What's happening
This bill clarifies and expands who must get state approval to operate a hospital in New York, including those with significant decision-making authority.
Why it matters
Expands oversight to "shadow operators". The bill ensures that not just the formal owners or boards, but also anyone or any entity that has significant decision-making power over a hospital’s core functions—including finances, staffing, policy, or major contracts—must get explicit state approval to operate. This targets arrangements where outside firms or investors might otherwise control hospitals without formal accountability.
Targets indirect control and influence. By specifying a wide range of decision-making powers (like approving budgets, hiring management, or settling large lawsuits) that trigger the need for state approval, the bill closes loopholes that previously allowed non-traditional actors (such as private equity firms, management companies, or certain investors) to operate hospitals without oversight.
Mandates transparency for changes in control. Any transfer or delegation of these key authorities (except for routine assignments within the hospital’s own governing structure or standard management contracts with commissioner approval) will also require new state review, aiming to prevent hidden or unregulated changes in hospital control.
Seeks to protect public interest and patient care. The broader definition of who must seek approval is designed to ensure that anyone with real power over hospital operations is vetted for their qualifications, intentions, and potential impacts—helping to safeguard hospitals from unqualified or profit-driven operators who might undermine care quality or community health priorities.
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Who cares
Headline styles
Require Council OK for Hospitals
Plain English, a few words. Used as the page title.
Sponsors
7 Co-sponsors
History
- Ordered to third reading cal.191
- Advanced to third reading cal.36
- Reported
- Referred to health
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2441
2017-2018 Regular Sessions
IN ASSEMBLY
January 20, 2017
Introduced by M. of A. GOTTFRIED, PAULIN, ROSENTHAL, JAFFEE, HOOPER, ABINANTI -- Multi-Sponsored by -- M. of A. CARROLL, COOK, CYMBROWITZ, DINOWITZ, ENGLEBRIGHT, FARRELL, GLICK, LIFTON, PERRY, SIMON -- read once and referred to the Committee on Health
AN ACT to amend the public health law, in relation to hospital establishment
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 2801-a of the public health law, as amended by section 57 of part A of chapter 58 of the laws of 2010, is amended to read as follows:
1. (a) No hospital, as defined in this article, shall be established except with the written approval of the public health and health planning council. No certificate of incorporation of a business membership or not-for-profit corporation shall hereafter be filed which includes among its corporate purposes or powers the establishment or operation of any hospital, as defined in this article, or the solicitation of contributions for any such purpose, or two or more of such purposes, except with the written approval of the public health and health planning council, and when otherwise required by law of a justice of the supreme court, endorsed on or annexed to the certificate of incorporation. No articles of organization of a limited liability company established pursuant to the New York limited liability company law which includes among its powers or purposes the establishment or operation of any hospital as defined in this article, shall be filed with the department of state except upon the approval of the public health and health planning council.
(b) For the purposes of this subdivision, a person (other than a person acting solely as a member of the governing body of a hospital or an employee of a hospital), partnership, company, stockholder, member, corporation or other entity shall be deemed to have authority to operate
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02206-01-7
A. 2441 2
a hospital if it has or shares decision-making authority over any of the following:
(i) appointment or dismissal of a hospital's management-level employees or medical staff;
(ii) election or removal of members of the governing board or corporate officers of the hospital;
(iii) approval of the hospital's operating or capital budgets;
(iv) adoption, approval or enforcement of the hospital's operating policies or procedures;
(v) approval of applications for construction or establishment approval filed by or on behalf of the hospital;
(vi) approval of hospital debt necessary to finance the cost of compliance with operational or physical plant standards required by law;
(vii) approval of contracts for management of the hospital or for clinical services at the hospital; and
(viii) approval of settlements of administrative proceedings or litigation to which the hospital is party that exceed the hospital's insurance coverage or coverage by any applicable self-insurance fund.
(c) Any person, partnership, company, stockholder, member, or corporation, or other entity with authority to operate a hospital shall be subject to approval for establishment by the public health and health planning council under this section, unless otherwise authorized by this chapter to operate a hospital without such establishment approval.
(d) Any assignment or delegation of any authority to operate a hospital, as set forth in paragraph (b) of this subdivision shall be subject to approval for establishment by the public health and health planning council under this section, except for:
(i) assignment or delegation by the governing body of the hospital to a committee of the governing body, a corporate officer or an employee of the hospital; or
(ii) a management contract under which a governing body contracts with an entity to manage day-to-day operations of a hospital or a portion or service thereof, provided that such a management contract shall require the written approval of the commissioner before it may take effect.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
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