonresidents of the city.

37604. The trustees shall hold office for three years. The members
of the first board shall classify themselves by lot so that the terms
of two trustees expire at the end of the current fiscal year, two at
the end of the next year, and three at the end of the second year.
Vacancies shall be filled by appointment for the unexpired term.

37604.1. The board of trustees shall serve without compensation
except that the city council, by resolution adopted by a majority
vote of the members of the city council, may authorize the payment of
not to exceed one hundred dollars ($100) per meeting not to exceed
five meetings per month as compensation to each member of the board
of trustees.
Each member of the board of trustees shall be allowed his or her
actual necessary traveling and incidental expenses incurred in the
performance of official business of the hospital as approved by the
board.

37604.2. Notwithstanding any other provision of law, the term of
any member of the board of trustees shall expire if he or she is
absent from three consecutive regular meetings, or from three of any
five consecutive meetings of the board and the city council by
resolution declares that a vacancy exists on the board.

37605. The board of hospital trustees shall meet at least once a
month at the time and place it fixes by resolution. The president, or
in the absence of the president, the president pro tempore, or a
majority of the trustees may call a special meeting by serving
written notice upon the other members by following the procedures
prescribed in Section 54956 or 54956.5.

37606. (a) Except as provided in this section or Section 37624.3,
all of the sessions of the board of trustees, whether regular or
special, shall be open to the public, and a majority of the members
of the board shall constitute a quorum for the transaction of
business.
(b) The board of trustees may order a meeting held solely for the
purpose of discussion or deliberation, or both, of reports involving
hospital trade secrets to be held in closed session. Except as
provided in this subdivision, the closed session shall meet all
applicable requirements of Chapter 9 (commencing with Section 54950)
of Division 2 of Title 5.
(c) "Hospital trade secrets," as used in this section, means a
"trade secret," as defined in subdivision (d) of Section 3426.1 of
the Civil Code, and which meets all of the following:
(1) Is necessary to initiate a new hospital service or program or
add a hospital facility.
(2) Would, if prematurely disclosed, create a substantial
probability of depriving the hospital of a substantial economic
benefit.
(d) The exception provided in subdivision (b) to the general open
meeting requirements for a meeting of the board of trustees, shall
not apply to a meeting where there is action taken, as defined in
Section 54952.6.
(e) Nothing in this section shall be construed to permit the board
of trustees to order a closed meeting for the purposes of discussing
or deliberating, or to permit the discussion or deliberation in any
closed meeting of, any proposals regarding:
(1) The sale, conversion, contract for management, or leasing of
any municipal hospital or the assets thereof, to any for-profit or
nonprofit entity, agency, association, organization, governmental
body, person, partnership, corporation, or hospital district.
(2) The conversion of any municipal hospital to any other form of
ownership by the city.
(3) The dissolution of the municipal hospital.

37606.1. (a) When a municipal hospital established pursuant to this
article is managed by a board of trustees that is appointed by the
mayor, the city council may meet in a closed session held solely for
the purpose of discussion, deliberation, or both, of reports
involving trade secrets of the municipal hospital. Except as provided
in this section, the closed session shall comply with all applicable
requirements of Chapter 9 (commencing with Section 54950) of
Division 2 of Title 5.
(b) "Hospital trade secrets," as used in this section, means a
"trade secret," as defined in subdivision (d) of Section 3426.1 of
the Civil Code, and which meets all of the following:
(1) Is necessary to initiate a new hospital service or program or
add a hospital facility.
(2) Would, if prematurely disclosed, create a substantial
probability of depriving the hospital of a substantial economic
benefit.
(c) The exception provided in subdivision (a) to the general open
meeting requirements for a meeting of the city council shall not
apply to a meeting where there is action taken, as defined in Section
54952.6.
(d) Nothing in this section shall be construed to permit the city
council to order a closed meeting for the purposes of discussing or
deliberating, or to permit the discussion or deliberation in any
closed meeting of, any proposals regarding any of the following:
(1) The sale, conversion, contract for management, or leasing of
any municipal hospital or the assets thereof, to any for-profit or
nonprofit entity, agency, association, organization, governmental
agency, person, partnership, corporation, or hospital district.
(2) The conversion of any municipal hospital to any other form of
ownership by the city.
(3) The dissolution of the municipal hospital.

37607. The board shall appoint one of its members president. He
shall serve for one year and until his successor is appointed. In his
absence, the board shall select a president pro tempore.

37608. The board shall cause a proper record of its proceedings to
be kept.

37609. The board may make and enforce all regulations necessary for
the administration, protection, and maintenance of the hospital and
hospital property.

37609.1. (a) The rules of the hospital, established by the board of
trustees pursuant to this article, shall include all of the
following:
(1) Provision for the organization of physicians and surgeons,
podiatrists, and dentists licensed to practice in this state who are
permitted to practice in the hospital into a formal medical staff,
with appropriate officers and bylaws and with staff appointments on
an annual or biennial basis.
(2) Provision for a procedure for appointment and reappointment of
medical staff consistent with the standards of the Joint Commission
on Accreditation of Healthcare Organizations.
(3) Provisions that the medical staff shall be self-governing with
respect to the professional work performed in the hospital; that the
medical staff shall meet consistent with the minimum requirements of
the Joint Commission on Accreditation of Healthcare Organizations;
and that the medical records of the patients shall be the basis for
review and analysis.
(4) Provision that accurate and complete medical records be
prepared and maintained for all patients.
For purposes of this paragraph medical records include, but are
not limited to, identification data, personal and family history,
history of present illness, physical examination, special
examinations, professional or working diagnoses, treatment, gross and
microscopic pathological findings, progress notes, final diagnosis,
condition on discharge, and other matters as the medical staff shall
determine.
(b) The rules of the hospital, insofar as consistent with this
article, shall be in accord with and contain minimum standards not
less than the rules and standards of private or voluntary hospitals.
Unless specifically prohibited by law, the board of trustees may
adopt other rules which could be lawfully adopted by private or
voluntary hospitals.

37610. The board may establish a nurses' training school in
connection with the hospital, prescribe a course of study, and
provide for the issuance of diplomas to graduate nurses.

37611. The board may purchase any property necessary for equipping
a hospital and nurses' home.

37612. If the board determines that the city legislative body has
not provided suitable buildings for the hospital, it may purchase
real property and erect, or rent, and equip such buildings as it
deems necessary.

37612.1. Except as provided in this section, by resolution, the
board of trustees of a municipal hospital may authorize the
disposition of any surplus property of the municipal hospital at fair
market value by any method determined appropriate by the board.
The board of trustees of a municipal hospital may donate or sell,
at less than fair market value, any surplus property to any local
hospital district in California.

37612.2. (a) Notwithstanding any other provision of law, a
municipal hospital, or any affiliated nonprofit corporation upon a
finding by the board of trustees of the municipal hospital that it
will be in the best interest of the public health of the communities
served by the municipal hospital and in order to obtain a licensed
physician and surgeon to practice in the communities served by the
municipal hospital, may upon a four-fifths vote of the board of
trustees do any of the following:
(1) Guarantee to a physician and surgeon a minimum income for a
period of no more than three years from the opening of the physician
and surgeon's practice.
(2) Guarantee purchases of necessary equipment by the physician
and surgeon.
(3) Provide reduced rental rates of office space in any building
owned or leased by the municipal hospital or any of its affiliated
entities, or subsidize rental payments for office space in any other
buildings, for a term of not more than three years.
(4) Provide other incentives to a physician and surgeon in
exchange for consideration and upon terms and conditions the hospital
board of trustees deems reasonable and appropriate.
(b) Any provision in a contract between a physician and surgeon
and a municipal hospital or affiliated nonprofit corporation is void
which does any of the following:
(1) Imposes as a condition any requirement that the patients of
the physician and surgeon, or a quota of the patients of the
physician and surgeon, only be admitted to a specified hospital.
(2) Restricts the physician and surgeon from establishing staff
privileges at, referring patients to, or generating business for
another entity.
(3) Provides payment or other consideration to the physician and
surgeon for the physician and surgeon's referral of patients to the
municipal hospital or an affiliated nonprofit corporation.
(c) Contracts between a physician and surgeon and a municipal
hospital or affiliated nonprofit corporation that provide an
inducement for the physician and surgeon to practice in the community
served by the municipal hospital shall contain both of the
following:
(1) A provision which requires the inducement to be repaid with
interest if the inducement is repayable.
(2) A provision which states that no payment or other
consideration shall be made for the referral of patients to the
municipal hospital or an affiliated nonprofit corporation.
(d) To the extent that this section conflicts with Section 650 of
the Business and Professions Code, Section 650 of the Business and
Professions Code shall supersede this section.
(e) The Legislature finds that this section is necessary to assist
municipal hospitals to attract qualified physicians and surgeons to
practice in the communities served by these hospitals, and that the
health and welfare of the residents in these communities require
these provisions.

37612.3. Notwithstanding any other provision of law, upon a
recommendation by the board of trustees and upon a finding by the
city council that it will be in the best interests of the municipal
hospital to provide additional diversification of facilities, the
board of trustees may lease and operate the realty facilities, and
business of a hospital district in California, or create a leasehold
interest in its own realty, improvements, and business in favor of a
hospital district, if the following apply:
(a) That the lease when taken together with any extensions of the
lease shall not exceed a total of 10 years.
(b) That the lessor district or lessor city shall not finance any
capital improvements through the use of the lessor district's or
lessor city's credit.
(c) That the lessor district or lessor city shall have
successfully completed any feasibility studies required by the board
of directors of the district or the board of trustees or the city
council of the municipal hospital as will reasonably ensure that the
lessor hospital's financial stability will not be endangered by the
lease transaction.
(d) Nothing in this section shall be construed to impair or limit
the authority of the California Medical Assistance Commission to
contract for the provision of inpatient hospital services under the
Medi-Cal program with local hospital district hospitals or municipal
hospitals as sole distinct entities, even though one or more hospital
districts or municipal hospitals may have entered into leasehold or
joint-venture arrangements.

37613. The board may administer any trust created for the hospital.
It may receive property situated in or out of the State by gift,
devise, or bequest and hold it in trust or otherwise. Except where
the gift, devise, or bequest provides otherwise, it may dispose of
such property for the benefit of the hospital.

37614. The board may prescribe the duties and powers of the
hospital administrator, secretary, and other officers and employees
of the hospital. The officers and employees shall hold their offices
at the pleasure of the board of trustees.

37614.1. Notwithstanding any other provision of this division, a
municipal hospital may enter into a contract of employment with a
hospital administrator, the duration of which shall not exceed four
years, but which may periodically be renewed upon expiration for not
more than four years.

37615. The board may perform any other act necessary to carry out
the provisions of this article, including any thing which an
individual might do which is necessary for, and to the advantage of,
a municipal hospital and a nurses' training school.

37615.1. Each local municipal hospital shall have and may exercise
the following powers:
(a) To purchase, receive, have, take, hold, lease, use, and enjoy
property of every kind and description within and without the limits
of the municipality, and to control, dispose of, convey, and encumber
the same and create a leasehold interest in the same for the benefit
of the hospital.
(b) To establish one or more trusts for the benefit of the
municipal hospital, to administer any trusts declared or created for
the benefit of the municipal hospital, to designate one or more
trustees for trusts created by the municipality, to receive by gift,
devise, or bequest, and hold in trust or otherwise, property,
including corporate securities of all kinds, situated in this state
or elsewhere, and where not otherwise provided, dispose of the same
for the benefit of the municipal hospital.
(c) To employ any officers and employees, including architects and
consultants, the board of trustees deems necessary to carry on
properly the business of the municipal hospital.
(d) To do any and all things which an individual might do which
are necessary for, and to the advantage of, a hospital and a nurses'
training school, or a child-care facility for the benefit of
employees of the hospital or residents of the municipality.
(e) To establish, maintain and operate, or provide assistance in
the operation of, one or more health facilities or health services,
including, but not limited to, outpatient programs, services and
facilities, retirement programs, services and facilities, chemical
dependency programs, services and facilities, or other health care
programs, services and facilities and activities at any location
within or without the municipality for the benefit of the hospital
and the people served by the municipal hospital.
"Health facilities," as used in this subdivision, means those
facilities defined in either Section 15432 of this code or Section
1250 of the Health and Safety Code and specifically includes
freestanding chemical dependency recovery units.
(f) To do any and all other acts and things necessary to carry out
this division.
(g) To acquire, maintain, and operate ambulances or ambulance
services within and without the municipality.
(h) To establish, maintain, and operate, or provide assistance in
the operation of, free clinics, diagnostic and testing centers,
health education programs, wellness and prevention programs,
rehabilitation, aftercare, and any other health care services
provider, groups, and organizations which are necessary for the
maintenance of good physical and mental health in the communities
served by the municipal hospital.
(i) To establish and operate in cooperation with its medical staff
a coinsurance plan between the municipal hospital and the members of
its attending medical staff.
(j) With the approval of the city council, to establish, maintain,
and carry on its activities through one or more corporations, joint
ventures, or partnerships for the benefit of the municipal hospital.
(k) With the consent of the city council, to contract for bond
insurance, letters of credit, remarketing services, and other forms
of credit enhancement and liquidity support for its bonds, notes, and
other indebtedness and to enter into reimbursement agreements,
monitoring agreements, remarketing agreements, and similar ancillary
contracts in connection therewith.
(l) To establish, maintain, operate, participate in, or manage
capitated health care plans, health maintenance organizations,
preferred provider organizations, and other managed health care
systems and programs properly licensed by the Department of Insurance
or the Department of Managed Health Care, at any location within or
without the municipality for the benefit of residents of communities
served by the hospital. However, no such activity shall be deemed to
result in or constitute the giving or lending of the municipality's
credit, assets, surpluses, cash, or tangible goods to, or in aid of,
any person, association, or corporation in violation of Section 6 of
Article XVI of the California Constitution.
Nothing in this section shall authorize activities which
corporations and other artificial legal entities are prohibited from
conducting by Section 2400 of the Business and Professions Code.
Any agreement to provide health care coverage which is a health
care service plan, as defined in subdivision (f) of Section 1345 of
the Health and Safety Code, shall be subject to the provisions of
Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code, unless exempted pursuant to Section 1343 or
1349.2 of the Health and Safety Code.
A municipal hospital shall not provide health care coverage for
any employee of an employer operating within the service area of the
municipal hospital, unless the Legislature specifically authorizes,
or has authorized the coverage.
This section shall not authorize any municipal hospital to
contribute its facilities to any joint venture that could result in
transfer of the facilities from city ownership.
(m) To provide health care coverage to members of the hospital's
medical staff, employees of the medical staff members, and the
dependents of both groups, on a self-pay basis.
(n) With the consent of the city council, to establish, maintain,
and carry on its activities through one or more corporations, joint
ventures, or partnerships for the benefit of the municipal hospital.
(o) With the consent of the city council, to transfer, with or
without consideration, any part of its assets to one or more
nonprofit corporations to operate and maintain the assets for the
benefits of the area served by the hospital. The initial members of
the board of directors of the nonprofit corporation or corporations
shall be approved by the city council and shall be residents of the
city.
(p) Nothing in this section, including, but not limited to,
subdivision (e), shall be construed to permit a municipal hospital to
operate or be issued a single consolidated license to operate a
separate physical plant as a skilled nursing facility or an
intermediate care facility which is not located within the boundaries
of the municipality.

37615.2. The board of trustees may purchase real property, and
erect or rent and equip those buildings or building, room or rooms as
may be necessary for the hospital.

37615.3. The board of trustees shall be responsible for the
operation of all hospitals owned or leased by the city, according to
the best interests of the public health and shall make and enforce
all rules, regulations and bylaws necessary for the administration,
government, protection, and maintenance of hospitals under their
management and all property belonging thereto and may prescribe the
terms upon which patients may be admitted thereto. However, these
hospitals shall not contract to care for indigent county patients at
below the cost for care. In setting the rates, the board shall,
insofar as possible, establish such rates as will permit the hospital
to be operated upon a self-supporting basis.

37615.4. The board of trustees, with the consent of the city
council, may provide for the operation and maintenance through
tenants of the whole or any part of any municipal hospital acquired
or constructed by it pursuant to this article, and for that purpose
may enter into any lease agreement which it believes will best serve
the interest of the municipal hospital; provided, that any lease
entered into for the operation of any municipal hospital shall
require the tenant or lessee to conform to and abide by each and all
of the provisions of Section 37609.1. No lease for the operation of
an entire hospital shall run for a term in excess of 30 years. No
lease for the operation of less than an entire hospital shall run for
a term in excess of 10 years.

37615.5. (a) The board of trustees may do any of the following when
it determines that the action is necessary for the provision of
adequate health services to the communities served by the municipal
hospital:
(1) Enter into contracts with health provider groups, community
service groups, and independent physicians and surgeons for the
provision of health services.
(2) Provide assistance or make grants to nonprofit provider groups
and clinics already functioning in the community.
(b) Nothing in this section shall authorize activities which
corporations and other artificial legal entities are prohibited from
conducting by Section 2400 of the Business and Professions Code.

37615.6. Notwithstanding the provisions of the Medical Practice
Act, the board of trustees may contract with physicians and surgeons,
health care provider groups, and nonprofit corporations for the
rendering of professional health services on a basis that does not
result in any profit or gain to the municipal hospital from the
services so rendered and that allows the board of trustees to ensure
that fees and charges, if any, are reasonable, fair, and consistent
with the basic commitment of the municipal hospital to provide
adequate health care to all residents within its service area.
However, nothing in this section shall authorize activities that
corporations and other legal entities are prohibited from conducting
by Section 2400 of the Business and Professions Code.

37615.7. The municipal hospital may maintain membership in any
local, state, or national group or association organized and operated
for the promotion of the public health and welfare or the
advancement of the efficiency of hospital administration, and in
connection therewith pay dues and fees thereto.

37615.8. The board of trustees may, by resolution, change the name
of the municipal hospital. The change in the name of the municipal
hospital shall be effective upon the filing of a verified copy of the
resolution with the Secretary of State.

37616. On or before July 31st in each year, the board shall report
to the legislative body the condition of the hospital on June 30th
preceding, with a statement of its proceedings for the year.

37617. If other provision has not been made for maintenance of the
hospital, the legislative body may levy a special tax, pursuant to
Article 3.5 (commencing with Section 50075) of Chapter 1 of Part 1 of
Division 1 of Title 5, and spend the proceeds to maintain the
hospital and purchase necessary property for the hospital. The
special tax is in addition to other taxes permitted in the city.

37618. Instead of the tax levy, the city legislative body may raise
the necessary funds by a bond issue pursuant to Article 1
(commencing with Section 43600) of Chapter 4 of Division 4.

37618.1. Exclusively for the purpose of securing state insurance of
financing for the construction of new health facilities, the
expansion, modernization, renovation, remodeling and alteration of
existing health facilities, and the initial equipping of any health
facilities under Chapter 4 (commencing with Section 436) of Part 1 of
Division 1 of the Health and Safety Code which is hereby made
applicable to municipal hospitals, and notwithstanding any provision
of this division or any other provision or holding of law, the board
of trustees of any municipal hospital may recommend and the city
council may (a) borrow money or credit, or issue bonds, as well as by
the financing methods specified in this division, and (b) execute in
favor of the state first mortgages, first deeds of trust, and other
necessary security interests as the Office of Statewide Health
Planning and Development may reasonably require in respect to a
health facility project property as security for the insurance. No
payments of principal, interest, insurance premium and inspection
fees, and all other costs of state-insured loans obtained under the
authorization of this section shall be made from funds derived from
the municipality's power to tax. It is hereby declared that the
authorizations for the executing of mortgages, deeds of trust and
other necessary security agreements by the board and city council and
for the enforcement of the state's rights thereunder is in the
public interest in order to preserve and promote the health, welfare,
and safety of the people of this state by providing, without cost to
the state, a state-insurance program for health facility
construction loans in order to stimulate the flow of private capital
into health facilities construction to enable the rational meeting of
the critical need for new, expanded, and modernized public health
facilities.

37618.2. A municipal hospital may borrow money and incur
indebtedness in an amount not to exceed 85 percent of all estimated
income and revenue for the current fiscal year, including, but not
limited to, tax revenues, operating income, and any other
miscellaneous income received by the municipal hospital, from
whatever source derived. The money borrowed and indebtedness incurred
under this section shall be repaid within the same fiscal year.

37618.3. All certificates of indebtedness or other evidence of
indebtedness shall be issued after the recommendation by a
three-fifths vote of the board of trustees of the hospital and the
adoption by a three-fifths vote of the city council of a resolution
setting forth the necessity for the borrowing and the amount of the
assessed valuation of the municipality and the amount of funds to be
borrowed thereon. All certificates of indebtedness or other evidence
of indebtedness shall be offered at public sale by the board of
trustees or city council after not less than 10 days advertising in a
newspaper of general circulation within the municipality and if no
newspaper of general circulation is printed within the municipality,
then in a newspaper of general circulation within the county in which
the municipality is located. Each sale shall be made to the bidder
offering the lowest rate of interest or whose bid represents the
lowest net cost to the municipality. However, the rate of interest
shall not exceed the rate prescribed in Section 53531.
The certificates of indebtedness or other evidences of
indebtedness shall be signed on behalf of the municipal hospital by
the mayor of the city and attested by the city clerk of the city.

37618.4. (a) A municipal hospital may, by resolution adopted by a
majority of the board of trustees, issue negotiable promissory notes
to acquire funds for any municipal hospital purposes subject to the
restrictions and requirements imposed by this section. The maturity
of the promissory notes shall not be later than 10 years from the
date thereof. The total aggregate amount of the notes outstanding at
any one time shall not exceed 85 percent of all estimated income and
revenue for the current fiscal year, including, but not limited to,
tax revenues, operating income, and any other miscellaneous income of
the district. Indebtedness incurred pursuant to any other provision
of law shall be disregarded in computing the aggregate amount of
notes that may be issued pursuant to this section.
(b) Negotiable promissory notes may be issued pursuant to this
section for any capital outlay facility, equipment, or item which has
a useful life equal to, or longer than, the term of the notes, as
determined by the board of trustees.
(c) The maximum annual interest rate which may be paid on
negotiable promissory notes shall at no time exceed the amount
authorized under Section 53531.

37619. The revenue derived from the tax and money otherwise
acquired for hospital purposes shall be placed in the hospital fund
and expended for the purposes of this article.

37620. If payment into the fund is inconsistent with the conditions
of any gift, devise, or bequest, the board shall provide for the
preservation of the money, and its application to the use of the
hospital, pursuant to such conditions.

37621. The board may issue warrants for payments from the fund
after due audit. The president and secretary of the board shall sign
the warrants.

37622. The city treasurer shall pay the warrants without further
order.

37623. Unless inconsistent with the terms of its acquisition, the
title to property acquired for hospital purposes vests in the city.
Actions involving the property shall be brought and defended in the
name of the city.

37624. The board of trustees shall adopt reasonable rules and
regulations, or bylaws, providing for appellate review of any action,
decision, or recommendation of the medical staff affecting the
professional privileges of any member of, or applicant for membership
on, the medical staff. The appellate review may be conducted by the
board or by a hearing officer designated by the board. The board's
decision rendered after the appellate review shall be final.

37624.2. The governing body or the hearing officer, if one is
appointed, shall have the same power with respect to the issuance of
subpoenas and subpoenas duces tecum as that granted to any agency or
hearing officer pursuant to Article 11 (commencing with Section
11450.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2. Any
subpoena or subpoena duces tecum issued pursuant to this section
shall have the same force and effect and impose the same obligations
upon witnesses as that provided in Article 11 (commencing with
Section 11450.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2.

37624.3. The governing body of the hospital may order that the
hearing pursuant to this article, and hearing on the reports on the
hospital medical audit or quality assurance committees, be held in
private or executive session, provided, that an applicant or medical
staff member whose staff privileges are the direct subject of a
hearing may request a public hearing. Deliberations of the governing
body in connection with matters pertaining to this article may be
held in executive session.

37625. (a) A member of a municipal hospital's medical or allied
health professional staff who is an officer of the municipal hospital
shall not be deemed to be "financially interested," for purposes of
Section 1090, in any of the contracts set forth in subdivision (b)
made by any municipal hospital body or board of which the officer is
a member if all of the following conditions are satisfied:
(1) The officer abstains from any participation in the making of
the contract.
(2) The officer's relationship to the contract is disclosed to the
body or board and noted in its official records.
(3) If paragraphs (1) and (2) are satisfied, the body or board
does both of the following, without any participation by the officer:
(A) Finds that the contract is fair to the municipal hospital and
in its best interest.
(B) Authorizes the contract in good faith.
(b) Subdivision (a) shall apply to the following contracts:
(1) A contract between the municipal hospital and the officer for
the officer to provide professional services to the hospital's
patients, employees, or medical staff members and their respective
dependents, provided that similar contracts exist with other staff
members and the amounts payable under the contract are no greater
than the amounts payable under similar contracts covering the same or
similar services.
(2) A contract to provide services to covered persons between the
municipal hospital and any insurance company, health care service
plan, employer, or other entity which provides health care coverage,
and which also has a contract with the officer to provide
professional services to its covered persons.
(3) A contract in which the municipal hospital and the officer are
both parties if other members of the municipal hospital's medical or
allied health professional staff are also parties, directly or
through their professional corporations or other practice entities,
provided the officer is offered terms no more favorable than those
offered any other party who is a member of the municipal hospital's
medical or allied health professional staff.
(c) This section does not permit an otherwise prohibited
individual to be a member of the board of trustees of a municipal
hospital, including, but not limited to, individuals described in
Section 53227. Nothing in this section shall authorize a contract
that would otherwise be prohibited by Section 2400 of the Business
and Professions Code.
(d) For purposes of this section, a contract entered into by a
professional corporation or other practice entity in which the
officer has an interest shall be deemed the same as a contract
entered into by the officer directly.