Relates to the refinancing of outstanding indebtedness of certain not-for-profit hospitals

1 Co-sponsor

• Martin Malavé Dilan

BILL NUMBER:S7387A

Title of bill

An act to amend the public health law and the New York state medical care facilities finance agency act, in relation to providing for the refinancing of outstanding indebtedness of certain not-for-profit hospitals; to amend chapter 934 of the laws of 1985, amending the public health law and the New York state medical care facilities finance agency act relating to authorizing issuance of special hospital project bonds on behalf of certain secured hospital borrowers to assist in providing adequate health care to low income persons, in relation to extending the provisions of such chapter; and providing for the repeal of certain provisions upon expiration thereof

Purpose or general idea of bill

To permit financially distressed hospitals, which have existing capital indebtedness under the former "Secured Hospital Loan Program" to realize annual cash flow savings through the refinancing of such existing debt at lower rates without increasing the amount of debt or the final maturity of such debt.

Summary of specific provisions

Sections 1 through 11 amend various provisions of the Public Health Law and Chapter 392 of the Laws of 1973, constituting the NYS Medical Care Facilities Finance Agency Act, to authorize the refinancing of existing debt which is secured under the former "secured hospital loan program" for financially distressed hospitals. These sections provide that refinanced debt for such hospitals will be secured in the same manner as original debt financed under the program and also provides that hospitals shall not claim additional Medicaid reimbursement due to interest payments on refinanced debt.

Section 12 provides that Medicaid reimbursement for interest on debt refinancing shall be subject to availability of federal financial participation and that the refinancing of a mortgage loan shall not alter, affect or change the component of Medicaid rates applicable to the depreciation of any asset or assets.

Section 13 provides that the expiration and repeal of this act shall not affect or impair bonds or notes issued, or any loan made to a borrower made prior to the expiration of the provisions herein.

Section 14 provides for an immediate effective date with, an expiration and repeal on December 31, 2015.

Justification

The bill is intended to permit certain not-for-profit hospitals, previously designated as "financially distressed," to refinance secured hospital debt upon demonstrating to the Commissioner of Health that the refinancing is undertaken in furtherance of sustaining, maintaining, and improving the financial condition of the hospital. As a practical mater, this measure applies only to Wyckoff Heights Medical Center. Other hospitals are either ineligible or cannot take advantage of the new provisions. The bonds are already secured by the State through a service contract, and the refinancing will have the salutary effect of reducing the State's annual exposure, as it will reduce ongoing debt service. The result of the refinancing will be funds available in an escrow for use by the hospital top improve infrastructure and equipment, with the approval of the Commissioner of Health.

Prior legislative history

New Bill

Fiscal implications

As a result of the "Medicaid hold harmless" provision in the bill there is no fiscal impact to State or local governments

Effective date

Immediate with a sunset on December 31, 2015.