Sunset review of the Health Facilities Authority

              Arizona House of Representatives
House Majority Research
MEMORANDUM
Kristine Stoddard~
Assistant Legislative Research Analyst
(602) 926-5299
To: JOINT LEGISLATIVE AUDIT COMMITTEE
1700 W. Washington
Phoenix, AZ 85007-2848
FAX (602) 417-3140
cc: Representative Rick Murphy, Chair
Senator Jim Waring, Vice-Chair
Re: Sunset Review of the Health Facilities Authority
Date: December 2, 2005
Attached is the final report ofthe sunset review ofthe Health Facilities Authority, which was
conducted by the Senate Health and House ofRepresentatives Health Committee ofReference.
This report has been distributed to the following individuals and agencies:
Governor of the State ofArizona
The Honorable Janet Napolitano
President ofthe Senate
Senator Ken Bennett
Senate Members
Senator Jim Waring, Vice-Chair
Senator Carolyn Allen
Senator Marsha Arzberger
Senator Robert Cannell
Senator Barbara Leff
Health Facilities Authority
Department of Library, Archives & Public Records
Auditor General
Senate Republican Staff
Senate Research Staff
Senate Democratic Staff
Speaker ofthe House ofRepresentatives
Representative Jim Weiers
House Members
Representative Rick Murphy, Chair
Representative David Bradley
Representative Laura Knaperek
Representative Linda Lopez
Representative Doug Quelland
House Majority Staff
House Research Staff
House Democratic Staff
Senate Health and House ofRepresentatives Health
Committee ofReference Report
Health Facilities Authority
Date: December 2, 2005
To: Joint Legislative Audit Committee
Representative Rick Murphy, Chair
Senator Jim Waring, Vice-Chair
Background
Pursuant to Arizona Revised Statutes (ARS) §41-2953, the Joint Legislative Audit
Committee (JLAC) assigned the sunset review of the Health Facilities Authority
(Authority) to the Senate Health and House of Representatives Health Committee of
Reference.
The Authority was established by Laws 1974, Chapter 128, §3, to reduce health care
costs and improve health care for residents of this state by providing less expensive
financing through acquisition of one or more health care facilities (this provision was
removed from statute in 1977) and through the issuance of tax-exempt bonds. The tax­exempt
bonds permit the Authority to obtain lower market interest rates than other
financial institutions. After the bonds are issued, the Authority then loans the bond's
proceeds to health care institutions to finance their projects. It may also issue bonds for
projects located in Arizona and on behalf of a participating facility that is headquartered
in Arizona. Additionally, the Authority may issue bonds for the purpose of refunding at
or prior to maturity outstanding bonds or other indebtedness of any participating facility.
In 1999, the Authority hired its first Executive Director, Blaine Bandi.
Committee ofReference Sunset Review Procedures
The Committee of Reference held one public meeting on November 8, 2005 to review the
Board's responses to the sunset factors as required by ARS §41-2954, subsections D and
F, and to hear public testimony.
Committee ofReference Recommendations
The Committee of Reference recommends continuing the Health Facilities Authority for
10 years.
Attachments:
1. Sunset report requirements pursuant to ARS §41-2954, subsections D and F.
2. Meeting notice.
3. Minutes of the Committee ofReference meeting.
Arizona House of Representatives
House Majority Research
MEMORANDUM
Kristine Stoddard8
Assistant Legislative Research Analyst
(602) 926-5299
1700 w. Washington
Phoenix, AZ 85007-2848
FAX (602) 417-3140
To: Members of the House and Senate Health Committees of Reference
Re: Sunset Review of the Health Facilities Authority
Date: October 26, 2005
The Health Facilities Authority (Authority) is scheduled to sunset July 1,2006. The following is
a brief description of the history and duties of the Authority, as well as the Authority's response
to the sunset questionnaire. A public meeting is scheduled for November 8, 2005 to allow you to
ask questions of the Board, take public testimony, and make a fInal recommendation on the
Authority's continuation. If you have any questions or need further assistance, please feel free to
contact me.
AUTHORITY mSTORY AND MISSION
The Authority was established by Laws 1974, Chapter 128, §3, to reduce health care costs and
improve health care for residents of this state by providing less exp~nsive fInancing through
acquisition of one or more health care facilities and through the issuance of tax-exempt bonds.
The Authority was originally established as a public corporation, specifIcally, as a municipality
that may contract with participating lessees (health care facilities). In 1977, the Legislature
eliminated language permitting the Authority to be a public corporation and removed the ability
for the Authority to acquire health care facilities.
October 26, 2005
ORGANIZATION AND DUTIES
The Authority has a governing board composed of seven directors appointed by the Governor.
Statute requires all members of the governing board to be residents ofArizona and not more than
four of the same political party. Each member serves a seven-year tenn and receives fifty dollars
for attending board meetings. The governing board may accept grants ofmoney and materials or
property from federal, state, county or municipal agencies or others. It may also issue bonds for
projects located in Arizona and on behalf of a participating facility that is headquartered in
Arizona. Additionally the Authority may issue bonds for the purpose of refunding at or prior to
maturity outstanding bonds or other indebtedness of any participating facility. The governing
board is pennitted to employ or contract with engineers, architects, attorneys, accountants,
construction and financial experts as necessary. In 1999, the Authority hired its first Executive
Director, Blaine Bandi.
The tax-exempt bonds pennit the Authority to obtain lower market interest rates than other
financial institutions. After the bonds are issued, the Authority then loans the bond's proceeds to
health care institutions to finance their projects. Historically, the Authority issued tax-exempt
bonds exclusively for the largest and highest credit rated hospitals in Arizona. The Authority
believes that the enabling legislation excluded smaller non-hospitals and has since sought
legislative amendments to mitigate this practice. According to the Authority, in 1997 the
Authority led a successful effort to amend the enabling legislation to allow more flexibility in
issuing bonds. The statutory amendments allowed the Authority to finance a greater variety of
health care projects and removed the requirement for high credit ratings. Since 1995, the
Authority has issued almost $1.9 billion in bond financing for the construction and renovation of
facilities and acquisition of essential equipment and technology. In 1999, the Authority created a
program called the Arizona Health Assistance Program. This program allows the Authority to
provide low-cost loans for rural and underserved health care facilities. According to the
Authority, since 2000, this program has loaned $1.2 million to rural hospitals and health centers,
an urban health center and a birthing center. The Authority has also provided over $150,000 in
direct or compensated technical assistance to develop or expand health care services in rural and
medically underserved communities and tribal reservations.
2
October 26, 2005
FISCAL ISSUES
The Authority does not receive state funding. The Authority's operations are funded by the
revenues generated from its bond financing activities.
LEGISLATIVE ISSUES
The Authority does not have any recommended legislative changes at this time.
ADDITIONAL BACKGROUND
Staff contacted individuals and agencies in order to discuss their working relationships with the
Authority.
Michael McAnder, System Vice President/Treasurer of Banner Health stated that on behalf of
the patients and employees of Banner Health, he supports the renewal of the Authority. As
Treasurer of Banner Health, he relies on the resources of the Authority "in order to maximize the
ongoing quality of care" Banner Health provides patients in Arizona communities. Mr.
McAnder stated that Banner Health utilized the Authority's resources in 2002 and 2005 as the
issuing organization for bonds to build new hospitals, expand current facilities and purchase new
technology. Mr. McAnder believes that because of this resource, Banner Health has been able to
add 5,460 employees and care for 21,903 additional patients annually.
Additionally, Mr. McAnder believes that the Authority plays an important role in managing
health facilities costs. In 2005, Banner Health was able to replace higher cost debt with lower
cost debt offered by the Authority, reducing the overall costs of health care delivery to their
patients.
Mr. McAnder stated that the Authority has provided valuable assistance to Banner Health in
issuing debt. He believes that if the Authority were to sunset, Banner Health would be required
to issue bonds through an authority outside of the state and that authority would not understand
the Arizona marketplace as well as the Authority does. Mr. McAnder stated that this alternative
would have a negative impact on Banner Health's ability to build additional facilities that are
essential to meet the health care needs of Arizona.
3
October 26, 2005
Gary Cloud, Director of Advancement at A.T. Still University offered his endorsement of the re­authorization
of the Authority. He stated that he has observed the role of the Authority for many
years and that the Authority has performed admirably for the citizens of Arizona by fostering
macro-infrastructure for needed hospitals and other health care facilities. Mr. Cloud also stated
that it has been pleasing to see the Authority begin to foster micro-infrastructure development for
primary care in the state's least served communities. A.T. Still University has worked with the
Authority to develop facilities to "help train tomorrow's healers."
4
ARIZONA HEALTH FACILITIES AUTHORITY
"Financing the Future ofHealthcare in Arizona"
August 17,2005
Representative Rick Murphy
Chair, Health Committee ofReference
Arizona House of Representatives
1700 West Washington
Phoenix, AZ 85007
RE: Sunset factors pursuant to A.R.S. §41-2954
Dear Representative Murphy:
In accordance with the provisions ofA.R.S. §41-2954 and in response to your letter dated June
30, 2005, I offer the following response to the sunset consideration factors as follows:
1. The objective and purpose in establishing the agency.
The Authority was established by the Arizona legislature in 1977 to issue bonds for the purpose
of improving health care for residents of Arizona by providing less expensive financing for health
care facilities. Interest on the Authority's bonds and other financing obligations is exempt from
income taxation, which permits the Authority to obtain lower market interest rates for its bonds
than the interest rate that would otherwise be available. Upon the issuance of the bonds, the
Authority loans the bond proceeds to health care institutions to finance their projects at lower
interest rates than would be available from a bank or from other forms of financing. In this way
the Authority acts as a "conduit" to provide less expensive forms of financing. As a result of the
Authority's less. expensive financings, health care costs are reduced and the availability of
services is improved for residents of Arizona.
Historically, the Authority issued tax-exempt bonds exclusively for Arizona's largest and highest
credit rated hospitals. However, the Authority realized that those hospitals with the greatest need
for financing would not qualify for Authority issued tax-exempt financing due to their credit
rating. Additionally, smaller non-hospital facilities were not eligible for financing under the
Authority's enabling legislation.
In 1996 the Authority began a process to expand its mission to encompass a broader spectrum of
health care financing. The Authority desired an enhance ability to address unmet need for
healthcare facilities in rural and underserved areas of the state. The Authority developed a
strategic plan that would position it to be responsive to the needs of rural and underserved areas
of the state while maintaining its historical commitment to the large nonprofit hospitals.
11024 N. 28th Drive • Suite 200 • Phoenix, AZ 85029
Office (602) 375-2770 0 Fax (602) 375-2804 • www.azhfa.com
In 1997 the Authority led a successful effort to amend its enabling legislation to allow more
flexibility in issuing bonds. These amendments permitted the Authority to finance a greater array
of health care projects and removed the requirement for high credit ratings.
In 1999 the Authority created a program to provide low-cost loans for rural and underserved
health care facilities (Arizona Health Assistance Program) and hired its first Executive Director,
Blaine Bandi. Mr. Bandi represents the Authority with over 20 years experience in healthcare
administration and has significant experience in the areas of healthcare planning, primary care
administration and rural medically underserved populations in Arizona
In 2003 the Authority again led a successful effort to amend it enabling legislation. These
amendments permitted the Authority to issue bonds for Arizona headquartered nonprofit
healthcare organizations with multi-state operations and expanded the Authority's ability to issue
taxable debt for health care facilities. The Authority also received a grant from St. Luke's Health
Initiatives to provide targeted technical assistance to rural, medically underserved communities to
identify community needs and increase their ability to leverage other resources and otherwise
improve organizational capability. St. Luke's is a public foundation created by the sale ofthe St.
Luke's nonprofit healthcare system. St. Luke's grant programs focus on increasing the
organizational capacity of health and human services, as well as on promoting grassroots
community development.
These activities demonstrate the Authority's commitment to financing the future of healthcare in
Arizona. The Authority remains poised as a catalyst in the development ofhealth care services in
rural and underserved areas of the state. As a quasi-governmental body, the Authority is well
positioned to leverage both public and private fmancing for the development of new services and
nurturing ofappropriate existing services.
2. The effectiveness with which the agency has met its objectives and purpose and
the efficiency with which it has operated.
The Authority successfully meets its objectives and pmpose and works diligently to expand the
availability of essential health services throughout Arizona. Attached as Exhibit A, is a list ofthe
amounts, names and locations bfthe Authority's activities since its last Sunset Review in 1995.
Since 1995 the Authority has issued almost $1.9 billion in bond financing for the construction and
renovation of facilities and acquisition of essential equipment and technology. These financings
have benefited rural and urban hospitals, blood banks, assisted living facilities, a pediatric
hospital, medical centers, a medical and dental school, pediatric long term care facilities,
behavioral health providers, and a Regional Behavioral Health Authority.
Since 2000 the Authority's Arizona Health Assistance Program (AHAP) has loaned $1.2 million
to rural hospitals and health centers, an urban health center and a birthing center. AHAP loans to
two rural hospitals (Douglas and Springerville) enabled these then struggling facilities to remain
open following bankruptcy proceedings.
Since 2002 the Authority has provided over $150,000 in direct or compensated technical
assistance to develop or expand essential health care services in rural and medically underserved
communities and tribal reservations. This program has been funded in part by a grant from the
St. Luke's Health Initiatives and has been coordinated with the Arizona Department of Health
Services, Office ofHealth Systems Development.
2
In 2005 the Authority antIcIpates directing additional financial resources to improve rural
facilities' access to capital markets for purposes of acquiring or replacing critical patient
diagnostic equipment.
The Authority's operations are funded solely by the revenues generated from its bond financing
activities. The Authority receives no state funding.
3. The extent to which the agency has operated within the public interest.
The Authority has clearly operated within the public interest. As noted in #1 above, the Authority
was established by the Arizona legislature to issue bonds for the purpose of improving health care
for residents of Arizona by providing less expensive financing for health care facilities. The
Authority's lower cost financing has allowed Arizona health facilities to save approximately 15%
on their overall debt service payments during the life of their bond issues. As a result of these
savings, health care costs are reduced and the availability of health care services is improved for
residents of Arizona.
Additionally, the Authority holds monthly meetings that, pursuant to state law, are always open to
members of the public. The meetings are properly announced with agendas posted within the
Arizona Department of Health Services and on the Authority's website (www.azhfa.com). The
Authority also maintains a mailing list of interested parties that have indicated a desire to receive
notices and agendas ofthe Authority's meetings.
The Authority's website provides information regarding the Authority's purpose, requirements
for financing, composition of the Board of Directors, application materials, historical bond
financings, and current meeting agendas.
4. The extent to which rules adopted by the agency are consistent with the
legislative mandate.
The Authority is in compliance with all regulations for rulemaking agencies. The Governor's
Regulatory Review Council has reviewed the Authority's rules and determined that they were
consistent with the Authority's statutes. At the request ofthe GRRC, the Authority has proposed
minor changes to its rules relating to the "elimination of legalese". The proposed rules have been
submitted to the GRRC for a courtesy review.
5. The extent to which the agency has encouraged input form the public before
adopting its rules and the extent to which it has informed the public as to its
actions and their expected impact on the public.
The Authority reviews and approves applications from nonprofit health care organizations
seeking financing for their facilities. The Authority is not a regulatory agency and receives only
limited contact from the public outside of its applicant agencies. The Authority complies with the
State's open meeting laws and its rules by posting public meeting notices at least 24 hours in
. advance and making the agenda available to the public. Members of the public have the
opportunity to make comment to the Authority at every meeting. Additionally, all seven
members ofthe Board ofthe Authority are public members.
3
In addition the Authority is required by laws and regulations under the Internal Revenue Code to
provide for public hearings in connection with the issuance of bonds. These public hearing are
separate from the Authority's monthly meetings. Notices ofthese public hearing are published in
newspapers ofgeneral circulation.
The issuance by the Authority of its bonds for the benefit of a particular applicant institution will
not have a negative impact upon the public. In the rare instance that a borrowing health care
facility defaults in the payment of its debt service obligations, the investors in the bonds, that
could include a small portion of the State population, may not be repaid on their investment. In
connection with its deliberations as to whether a particular financing should be approved, the
Authority considers the likelihood that its borrowers can provide the funds to repay the bonds.
Investors are provided with significant disclosures (in the form of official statements and other
disclosure documents) that describe the merits and risks of a particular investment prior to
purchasing the Authority's bonds. Additionally, various rules and regulations promulgated by the
Securities and Exchange Commission are applicable to the Authority's bonds.
6. .The extent to which the agency has been able to investigate and resolve
complaints that are within its jurisdiction.
The Authority is not a regulatory agency and has no legislative jurisdiction to investigate and
resolve complaints. The Authority's meetings are open to the public, provide for public comment
and comply with the State's open meeting laws. The Authority would give appropriate
consideration to any complaint brought to its attention.
7. The extent to which the Attorney General or any other applicable agency of
state government has the authority to prosecute actions under the enabling
legislation.
The Authority is not a regulatory agency and has no legislative jurisdiction to investigate and
resolve complaints. The Authority's enabling legislation provides no authority to the Attorney
General or any other applicable agency to prosecute actions.
8. The extent to which the agency has addressed deficiencies in its enabling statutes
that prevent it from fulfilling its statutory mandate.
The Authority has sought and received statutory changes on two separate occasions to improve its
ability to finance critical health care projects in Arizona.
In 1997, the Authority's enabling legislation was amended to allow more flexibility in issuing
bonds. These amendments permitted the Authority to frnance a greater array of health care
projects and removed the requirement for high credit ratings.
In 2003 the Authority again led a successful effort to amend it enabling legislation. These
amendments permitted the Authority to issue bonds for Arizona headquartered non-profit
healthcare organizations with multi-state operations and expanded the Authority's ability to issue
taxable debt for health care facilities.
4
9. The extent to which changes are necessary in the laws of the agency to
adequately comply with these factors.
The Authorityhas no recommended changes at this time.
10. The extent to which the termination of the agency would significantly harm the
public health, safety or welfare.
Termination of the Authority would deprive the state's health care providers of a needed source
oftax-exempt financing and ultimately may adversely affect the cost ofhealth care in the state. If
the Authority were terminated, this significant vehicle for tax-exempt financing would be lost,
and the significant potential for reduction of health care costs and improvements of health care
services would be removed. Indeed, the Authority's termination may result in Arizona's
residents paying higher health care costs than would otherwise be available without the existence
of the Authority. Furthermore, the absence of the Authority would limit Arizona's health care
institutions ability to finance projects needed to provide services to Arizona's growing
population.
The State is not responsible for any costs incurred by the Authority, including but not limited to
operational and administrative costs and the costs of issuing bonds. Accordingly, Arizona's
health care providers and residents are realizing these benefits without the State having to incur
the operational and administrative costs.
Additionally, a legal issue would exist with respect to the effect of the termination of the
Authority on existing outstanding bonds and other obligations issued by the Authority, which
have maturities extending for as long as thirty years. Even if the outstanding bonds were still
deemed to be valid, the termination of the Authority may have an adverse effect on the market
perception and market rate for these bonds, which may in tum cause the Authority's bondholders
to suffer a loss in the bond market or cause the existing borrowers to pay higher interest rates with
respect to bonds that bear variable rates.
11. The extent to which the level of regulation exercised by the agency is
appropriate and whether less or more stringent levels of regulation would be
appropriate.
The Authority is not a regulatory agency. As such, there are no regulations that can be evaluated
to determine whether they should be more or less stringent. The Authority is regulated by its
rules, state statute and federal tax code. The Authority believes these regulations to be
appropriate.
12. The extent to which the agency has used private contractors in the performance
of its duties and how effective use of private contractors could be accomplished.
In conducting its operations, the Authority makes significant use of private contractors. The
Authority contracts for legal services, financial reviews of applications, and annual financial
audits of the Authority's financial statements. The costs for these services are passed on to the
borrowing institutions. Accordingly, the Authority could not increase its use of private
contractors more than it is doing already.
5
1. An identification of tbe problem or tbe needs tbat tbe agency is intended to
address
The Authority was created to provide a mechanism for nonprofit health care agencies to access
low cost capital funds. The Authority issues tax-exempt bonds and other obligations to finance
health care facilities or projects on behalf of nonprofit health care institutions. Interest on the
Authority's bonds and other fmancing obligations is exempt from income taxation, which permits
the Authority to obtain lower market interest rates for its bonds than the interest rate than would
otherwise be available from a bank or from other forms of financing. In this way the Authority
acts as a "conduit" to provide less expensive fmancing for such nonprofit health care institutions
than the institutions could obtain on their own. As a result of the Authority's less expensive
financings, health care costs are reduced and the availability of health care services is improved
for residents ofArizona.
2. A statement, to tbe extent practicable, in quantitative and qualitative terms, of
the objectives of sucb agency and its anticipated accomplisbments.
The primary objective of the Authority is to issue tax-exempt bonds and other obligations to
finance health care facilities or projects on behalf of nonprofit health care institutions. Since its
last Sunset Review process in 1995, the Authority has also focused on targeting services to rural
and underserved areas of the state. In 1999 the Authority created a program to provide low-cost
loans for rural and underserved health care facilities (Arizona Health Assistance Program). In
2003 the Authority began providing technical assistance to develop or expand essential health
care services in rural and medically underserved communities and tribal reservations. This
program has been funded in part by grant from the St. Luke's Health Initiatives and has been
coordinated with the Arizona Department of Health Services, Office of Health Systems
Development. Attached as Exhibit A, is a list of the amounts, names and locations of the
Authority's activities in these three areas.
3. An identification of any other agencies having similar, conflicting or duplicate
objectives, and an explanation of the manner in which the agency avoids
duplication or conflict with other such agencies.
There are no other state agencies having similar, conflicting or duplicate objectives.
4. An assessment of the consequences of eliminating the agency or of consolidating
it with another agency.
As noted in #10 above, termination of the Authority would deprive the state's health care
providers of a needed source oftax-exempt financing and ultimately may adversely affect the cost
of health care in the state. The absence of the Authority would limit Arizona's health care
institutions ability to finance projects needed to provide services to Arizona's growing
population. Eliminating the Authority would also cause the Authority's bondholders to suffer a
loss in the bond market andlor cause the existing variable rate borrowers to pay higher interest
rates.
6
The Authority believes consolidating the Authority with another agency would not be in the best
interests of the residents of Arizona and the health care institution~ serving them. There are no
other agencies having similar or duplicate objectives. Consolidation with another state agency
would create unnecessary obstacles to fmancings. Additionally, consolidation with another
agency would require legislative fmancial support and/or an increase in the fees the Authority
charges borrowers thus diminishing the original intent of creating the Authority to provide less
expensive financing.
On behalf of the Arizona Health Facilities Authority, I thank you for the opportunity to respond
to these questions. If you have additional questions, or require clarification, please contact me at
602-375-2770.
7
ATTACHMENT A: ARIZONA HEALTH FACILITIES AUTHORITY
Revenue bonds Issued 1995 to Current (in millions):
Agency
Blood Systems, Inc.
Care Institute, Inc.
Northern Arizona Healthcare System
Northern Arizona Healthcare System
Bethesda Foundation
Northern Arizona Healthcare System
John C. Lincoln Health Network
Catholic Healthcare West
Phoenix Children's Hospital
Universtity Physicians
Carondelet Health Network
Scottsdale Healthcare, Inc.
Arizona School of Health Sciences
John C. Lincoln Health Network
Hospital District No. One - Mohave County
Hacienda de los Angeles
Sun Health Corporation
Carondelet Health Network
Phoenix Children's Hospital
John C. Lincoln Health Network
Royal Oaks Lifecare Community
Blood Systems, Inc.
Community Partnership of Southern Arizona
John C. Lincoln Health Network
Yavapai Regional Medical Center
Northern Arizona Healthcare System
Banner Health System
John C. Lincoln Health Network
Sun Health Corporation
The Terraces
Southwest Behavioral Health System
Arizona School of Health Sciences
Blood Systems, Inc.
Sun Health Corporation
Banner Health System
Wickenburg Community Hospital
Total
Location
Various
Mesa
Flagstaff
Flagstaff
Phoenix
Flagstaff
Phoenix
Phoenix
Phoenix
Tucson
Tucson
Scottsdale
Mesa
Phoenix
Kingman
Phoenix
Sun City
Tucson
Phoenix
Phoenix
Sun City
Various
Tucson
Phoenix
Presott
Flagstaff
Various
Phoenix
Sun City
Phoenix
Phoenix
Mesa
Various
Sun City
Various
Wickenburg
$
Original
Issue
Amount $
9.5
11.4
24.1
29.6
9.5
73.1
1.8
120.0
40.0
5.0
3.0
6.5
17.2
34.3
11.8
1.0
10.0
4.0
45.0
7.0
20.5
4.4
5.1
47.0
7.5
35.0
325.0
4.0
5.5
62.0
5.5
2.6
55.0
4.5
836.0
6.0
1,889
1
Arizona Health Assistance Program Loans Approved 2000 to Current
Agency
Mountain Park Health Center
Community Healthcare of Douglas
White Mountain Regional Medical Center
Phoenix Developing Families Center
Canyonlands Community Health Center
Copper Queen Community Hospital
North Country Community Health Center
EI Pueblo Health Center
Total
Location
Phoenix
Douglas
Springerville
Phoenix
Page
Bisbee
Flagstaff
Tucson
Amount $
50,000
350,000
150,000
65,000
150,000
150,000
150,000
150,000
$ 1,215,000
Grants and Technical Assistance Provided 2002 to Current
Agency
Yavapai Apache Nation
Fort Mojave Indian Tribe
Mountain Park Health Center
Hulapai Tribe
Clinica Adelante
Phoenix Developing Families Center
Las Fuentes Clinic
Yavapai County Health Department
Family Involvement Center
Gila River Health Care Corporation
North Country Community Health Center
Chiracahua Community Health Center
Mountain Park Health Center
Morenci Health Care Center
United Methodist Outreach Ministries
Phoenix Day
Desert Senita Community Health Center
Northern Apache County Special Health Care District
Total
location
Camp Verde
Fort Mojave
Phoenix
Peach Springs
Queen Creek
Phoenix
Guadalupe
Prescott
Phoenix
Sacaton
Flagstaff
Elfrida
Phoenix
Morenci
Phoenix
Phoenix
Ajo
S1. Michaels
Amount $
12,500
11,500
5,000
5,000
5,000
10,000
5,000
10,000
6,500
8,100
10,080
9,900
9,850
10,000
8,000
10,000
10,000
5,000
$151,430
2
Interim agendas can be obtained via the Internet at http://www.azleg.state.az.usllnterimCommittees.asp
ARIZONA STATE LEGISLATURE
INTERIM MEETING NOTICE
OPEN TO THE PUBLIC
SENATE HEALTH AND HOUSE OF REPRESENTATIVES HEALTH
COMMITTEE OF REFERENCE FOR THE:
SUNSET OF THE HEALTH FACILITIES AUTHORITY
SUNSET OF THE MEDICAL RADIOLOGIC TECHNOLOGY BOARD OF EXAMINERS
SUNSET OF THE NURSING CARE INSTITUTION ADMINISTRATION AND ASSISTED LIVING
SUNSET OF THE BOARD OF HOMEOPATHIC MEDICAL EXAMINERS
SUNRISE REQUEST OF THE ARIZONA ASSOCIATION FOR HOME CARE
SUNRISE REQUEST OF THE ARIZONA MIDWIFERY INSTITUTE
SUNRISE REQUEST OF THE ARIZONA ALLIANCE OF SURGICAL SPECIALISTS
Date:
Time:
Place:
Tuesday,November8,2005
9:00 a.m.
House Hearing Room 1
AGENDA
1. Call to Order - Opening Remarks
2. Health Facilities Authority
• Presentation by the Health Facilities Authority
• Public Testimony
• Discussion and Recommendations by Committee of Reference
3. Medical Radiologic Technology Board of Examiners
• Presentation by the Medical Radiologic Technology Board of Examiners
• Public Testimony
• Discussion and Recommendations by Committee of Reference
4. Nursing Care Institution Administration and Assisted Living Facility Managers Board
• Presentation by the Nursing Care Institution Administration and Assisted Living
Facility Managers Board
• Public Testimony
• Discussion and Recommendations by Committee of Reference
5. Board of Homeopathic Medical Examiners
• Presentation by the Board of Homeopathic Medical Examiners
• Public Testimony
• Discussion and Recommendations by Committee of Reference
6. Arizona Alliance of Surgical Specialists
• Presentation by the Arizona Alliance of Surgical Specialists
• Public Testimony
• Discussion and Recommendations by Committee of Reference
7. Arizona Association for Home Care
• Presentation by the Arizona Association for Home Care
• Public Testimony
• Discussion and Recommendations by Committee of Reference
8. Arizona Midwifery Institute
• Presentation by the Arizona Midwifery Institute
• Public Testimony
• Discussion and Recommendations by Committee of Reference
9. Adjourn
Members:
Senator Jim Waring, Co-Chair
Senator Carolyn Allen
Senator Marsha Arzberger
Senator Robert Cannell
Senator Barbara Left
10/31/05
jmb
Representative Rick Murphy, Co-Chair
Representative David Bradley
Representative Laura Knaperek
Representative Linda Lopez
Representative Doug Quelland
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ARIZONA STATE LEGISLATURE
SENATE HEALTH AND HOUSE OF REPRESENTATIVES HEALTH COMMITTEE OF
REFERENCE FOR THE:
SUNSET OF THE HEALTH FACILITIES AUTHORITY
SUNSET OF THE MEDICAL RADIOLOGIC TECHNOLOGY BOARD OF EXAMINERS
SUNSET OF THE NURSING CARE INSTITUTION ADMINISTRATION AND
ASSISTED LIVING
SUNSET OF THE BOARD OF HOMEOPATHIC MEDICAL EXAMINERS
SUNRISE REQUEST OF THE ARIZONA ASSOCIATION FOR HOME CARE
SUNRISE REQUEST OF THE ARIZONA MIDWIFERY INSTITUTE
SUNRISE REQUEST OF THE ARIZONA ALLIANCE OF SURGICAL SPECIALISTS
Minutes of the Meeting
Tuesday, November 8,2005
9:00 a.m., House Hearing Room 1
Members Present:
Senator Jim Waring, Co-Chair
Senator Carolyn Allen
Senator Marsha Arzberger
Senator Robert Cannell
Senator Barbara Left
Members Absent:
Representative David Bradley
Staff:
Beth Kohler, Senate Health Research Analyst
Elizabeth Baskett, House Health Research Analyst
Representative Rick Murphy, Co-Chair
Representative Laura Knaperek
Representative Linda Lopez
Representative Doug Quelland
Co-chairman Murphy called the meeting to order at 9: 12 a.m. and attendance was
noted. .
Presentation by the Health Facilities Authority
Blaine Bandi, Executive Director, Health Facilities Authority (HFA), stated that his
organization was established in 1977 to issue bonds exempt from income tax on the
Authorities interest which enables them to get lower interest rates. He explained that the
Authority would then loan their proceeds to health care facilities at lower rates than the
healthcare facilities would receive from banks. Mr. Bandi remarked that the Authority
provided low cost loans for rural and underserved healthcare facilities.
He stated that rural communities that have benefited from the program included:
• Flagstaff
• Kingman
• Prescott
• Wickenburg
• Douglas
• Springerville
• Page
• Bisbee
• Camp Verde
• Fort Mojave
• Peach Springs
• Sacaton
• Elfrida
• Morenci
• Ajo
• St. Michaels
Mr. Sandi remarked that the Health Facilities Authority was not a regulatory agency and
that it existed solely to improve the health care for the residents of Arizona through the
financing of critical health care projects. He remarked that failure to continue the
Authority would deprive the State's health care providers of a needed source of tax
exempt financing. He respectfully requested the Committee of Reference recommend
the Arizona Health Facilities Authority be continued for ten years.
In response to Senator Cannell's question about the possibility of a hospital not paying
their loan back, Mr. Sandi told the Committee that since the inception of the HFA in
1977, this had only occurred once. He remarked that payments by that hospital were
still being made to HFA. Mr. Sandi added that the residents of the State have no legal
obligation to back up those bonds because they were issued solely on the credit of the
institution. .
Representative Knaperek asked Mr. Bandi to list the seven directors for HFA and he did
so as follows:
1. Bruce Gulledge, health care underwriter who does financing for health
care institutions across the country.
2. Donald Shropshire, former hospital administrator; Tucson Medical
Center.
3. Jennifer Ryan, community health center director from Southern Arizona.
4. Rufus Glasper, Chancellor of the Maricopa County Community College
District.
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5. William Emerson, City Attorney for the City of Peoria.
6. Susan Straussner, Community Health Nurse from Parnell County.
7. Steven Russo, Sond Attorney based in Tucson.
In response to Representative Knaperek's question about funding, Mr. Sandi told the
Committee that the HFA's annual budget was approximately $300,000 per year and that
revenues to the Authority were generated through bond financing activities. He stated
that when the HFA approved bonds, applicants are paying one basis point, which is .01
of one percent of total financing. He remarked that additionally applicants paid 7.5 basis
points which was equal to .075 percent. Mr. Sandi told the Committee that the HFA
brought in between $300,000 to one million dollars per year, a five year cycle with one
million dollars every fifth year. He added that the extra money was used for loans to
other healthcare facilities in underserved parts of the State. Mr. Sandi told the
Committee that the credit rate was predicated on a number of things, the most
prominent being the credit worthiness of the applicant and also on the term and purpose
of the loan. He remarked that he had seen the interest rates in the range of about four
percent up to about seven percent.
Representative Knaperek asked the amount of savings in interest rates there was for
people who used the HFA services. Mr. Sandi responded that historically, the industry
used a figure of 15 percent savings going to tax exempt financing versus taxable
financing. He stated that today, when interest rates are lower, that 15 percent figure
would be closer to 10 or 11 percent.
In response to Representative Quelland, Mr. Sandi stated that the title holder on any
property in which the HFA loaned money is going to be that non-profit corporation. He
remarked that the HFA had liens on record for every loan they do. Mr. Sandi explained
that the bond financing has specific guidelines and rules the HFA must follow in the
event of a default.
In response to Senator Left, Mr. Sandi told the Committee that HFA hired a lobbyist
solely from lack of experience with legislative scenarios and to help the organization
navigate through the process.
Representative Quelland moved that the Senate Health and House
Health Committee of Reference recommend to continue the Health
Facilities Authority Board for ten years. By voice vote, the motion
CARRIED.
Presentation by the Medical Radiologic Technology Board of Examiners
Aubrey Godwin, Director, Radiation Regulatory Agency, told the Committee that the
Medical Radiologic Technology Board of Examiners (MRTSE) was created in 1977 by
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legislation due to the large number of unqualified technicians in the State. He stated that
the role of MRTBE was to make sure that technicians or people applying ionizing
radiation to a human being had been properly trained. He remarked that the type of
technologist observed by MRTBE were X-ray, therapy, nuclear medicine and
mammography technologists. Mr. Godwin pointed out that nuclear medicine technology
had been added recently to MRTBE's certification program. He stated that MRTBE
presently had approximately 9,000 certificate holders, some of whom hold dual
certification. Mr. Godwin pointed out that most of the MRTBE cases dealing with
disciplinary matters were related to failure to pay dues or questionable certifications
since their last sunset review.
In response to Senator Allen, Mr. Godwin explained that drug treatment was made
available through MRTBE for certified technicians who may need it and failure to
successfully complete these proceedings would result in termination of certification.
In response to Senator Cannell, Mr. Godwin said that most of the drug related issues
with technicians took place in larger institutions such as hospitals as opposed to private
physician offices. He stated that if the institution where a troubled technician worked
had a drug treatment program, MRTBE would direct the technician to utilize that
program and if not, the technician would attend an independent drug program paid for
by the technician.
In response to Senator Arzberger, Mr. Godwin remarked that due to the different State
requirements for technician certification, out of town applicants must be certified in
Arizona before working in this State.
In response to Representative Knaperek, Mr. Godwin told the Committee that there
were both nationally certified and non-nationally certified radiological technician schools
in Arizona. He stated that the vacancy on MRTBE had been available for less than one
year.
In response to Representative Murphy, Mr. Godwin told the Committee that he looked
forward to finding a citizen to fill the vacancy on the MRTBE.
In response to Representative Knaperek, Mr. Godwin remarked that due to the shortage
of technicians in the State, Arizona has experienced an influx of out of State
technicians.
In response to Senator Allen, John Gray, Program Manager, MRTBE, informed the
Committee that a high school graduate could enter into the field of radiological
technology either through community college or privately funded programs. He added
that private school training took two years or less.
In response to Senator Leff, Mr. Godwin stated that there was a continuing education
requirement in place for the field of radiological technology due to changing technology.
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Public Testimony
Jerry High, Arizona state Society of Radiologic Technologists, told the Committee
that out of concern for public safety, he was glad that certification was required before
becoming a technician.
In response to Senator Left, Mr. Hyde said that passing the "Registry," a test sponsored
by the American Association of Radiologic Technology (AART) was very difficult, yet
allowed him to be nationally certified.
In response to Senator Left, Mr. Godwin told the Committee that radiologic
technologists were certified professionals, not licensed professionals.
Stephen Sapareto, Director of Medical Physics, Banner Good Samaritan Hospital,
stated that he was the boss of the technologists at his facility and expressed the
importance of technologists to be certified. He pointed out that another group certified
by MRTBE were radiologic therapists, who administered ongoing care such as
chemotherapy, and that it was especially important for these therapists to be certified.
Infesponse to Senator Left, Mr. Safereto explained that radiologic technologists and
therapists had a chief technologist or therapist supervising them, followed by a chain of
command that ultimately led to a physician at his facility.
Jeff Siupik, Director of Radiation Services, MRTBE told ~he Committee that being a
director of technologists, he is concerned about the shortage of technologists in the
State due to strict standards by the MRTBE on non-local technologist operating
machinery in a crisis situation.
Senator Left opined that two weeks, the time it takes for MRTBE to certify a non-local
technician, was not a long period of time.
Representative Quelland moved that the Senate Health and House
Health Committee of Reference recommend to continue the Medical
Radiologic Technology Board of Examiners for ten years. The motion
CARRIED by voice vote.
Presentation by the Board of Examiners of Nursing Care Institution
Administrators and Assisted Living Facility Managers
Allen Imig, Executive Director, Board of Examiners of Nursing Care Institution
Administrators and Assisted Living Facility Managers (BENCIAIALFM), informed
the Committee that the Board was created in 1975 to protect the public's health and
welfare by regulating and licensing nursing care institution administrators. He stated that
in 1990, the board statutes were amended to add the responsibility of certifying and
regulating adult home care managers and renamed in 1998 to Assisted Living Facility
Managers. The mission of the Board was to protect the health, welfare and safety of its
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citizens, to seek and institute the use of services of nursing care institution
administrators and assisted living facility managers. Mr. Imig said that the Board's
procedures helped ensure quality and competency standards were met by
administrators and managers. In addition, the Board approves continuing education
courses to make sure quality and useful education is being taught. He explained that
since June of 2005, the Board had undergone an "extreme makeover" with virtually all
new members being appointed. This reduced the back log of uninvestigated complaints
significantly. Mr. Imig told the Committee that the Board had reduced their staff from five
to three, leaving an executive director, investigator and a licensing coordinator. He
encouraged the Committee to continue the BENCIAIALFM.
In response to Senator Allen, Mr. Imig said that the Board consisted of five managers,
two public members and the remaining members were administrators.
Senator Allen opined that home care nursing staff deserved better pay.
In response to Senator Waring, Mr. Imig stated that the changes made to the Board has
helped, but not solved its financial problems.
In response to Senator Arzberger, Mr. Imig said that his Board investigated complaints
from citizens regarding private care nurses and administrators as well as complaints
filed by the Department of Health Services.
In response to Senator Waring, Mr. Imig told the Committee that the Board's website
contained information regarding decisions on disciplinary action.
In response to Senator Allen, Mr. Imig explained that out of the last renewal period for
managers, 2,000 of 2,500-2,600 renewal notices sent were renewed, causing 578
expired notices to be sent by the Board. .
In response to Senator Leff, Mr. Imig opined that his Board received between 60 and 70
complaints a year, mainly not health care related but administrative related.
In response to Senator Waring, Mr. Imig stated that with the current staff, the Board
should catch up on its back log of complaints by January 2006.
In response to Representative Quelland, Mr. Imig remarked that the Board was actively
seeking replacements for the three vacancies on the Board.
Senator Leff suggested that the Committee send a letter to the Governor encouraging
her to appoint the three positions.
In response to Representative Quelland, Mr. Imig opined that he would like to see a five
year continuation be given to the Board.
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Representative Knaperek remarked that time elected to the Board would reflect
concerns with term limits and not reflect faith in Mr. Imig.
Public Testimony
Robert Frechettee, President, Arizona Health Care Association (AHCA), told the
Committee that on behalf of his Board, he would like to offer support in the continuation
of the BENCIAIALFM. He opined that the efforts implemented by the new staff showed
that the Board was very serious about suggestions and concerns brought forth by the
Legislature.
In response to Senator Waring, Mr. Bruschette stated that the AHCA was seen as the
organization that represented the for profit facilities, containing some non-profit facilities
and representing assisted living communities and independent full service communities.
He said that Assisted Living Federation represents assisted living centers in homes and
the Arizona Association of Homes for the Aging represents a number of facilities seen
as non-profit businesses.
In response to Senator Cannell, Mr. Bruschette opined that if fee increases were
necessary to fund the continuation of the Board, that it would be supported by AHCA.
Senator Leff stated that if the Committee made a five year recommendation at this
meeting and the audit comes out in December and is changed, the legislation coming
out in January does not have to be the same as the recommendation.
Representative Knaperek told the Committee that Mr. Imig had a good work history as a
Director in other fields.
In response to Representative Knaperek, Beth Kohler, Senate Health Research Analyst,
stated that the first audit of the Board would take place approXimately six months after
nomination adding an 18 month follow up audit, only if the requirements and
recommendations made by the report were not met.
Representative Quelland moved that the Senate Health and House
Health .Committee of Reference recommend that the Board of
Examiners of Nursing Care Institution Administrators and Assisted
Living Facility Managers be continued for two years. The motion
FAILED.
Representative Quelland moved that the Senate Health and House
Health Committee of Reference recommend that the Board of
Examiners Nursing Care Institution Administrators and Assisted
Living Facility Managers be continued for five years pending the
findings of the Auditor General's report due in December of 2005.
The motion CARRIED.
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Presentation by the Board of Homeopathic Medical Examiners
Chris Springer, Executive Director, Homeopathic Board, told the Committee that
she had worked for the Board of Homeopathic Medical Examiners (BHME) since 1999.
She complimented appointments made to the Board by all of the Governors on both the
Democrat and Republican side. She opined that the laws governing the licensing of
homeopathic physicians set forth by the State had been upheld. Ms. Springer stated
that a potential audit could be helpful in improving procedures and welcomed the
process of an impartial audit. She said that the Board currently has 117 licensed
homeopathic physicians.
Senator Leff opined that it was nice to hear Ms. Springer suggest an audit of the Board
and noted that BHME had gone approximately 20 years without an audit.
Senator Allen opined that she would like to see an audit of the BHME as well. She
added that in no way did legislation intend to do away with the homeopathic form of
medicine.
In response to Representative Lopez, Ms. Springer stated that a licensed homeopathic
physician could only continue to practice in one state after receiving disciplinary. action
in another state for less than one year, due to the Board's annual. renewal application
required of all homeopathic physicians, which would discover the violation in the other
~~e. .
In response to Representative Murphy, Ms. Springer said that there was the possibility
of a physician being dishonest about any past disciplinary action, however, there is a
standard penalty in place for such an event.
In response to Senator Waring, Ms. Springer told the Committee that there was not an
easily accessible data base of criminal background checks for physicians and added
that the fee to search names on the federal data base was $3.75 per name.
Senator Leff opined that being dishonest on an application should have strong
consequences for any physician when dealing with the subject matter of past
disciplinary action.
Dr. Charles Schwengel, President of the Homeopathic Medical Licensing Board,
told the Committee that being dishonest on an application was the most egregious of
unprofessional conduct that could happen.
In response to Representative Knaperek, Ms. Springer stated that a physician lying on
the application was discovered once and a letter of concern was issued.
Representative Knaperek opined that there should be a certain amount of consideration
afforded to the applicant on whether the incident was an issue of forgetfulness or
deliberate intent.
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In response to Senator Cannell, Ms. Springer stated that setting aside funds to check
each individual physician's background would be a step in the right direction.
Senator Allen remarked that the concerns stated today could be addressed in the
forthcoming audit.
In response to Representative Quelland, Ms. Springer told the Committee that some
traditional doctors became homeopathic physicians, and then dropped their traditional
medical license.
In response to Representative Quelland's comments on a medical doctor dropping their
license to pursue homeopathy due to decreased chances of medical malpractice
occuring, Dr. Schwengel remarked that he could not comment on the personal reasons
a physician might do this.
In response to Representative Murphy, Ms. Springer stated that the percentage of
homeopathic physicians who were previously licensed as medical doctors was very low.
Representative Murphy told the Committee that some physicians may choose to not
carry medical malpractice insurance to avoid becoming a target for medical malpractice.
Senator Cannell opined that there was a fear with physicians of becoming a target for
medical malpractice by carrying medical malpractice insurance.
In response to Senator Waring, Ms. Springer stated that BHME kept records indefinitely
of reported complaints against homeopathic physicians. She told the Committee that in
her opinion, the BHME should only keep records for up to five years similar to other
medical boards.
In response to Senator Waring, Ms. Springer remarked that she felt it necessary to keep
records of complaints for longer than five years, only if they were substantiated.
In response to Senator Allen suggesting that more public members should be on the
BHME, Ms. Springer said.that additional public members on the Board would be a good
idea.
Public Testimony
Dr. Kathleen Fry, dually licensed by the Arizona Medical Board and Arizona
Homeopathic Medical Board, told the Committee that she had gathered a large
amount of important information pertaining to the BHME that she would like to share
with the Legislature and the Office of the Auditor General. She stated that she had been
committed to the practice of homeopathic and alternative medicine for twenty years in
Scottsdale, Arizona. She remarked that it was not her intent to keep patients from
receiving homeopathic care. Dr. Fry opined that the BHME had been grossly negligent
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in its spiritual, moral and judicial responsibilities to protect the public from unscrupulous
physicians by licensing felons, failing to adequately discipline physicians who had
harmed patients, failing to adequately file complaints against other board members and
by giving licenses to physicians who could not pass a basic oral examination of
homeopathy. She stated that when she was recruited to the BHME in 1994, she was
informed by the Board that her dues were necessary to keep the Board in existence and
to allow her to continue to practice homeopathic medicine. Dr. Fry remarked that the
dues for the Association were $1000 per year in addition to the $500 per year licensing
fee and the $150 dispensing fee. She explained that if a homeopathic physician in
Arizona lost their M.D. license in another state, they could still practice homeopathy
here in Arizona which gives that physician the power to write prescriptions for all
classes of drugs, conduct minor surgery in their office, perform acupuncture and various
other medical techniques. In conclusion, Dr. Fry told the Committee that the
homeopathic license gives the physician a much broader range of modalities that they
can use with much less scrutiny and training.
In response to Senator Waring, Dr. Fry stated that in theory, physicians who had marks
on their records in other states should be rehabilitated in that state before being allowed
a license in Arizona, but that had not always been the case.
In response to Representative Knaperek, Dr. Fry remarked that transcripts from board
meetings that she had obtained from Ms. Springer, were public record. .
In response to Senator Left, Dr. Fry explained that a device called a sputnik originated
in Russia and is swallowed by a patient and designed to kill parasites by radiation. She
told the committee that a physician sold the device to a patient in Florida over the
phone, and that upon taking this device orally,. the patient developed a bowel
obstruction resulting in the removal of several feet of her intestine. She added that the
said physician, being one of the originators of the BHME, only received a letter of
concern and an apology by the Board for placing that letter in the physicians file.
In response to Senator Waring, Dr. Springer told the Committee that she disagreed with
Ms. Fry's perception of the Board.
Dr. Todd Rowe, Homeopathic and Integrative Medical Physician, Desert Institute
of Classical Homeopathy, dually licensed, told the Committee that he had been
practicing homeopathic medicine for over twenty years. He urged the Committee to
continue the BHME. He remarked that after attending several meetings over the years
of the BHME, he had found most of what Dr. Fry said to be untrue.
In response to Senator Cannell, Dr. Rowe stated that the number of out-of-state
homeopathic physicians licensed in Arizona was very small. He explained that Arizona
was one of only three states who had homeopathy boards and that this was another
reason for an increase in out-of-state applicants in this State.
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In response to Senator Leff, Dr. Rowe said that his homeopathy school had a 1,000
hour program for homeopathy, with plans on expanding that program to 4,000 hours
within the next few years.
In response to Senator Leff, Dr. Rowe stated that the qualifications for a license for
homeopathy consisted of either 40 hours of class of homeopathy, in addition to 300
hours of alternative medicine, or 90 hours of class for homeopathy. He opined that this
met the minimum requirements to become a homeopathic physician and commented on
the fact that some applicants were already licensed medical doctors.
Lee Bakunin, practicing attorney in Arizona for 36 years, representing self, told the
committee that he had spent the last eleven years of his life studying homeopathy. He
explained that after the required 90 hours, there was no continuing education required
to continue practicing homeopathy. Mr. Bakunin said that the Auditor General may
come across the problem of incomplete records of past BHME meetings.
In response to Representative Quelland, Mr. Bakunin said that he currently had studied
about 2,000 hours of homeopathy.
Gladys Conroy, patient of homeopathy, representing self stated that homeopathy
had saved her life. She told the Committee that standard medication caused her great
danger.
Clifford Heinrich, practicing family physician for alternative medicines, opined that
no alternative medical board should be able to have jurisdiction over the spiritual
practice of homeopathy. He added that he had obtained over 1,200 hours of
homeopathy. Dr. Heinrich told the Committee that he had a petition with 200 signatures
recognizing homeopathy as a spiritual practice. He stated that he had an additional
petition to request the Legislature audit the BHME for "reasons previously addressed in
the meeting."
In response to Senator Allen, Dr. Heinrich opined that· homeopathy was being
misrepresented by the BHME from its original spiritual foundation, causing the public to
believe they were receiving homeopathic care when in fact, they were not.
In response to Representative Knaperek question about the spiritual aspect of
homeopathy, Dr. Heinrich explained that a nonmaterial substance was one that had
been diluted to a point where the original property is no longer there, leaving only the
essence of that object.
In response to Representative Murphy, Dr. Heinrich told the Committee that he wanted
the separation between homeopathy and alternative medicines distinguished by the
State.
Amanya Jacobs, Director of Evolution of Self/Soul School Homeopathy, remarked
that she was deeply committed to making homeopathy available to all citizens in the
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State. She said that the Board regulated activities that it deemed homeopathy which
were totally unrelated to that area of medicine. Ms. Jacobs stated that she was in favor
of an audit of the BHME.
Linda Heming, Arizona Homeopathic and Integrative Medical Association, told the
committee that western medicine could not help her and homeopathy saved her life.
Senator Leff remarked that the open meeting law stated that recordings and minutes
must be kept by the open body and must be accurate and open for inspection three
days after the meeting, with no language about whether or not they could be destroyed
at any time period.
Russell Olinsky, patient of homeopathy, spoke in favor of the BHME.
Cynthia MacLuskie, patient of homeopathy, told the Committee that all homeopathy
medicines were not available at health food stores and that prescriptions were the only
way to obtain some of these medicines.
Lisa Platt, Arizona Homeopathic and Integrative Medical Association, speaking on
behalf of the BHME, remarked that BHME was not recruiting felons. She stated that a
number of patients had told her how homeopathy had saved their lives.
Senator Allen moved that the Senate Health and House Health
Committee of Reference recommend that the Board of Homeopathic
Medical Examiners continue for two years, adding the request for an
audit addressing the concerns covered in today's committee.
Representative Quelland explained his vote. He said that although he did not have an
educational background in homeopathy, the homeopathic physicians had a certain
amount of disagreement and confusion among themselves. He reminded the
Committee that this was just a recommendation and that someone was going to create
a bill and that bill would be voted on, making today's vote not a guarantee that the
Board will continue, and he voted "aye."
Senator Cannell explained his vote. He said that although he advocated homeopathy
and the continuation of the Board, that the BHME had suffered a "major black eye"
today. He opined that the director and the president of the boards had not changed their
attitudes and that they should consider their Board a precious commodity by not diluting
their group of good physicians with out of state applicants with questionable credentials
and he voted "aye."
Senator Leff explained her vote. She requested the Auditor General to do both a
financial and performance audit. She remarked that the people who came forward today
against the Board should feel free to do so without retaliation and she voted "aye."
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Senator Waring explained his vote. He said that he was very frustrated with the Board,
and that he would be the first to vote "no" on a bill in the following session if changes
weren't made, but since today's vote was merely a recommendation, he would vote
"aye."
Representative Murphy explained his vote. He said that he shared many of the
concerns voiced by the Committee members today and looked forward to hearing what
the Auditor General had to say and he voted "aye."
The motion CARRIED by a roll call vote of 9-0-1 (Attachment 1).
Representative Murphy RECESSED the meeting at 1:35 p.m. to the sound of the gavel.
Representative Murphy RECONVENED the meeting at 2:30 p.m.
Presentation by the Arizona Midwifery Institute
Marinah Valenzuela Farrell, President of the Arizona Midwifery Institute (AMI),
submitted handouts (Attachment A) and (Attachment B) to the Committee. She told the
Committee that as midwives, their main concern was for safe outcomes of mothers and
babies. She remarked that midwives chose home birth because they believe that birth is
a natural and safe event in the life of a woman. Ms. Farrell explained that in the 1970's,
midwifery became licensed in the State, yet because of medical liability issues,
midwives had experienced difficulty in consults with physicians and access to items to
assist in home birth. .
In response to Senator Allen, Ms. Farrell stated that midwife licensing exams were very
tough and that she had received specialized intravenous training in New Mexico through
the local hospital.
In response to Senator Cannell, Ms. Farrell told the Committee that licensing of
midwives was dependent upon number of hours of experience in child birth delivery with
that applicant. She stated that there were also schools available to midwives that
involved intense clinical training. Ms. Farrell said that a surveyor in the Department of
Special Licensure administered a national exam to applicants in which upon passing,
the applicant must then go through an oral board and upon passing this, must complete
a practical exam which is overseen by the surveyor and other midwives. She told the
Committee that midwives were trained in resuscitating babies.
In response to Senator Leff, Ms. Farrell stated that the midwives were requesting that a
physician not be required to sign off on supplies.
Representative Lopez opined that her own personal experience of giving birth to her last
two children at home from midwives was a wonderful experience.
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Representative Quelland informed the Committee that Arizona had 53 licensed
midwives with 22 of them located in Maricopa County and that there were 343 midwife
births in the home in 2004 in the State.
In response to Representative Quelland, Ms. Farrell remarked that none of the 343
reported' midwife births reported in 2004 resulted in any problems. She stated that
although medical malpractice and liability insurance was available to midwives, the
majority refused it due to its cost in proportion to their pay. She told the Committee that
the Arizona Health Care Cost Containment System (AHCCCS) discontinued the
payment for midwife delivery two years ago due to midwives not carrying medical
malpractice and liability insurance which could possibly put AHCCCS at risk for such
claims.
Senator Leff stated that midwives dealt mostly with low-risk births and that she would
like to see the issue of AHCCCS discontinuing payment for midwife births examined.
Senator Cannell opined that the Com-mittee should hear from AHCCCS because they
obviously found midwifery funds a financial risk for some legitimate reason.
Ms. Farrell told the Committee that mothers who chose home births mainly did so, not
for financial reasons, but because of belief that the hospital environment was just one
intervention leading to another.
Public Testimony
Rory Hays, Arizona Nurses Association, said that the items asked for by the AMI
were appropriate, if accompanied by more training. She stated that she opposed
expanding prescription privileges for anything requiring a Drug Enforcement Agency
number.
In response to Representative Quelland, Ms. Hays said that certification would be
appropriate for midwives.
Ms. Farrell stated that the only thing midwives were requesting was the power to obtain
items already in their reach through a physician, without that physician's pre-approval
and that the laws were already in place on limitations for uses with these items.
Representative Quelland moved that the Senate Health and House
Health Committee of Reference recommend that the Legislature
expand the scope of practice for Arizona's licensed midwives by
allowing procurement, possession, and administration of various
medical devices and medications which will be named in the bill. The.
motion was CARRIED by voice vote. .
SENATE HEALTH AND HOUSE HEALTH COMMITTEE
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Tuesday, November 8,2005
Page 14
Senator Allen opined that midwifery was a choice to be made by the citizen and she
hoped that fatalities did not occur due to the choice of using such a method.
Presentation by the Arizona Association for Home Care
Suzanne Gilstrap, representing the patients for the Arizona Association for Home
Care (AAHC), stated that AAHC was founded in 1983 with a mission to advance quality
home care as an integral component of the health care delivery system. She told the
Committee that she believed in continuing education for home care providers. She
remarked that AAHC had discussed having a joint workshop with the Physical Therapy
Association (PTA) but never actually initiated these workshops. Ms. Gilstrap requested
that the Committee grant an expansion to allow physical therapy assistants to work
under general supervision of a physical therapist as opposed to direct supervision. She
told the Committee that the AAHC respectfully requested the joint Committee
recommend that physical therapy assistants be allowed to practice in the home health
care setting and only in that setting under the following conditions:
• The supervising physical therapist shall be solely responsible for
evaluating the patient and determining a plan of care.
• The supervising physical therapist shall be available at all times via
telecommunication while the physical therapist assistant is providing
treatment interventions.
• The supervising physical therapist supervises no more than two physical
therapy assistants. .
• The supervising physical therapist shall see the patient and revise the plan
of care no less than every 21 days.
• The supervising physical therapist not assign responsibilities to the
physical therapy assistants that in any way allow them to provide
evaluation services for procedures.
• Continuing education requirements should be added to the statute as well.
• The physical therapist would be the one responsible for final evaluation
and discharge of the patient.
In response to Senator Arzberger, Ms. Gilstrap said that proposing a mileage limit would
be a good idea in reference to a physical therapist along with the constant
telecommunication contact. She stated that it was not unusual to recommend that the
practice of home care be extended to other areas outside of the home such as
hospitals.
SENATE HEALTH AND HOUSE HEALTH COMMITTEE
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Tuesday, November 8. 2005
Page 15
In response to Senator Left, Ms. Gilstrap remarked that the AAHC was not intending to
mandate what physical therapists do, but to enable legislation that would allow them to
choose.
In response to Representative Murphy, Ms. Gilstrap stated that home care therapist
assistants were well schooled for their job no matter what setting, with the exception of
no clinical experience required of the physical therapist.
In response to Senator Waring, Ms. Gilstrap remarked that in all fields of medicine,
health care providers were experiencing an inability to serve patients.
Representative Lopez opined that an outside organization should not be directing
physical therapists on how to conduct their practice.
In response to Senator Allen, Ms. Gilstrap told the Committee that currently more than
45 states allow general supervision in the home health care setting and that the only
two states that do not allow it are Pennsylvania and Arizona.
Public Testimony
Karen Jeselun, President of the Arizona Association for Home Care, stated that
even if there were no home care physical therapist available at the time, a patient could.
still be released from the hospital even though they required home care to continue
recovery. Ms. Jeselun compared the relationship between a physical therapist and a
physical therapist assistant to that of a registered nurse and a licensed practical nurse.
She told the Committee that all of their home care providers go through an interview
process, a mandatory criminal background check and participate in orientation often
with preceptors.
In response to Representative Knaperek, Ms. Jeselun stated that Medicare currently
paid home health agencies on an episode basis, meaning for every 60 days of time that
patient is in the care of a home health provider, the home care provider gets a lump
sum. She opined that she was hoping to serve more patients with no increase in cost.
Susie Stevens, representing the Arizona Physical Therapy Association (AZPTA),
informed the Committee that the definitions of general supervision and direct
supervision needed to be reviewed. She stated that she was there in opposition to the
sunrise request.
Heidi Herbst Paakkonen, Executive Director of the Arizona Board of Physical
Therapy (ABPT), told the Committee that the ABPT regulates about 3,200 physical
therapists and 434 physical therapist assistants. She said that due to lack of detailed
information at this time, she would encourage the Board to oppose the Sunrise
Application of the AAHC.
SENATE HEALTH AND HOUSE HEALTH COMMITTEE
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Tuesday, November 8, 2005
Page 16
In response to Representative Knaperek, Ms. Paakkonen remarked that there were
exactly 3,268 licensed in the State but not all of them worked in Arizona. She told the
Committee that approximately 2,800 physiGal therapists listed Arizona addresses. She
stated that there were 434 physical therapy assistants and that approximately 396
reside in Arizona and that it was ABPT's estimate that 350 of them were currently
working in the field of physical therapy.
In response to Representative Quelland, Ms. Paakkonen stated that the ABPT was
required by statute to have three physical therapists and two public members, but no
physical therapist assistants.
In response to Senator Left, Ms. Paakkonen told the Committee that the ABPT does
and has disciplined physical therapist assistants.
Bob Direnfeld, President of the Arizona Physical Therapy Association (AZPTA),
remarked that his organization was the only one in the State representing physical
therapists. He told the Committee that his association opposed the idea of general
supervision. Mr. Direnfeld said that patients were getting discharged from the hospital
too early in most cases compared to years ago, which cause a greater need for these
home care physicians. He remarked that a therapist was ultimately responsible for
anything the physical therapy assistant does which puts the physical therapist's license
on the line.
In response to Representative Murphy, Mr. Direnfeld opined that passing legislation
supporting general care could potentially decrease an even larger amount of physical
therapists.
In response to Senator Cannell, Mr. Direnfeld stated that he was not sure that there was
a shortage in home health care providers. He also remarked that setting a parameter or
definition of a home care patient, would cut down on the patient load.
Representative Knaperek opined that physical therapist assistants should have more of
a vote on the Board.
Peter Zawicki, in favor of the sunrise recommendation, told the Committee that
physical therapists and physical therapist assistants were trained at community colleges
and technical schools across the country. He opined that it was critical that there be
communication between the physical therapist and the physical therapist assistant in all
patient care.
In response to Senator Cannell, Mr. Zawicki stated that physical therapist assistants
were under direct supervision during the education process.
In response to Representative Murphy, Mr. Zawicki remarked that to be able to perform
in public health care, it would be helpful if a physical therapist assistant had a certain
amount or certain type of training.
SENATE HEALTH AND HOUSE HEALTH COMMITTEE
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Tuesday, November 8, 2005
Page 17
Senator Leff opined that home health patients are the most vulnerable patients and she
felt uncomfortable "experimenting" with the care of those patients.
Kerry Halcomb, Physical Therapy on Wheels, representing AAHC, opined that he
did not believe that a physical therapist could adequately supervise a physical therapist
assistant.
Gayle Haas, physical therapist, representing AAHC, remarked that a physical
therapist and a physical therapist assistant can work together for years and develop a
relationship which "allowed for better understanding and communication skills with one
another.
Deborah Bornmann, physical therapist, stated that she did not feel represented by
her own board. She opined that it was great for an outside organization to try to help
physical therapists.
Representative Quelland moved that the Senate Health and House
Health Committee of Reference recommend that the Legislature
expand the scope of practice for licensed physical therapist
assistants by allowing home health visits under the general
. supervision of licensed physical therapists. The motion was
CARRIED by voice vote.
Senator Waring stated that although he was unhappy with what he had heard
today, he hoped discussions were started to improve the situation.
Representative Knaperek remarked that she hoped they could work out their
differences for the benefit of the State.
Senator Arzberger opined that changes do need to be made and issues need to
be addressed.
Representative Murphy stated that hopefully, this would get people back into
discussions.
There being no further business, the meeting was adjourned at 5:12 p.m.
Respectfully submitted,
Jeff Turner
Committee Secretary
(Tapes and attachments on file in the Secretary of the Senate's Office/Resource Center, Room 115.)
SENATE HEALTH AND HOUSE HEALTH COMMITTEE
OF REFERENCE
Tuesday, November 8,2005
Page 18
Senate Health and House of Representatives Health Committee
of Reference
ARIZONA STATE LEGISLATURE
FORTY-FIFTH LEGISLATURE - ROLL CALL VOTE
Recommendation: 'Tt+A1 l"H-G '13OrJP-2 0 F \±()M£O?fr1}t1
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Rep. Bradley
Rep. Lopez
Rep. Knaperek
Rep. Quelland
Senator Allen
Senator Cannell
Senator Arzberger
Senator Left
Senator Waring, CoChair
Rep. Murphy, CoChair
Attachment --l.-
November 8, 2005