Fiscal Note - SB 0327 - Regulates Acquisition of Nonprofit Hospitals
L.R. NO. 1192-07
BILL NO. HCS for SS for SCS for SB 327
SUBJECT: Hospitals; Corporations; Department of Health; Charities; Attorney
General; Health Care
TYPE: Original
DATE: April 24, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($69,456) ($65,361) ($67,025)
Total Estimated
Net Effect on All
State Funds ($69,456) ($65,361) ($67,025)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Mental Health assume this proposal would not
fiscally impact their agency.
Department of Social Services (DOS) officials anticipate no fiscal impact
associated with hospital acquisitions made in accordance with this proposal.
However, DOS states that if the requirements of this proposal are not
followed and a license is not issued to a newly acquired hospital, then the
unlicensed hospital would not be enrolled as a Medicaid provider. DOS
further states that in some areas of the state access to proper health care
could be impeded by such a hospital no longer being a Medicaid provider. DOS
states the proposal would require the department to update its contracts with
providers and MC+ health plans to include this provision.
Officials from the Department of Health (DOH) state this proposal would
require a person wishing to purchase a non-profit hospital to obtain DOH
approval for the transaction. DOH also states the proposal would require the
department to make public the application to purchase the hospital and
receive comments about the sale. DOH would review the application and make a
recommendation to the Attorney General within thirty days on whether to
approve or deny the sale. DOH contacted the state of Nebraska which has a
similar type of program as outlined in this proposal. DOH states that
Nebraska has one FTE dedicated to the program. Nebraska indicated that the
position is very time consuming due to the receiving and responding to public
comments and inquires. Therefore, DOH assumes a Health Program
Representative III ($28,764) would be needed to conduct public hearings,
track the sales of hospitals, and fulfill the mandates of this proposal. DOH
estimates they receive four applications per year. Equipment ($4,139) would
include office furniture and a personal computer for one FTE. Expenses
($12,600) would include rental space, office and communication expenses, and
travel expenses for one FTE.
Oversight contacted the Nebraska program. Nebraska indicated that their law
had been effect for approximately one year and they had not received any
applications and very few inquires. Oversight assumes no additional FTE or
expense and equipment would be needed as four applications would result in
only four months of scheduled work per year. This additional work would be
absorbed within current resources.
Officials from the Office of Attorney General (AGO) anticipates four to five
applications per year. AGO assumes these transactions would be highly
complex involving often in excess $100 million. One Attorney General IV
($45,000) would be needed to receive and review the applications. Equipment
($6,700) would include office furniture and a personal computer for one FTE.
Expenses ($12,050) would include office and communication expenses and travel
expenses for one FTE.
Oversight requested additional information from the AGO concerning current
staffing for the review of hospitals acquisitions. AGO stated that on
complex transactions they estimated 600 person-hours and 400 person-hours on
non-complex transactions.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
GENERAL REVENUE FUND
Costs - Office of Attorney General
Personal service (1 FTE) ($45,000) ($46,125) ($47,278)
Fringe benefits ($12,839) ($13,159) ($13,488)
Expense and equipment ($11,617) ($6,077) ($6,259)
Total Costs - Office of Attorney General ($69,456) ($65,361) ($67,025)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($69,456) ($65,361) ($67,025)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
$0 $0 $0
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of
this proposal.
DESCRIPTION
The proposal would authorize the Attorney General to approve the transfer of
substantial assets or control of a nonprofit hospital. Before a nonprofit
hospital would be allowed to transfer substantial assets or control, it would
submit an application to the Attorney General and the Department of Health.
The Department would publish notice of the application. The Department would
also be required to recommend whether the application should be approved if
the Attorney General decides to review the application. The Attorney General
would determine whether to review an application within 15 days of receiving
it. After determining to review the application, the Attorney General would
have 75 days to approve, conditionally approve, or disapprove the transfer.
If the Attorney General would not act within the 75 days, the transfer would
be deemed approved. The transfer would not be approved unless it would be in
the public interest, safeguards the value of charitable assets, and ensures
that any proceeds would be used for appropriate health care purposes. If the
Attorney General approves an application, an action for judicial review may
be brought by any person with a legal interest in the hospital being
divested. If the Attorney General disapproves an application, the applicant
may bring an action for judicial review. The proposal has an emergency
clause.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Health
Office of Attorney General
Department of Social Services
Department of Mental Health
This Fiscal Note is not an official copy and should not be quoted or cited.