Licensing bill vexes mobile imaging vendors

August 25, 1993

Mobile imaging providers operating in California are trying toget a handle on a bill under consideration in the state Legislaturethat would require licenses for mobile units. Depending on yourinterpretation, the bill either clears up existing

Mobile imaging providers operating in California are trying toget a handle on a bill under consideration in the state Legislaturethat would require licenses for mobile units. Depending on yourinterpretation, the bill either clears up existing regulationsregarding mobile services or adds another level of regulationto the industry.

The legislation in question is Assembly Bill 2259, which haspassed the state Assembly and is being considered by the Senate.The law was proposed by the state Department of Health Servicesin order to clear up an oversight in state regulations that preventsnonprofit groups from offering mobile health-care services tounderserved populations such as the homeless, according to JerrySimkins, chief of the acute care policy unit in the department'slicensing and certification branch.

Under existing law, most of the ancillary licenses requiredfor mobile operation, such as site building codes and power requirements,are granted to health-care facilities where the mobile units operate.But there is no specific license pertaining to mobile operation,and mobiles that aren't affiliated with hospitals or clinics haveno such sponsor for licensing, Simkins said.

"For many years, existing health-facilities licensinglaws have been silent on mobiles," Simkins said. "Many(nonprofit) groups were saying, `Why can't we take a van out tothe homeless?' We were denying them the ability to do that (becausethey couldn't be licensed)."

AB 2259 clears up the oversight by creating a process for licensingsuch units. The law adds no new requirements for existing mobileproviders, according to Simkins, nor will it require an additionallicense or licensing fee for mobile units whose license requirementsare handled through hospitals or clinics.

"It does not create anything new," Simkins said."It will not require each van to get licensed. There willbe no more requirements than already exist under the law."

Mobile providers are concerned, however, about requirementsin the legislation that mobile units be inspected before the hospitalsor clinics they are serving receive approval for the service.Hospitals would have until March 1, 1994 to apply for a mobileunit license or an addition to an existing license. Mobile unitscannot begin operation until the inspection takes place and stateapproval to operate has been granted, according to the bill.

Such inspections could create bottlenecks in getting servicestarted if a mobile unit has to be checked at each stop on itsroute. The situation could be exacerbated if the state lacks theresources to conduct the inspections in a timely fashion.

Simkins, however, believes that the legislation will not causeany serious inconvenience for mobile providers and that the statehas the resources to conduct the inspections in a timely fashion.

One section of the legislation caused additional confusionfor mobile providers worried that the law could legislate themout of business. The section states that "mobile unit servicesshould not be utilized as a primary source for a basic hospitalservice."

Simkins explained that state law defines eight categories of"basic hospital service," one of which is radiology.According to the state, radiology means basic x-ray services,not MRI, CT or other more specialized modalities. Mobile provisionof such modalities would continue to be legal if AB 2259 passes.

AB 2259 was scheduled to be heard by the Senate AppropriationsCommittee Aug. 23. It is expected to pass the committee and thenbe sent to the Senate floor, according to an aide to AssemblymanPaul Woodruff (R-Forest Falls), the author of the bill. The billhas encountered no significant opposition and is expected to passbefore the Legislature adjourns in three weeks, the aide said.

Mobile providers, however, learned of the bill only withinthe past several weeks and are certain to make their concernsknown to legislators. Several have said they are concerned thatthe legislation was drafted without industry input and that itcould impose unworkable requirements on industry.

"There should be user input from hospitals and mobileproviders in how to most effectively and efficiently get the resultsthat are required," said Robert E. Reilly, president andCEO of Sun Medical Technologies of Campbell, CA. "There shouldbe user input in terms of making this whole process as cost- andtrouble-free for all parties as possible."

BRIEFLY NOTED:

  • American Health Services Corp. reached a restructuringagreement last month with its chief creditor, GE Medical Systems,according to the Orange County Register. Restructuring of GE leasepayments will help the struggling imaging center firm save about$2 million in annual operating expenses.

AHS reported a 1992 loss of $14.7 million in April, made upmostly of a $12 million write-down of equipment and good willinvolving its MRI service business. Auditors said at the timethat the firm's future as an ongoing concern was in doubt (SCAN5/5/93).

The GE agreement involves a $15.2 million loan from the medicalimaging vendor that will support the center firm's buyout andrestructuring of leases. GE also obtained the right to purchase2.5% of AHS stock, according to the Register.

  • Consultants brought in earlier this year to turn aroundmobile imaging firm Maxum Health have been officially installedat the Dallas company. Maxum's board this month elected DouglasL. Drumwright as president and CEO and Charles S. Mack as executivevice president. Both executives are principals of Alpha Partners,the firm's restructuring adviser since May (SCAN 6/16/93). Maxumhad a net loss of $3.6 million for the second quarter (end-June).