Directs the commissioner of health to establish demonstration projects providing for equity investment in the operation of residential health care facilities

BILL NUMBER:S7387

Title of bill

An act to amend the public health law, in relation to directing the commissioner of health to establish demonstration projects authorizing equity investment in the operation of residential health care facilities

Purpose

Directs the commissioner of health to establish a demonstration program authorizing private capital investments and private equity interests in residential health care facilities.

Summary of provisions

Section one amends §2801-a to require the commissioner of health to establish, on or before December 1, 2012, up to two demonstration projects to develop, evaluate and implement a flexible approach to allowing equity investors to invest in and hold an equity interest as operators of residential health care facilities. One demonstration shall be located in an upstate region, and one shall be in a downstate region of the state. The demonstration shall be designed to promote the development of new sources of capital for the operation of residential facilities. Investors shall participate in ach facility through the creation of the limited liability company. The facility may be operated by a limited liability company so long as at least one member is a natural person with sufficient experience and expertise. Facilities participating in this demonstration shall be subject to all current operating standards. The commissioner is required to provide, no later than two years from when the first facility commences operation, the legislature with a written evaluation of the demonstration programs. Further, residential health care facilities participating in the program are required to submit quality reports.

Section two provides that this act shall take effect on the sixtieth day after it shall become law; provided that, effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act are completed before the effective date.

Justification

Many health care facilities in New York State suffer from inadequate investment for capital improvements, upgrades and expansion. Private equity is a source of such fund in many sectors, but in New York's health care sector, such investing is limited. By statute ownership is limited to individuals who are subject to character and competence reviews. This bill provides, on a demonstration basis, the ability for a limited liability corporation to provide an invest and hold an equity interest in a residential health care facility; provided that at least one member of the limited liability company is a natural person with sufficient experience and expertise in delivering high quality health care. This would not be the first venture into private ownership of health care facilities for New York. Several years ago certain diagnostic and treatment centers, which provide dialysis services, were granted an exception due to the severe shortage of service providers. That exemption has proven successful in assuring

access to quality services. The instant legislation is designed to build on that success and proving similarly needing capital to residential health care facilities, meanwhile studying the effectiveness and impact of such investment s on the quality of care, staffing and access to care.

Legislative history

New bill.

Fiscal implications

None

Effective date

This act shall take effect on the sixtieth day after it shall become law; provided that, effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act are completed before the effective date.