Establishes a pilot program to assist in restructuring health care systems to allow increased capital investment

Summary of provisions

Section one amends Public Health Law (PHL) § 2801-a to authorize the Commissioner of Health to establish a pilot program to assist in restructuring health care delivery systems by allowing for increased capital investment in health care facilities. Under this pilot, the Public Health and Health Planning Council (PHHPC) shall approve the establishment of no more than ten business corporations. In order to be eligible for the program, the business corporation must affiliate with an academic medical institution or teaching hospital and shall not have any of its stock, or any stock of its direct or indirect owners, traded on the public stock exchange and the PHHPC may require disclosure of the identity of stockholders.

Business Corporations established under this section shall be eligible to participate in debt financing provided by the Dormitory Authority of the State of New York, local development corporations and economic development corporations. The corporate powers and purposes of a business corporation established under this program shall be limited to ownership and operation, or operation, of a specified hospital; provided, however, that the powers and purposes may also include ownership and operation, or operation, of a certified home health agency or licensed home care services agency or agencies or hospices. The pilot program also requires the board of directors, committees of the board and individual directors and officers of the board to take into consideration a number of factors in discharging their duties, including the interests of patients, and community and societal considerations.

In approving any business corporation under this section, the PHHPC must consider a number of factors including the corporations commitment to maintaining or enhancing current services and charity care, strategies to monitor and improve quality of care, the process for retaining existing workforce and its commitment to create a foundation to address community public health needs

The Commissioner shall provide an evaluation of the pilot program within three years of the establishment of a business corporation under this section.

Section two and three amend Public Authorities Law § 1676(2)(b) and 1680 to cross reference the pilot program under provisions applicable to the Dormitory Authority.

Section four provides the act shall take effect immediately.

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 funding 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, thus business corporation are ineligible.

The Governor and Senate both continue to advance initiatives allowing for increased capital investment in health care facilities on a demonstration basis in their respective budget proposals. This legislation represents culmination of discussions, and mirrors the Senate proposal advanced in the SY 2015-16 budget. This bill would allow for a pilot program consisting of ten business corporations. The bill prohibits publicly traded corporations from partaking in the program and provides a number of other safe guards such as requiring the board of directors to take into account a number of factors in discharging their duties, requiring PHHPC review of maintenance of current services and quality improvement, and requiring the Commissioner's approval prior to the sale or transfer of all or essentially all assets.

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 exception has proven successful in assuring access to quality services. The instant legislation is designed to build on that success and provide much needed capital to certain hospitals on a demonstration basis.

Legislative history

Similar to S.5092 of 2013-2014.

Fiscal implications

None.

Effective date

Immediately.