senate Bill S5092

2013-2014 Legislative Session

Directs the commissioner of health to establish a pilot program to assist in the restructuring of health care delivery systems by authorizing increased capital investments in health care facilities

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to health
Jun 21, 2013 committed to rules
Jun 10, 2013 advanced to third reading
Jun 05, 2013 2nd report cal.
Jun 04, 2013 1st report cal.1124
May 08, 2013 referred to health

Votes

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Jun 4, 2013 - Health committee Vote

S5092
9
5
committee
9
Aye
5
Nay
3
Aye with Reservations
0
Absent
0
Excused
0
Abstained
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Co-Sponsors

S5092 - Bill Details

Current Committee:
Law Section:
Public Health Law
Laws Affected:
Amd §2801-a, Pub Health L

S5092 - Bill Texts

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Directs the commissioner of health to establish a pilot program to assist in the restructuring of health care delivery systems by authorizing increased capital investments in health care facilities.

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BILL NUMBER:S5092

TITLE OF BILL: An act to amend the public health law, in relation to
directing the commissioner of health to establish a pilot program to
assist in the restructuring of health care delivery systems by
authorizing increased capital investments in health care facilities

PURPOSE: Authorizes establishment of a pilot program allowing for
increased capital investment in health care facilities.

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 five 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.

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.

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

Section two provides this 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 advanced initiatives allowing for
increased capital investment in health care facilities on a
demonstration basis in their respective SFY 2013-14 budget proposals.
This legislation represents the culmination of discussions had during
budget negotiations. This bill would allow for a pilot program


consisting of five 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
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: New bill.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5092

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               May 8, 2013
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health

AN ACT to amend the public health law,  in  relation  to  directing  the
  commissioner  of  health to establish a pilot program to assist in the
  restructuring of health care delivery systems by authorizing increased
  capital investments in health care facilities

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  2801-a  of  the  public health law is amended by
adding a new subdivision 17 to read as follows:
  17. (A) THE COMMISSIONER IS AUTHORIZED TO ESTABLISH A PILOT PROGRAM TO
ASSIST IN RESTRUCTURING HEALTH CARE DELIVERY  SYSTEMS  BY  ALLOWING  FOR
INCREASED  CAPITAL INVESTMENT IN HEALTH CARE FACILITIES. PURSUANT TO THE
PILOT PROGRAM, THE PUBLIC  HEALTH  AND  HEALTH  PLANNING  COUNCIL  SHALL
APPROVE THE ESTABLISHMENT, IN ACCORDANCE WITH THE PROVISIONS OF SUBDIVI-
SION  THREE  OF THIS SECTION, OF NO MORE THAN FIVE BUSINESS CORPORATIONS
FORMED UNDER THE BUSINESS CORPORATION LAW.   SUCH BUSINESS  CORPORATIONS
SHALL  AFFILIATE,  THE EXTENT OF THE AFFILIATION TO BE DETERMINED BY THE
COMMISSIONER, WITH AT LEAST ONE ACADEMIC MEDICAL INSTITUTION OR TEACHING
HOSPITAL APPROVED BY THE COMMISSIONER.  A BUSINESS CORPORATION SHALL NOT
BE ELIGIBLE TO PARTICIPATE IN THIS PROGRAM IF ANY OF ITS STOCK, OR  THAT
OF  ANY  OF  ITS  DIRECT  OR  INDIRECT OWNERS, IS OR WILL BE TRADED ON A
PUBLIC STOCK EXCHANGE OR ON AN OVER-THE-COUNTER MARKET.
  (B) NOTWITHSTANDING ANY PROVISION OF LAW  TO  THE  CONTRARY,  BUSINESS
CORPORATIONS  ESTABLISHED  PURSUANT  TO THIS SUBDIVISION SHALL BE DEEMED
ELIGIBLE TO PARTICIPATE IN DEBT  FINANCING  PROVIDED  BY  THE  DORMITORY
AUTHORITY  OF  THE STATE OF NEW YORK, LOCAL DEVELOPMENT CORPORATIONS AND
ECONOMIC DEVELOPMENT CORPORATIONS.
  (C) THE FOLLOWING PROVISIONS OF THIS CHAPTER SHALL NOT APPLY TO  BUSI-
NESS  CORPORATIONS  ESTABLISHED  PURSUANT TO THIS SUBDIVISION: (I) PARA-
GRAPH (B) OF SUBDIVISION THREE OF THIS SECTION, RELATING  TO  STOCKHOLD-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10580-01-3

S. 5092                             2

ERS; (II) PARAGRAPH (C) OF SUBDIVISION FOUR OF THIS SECTION, RELATING TO
THE DISPOSITION OF STOCK OR VOTING RIGHTS; (III) PARAGRAPH (E) OF SUBDI-
VISION  FOUR  OF  THIS  SECTION, RELATING TO THE OWNERSHIP OF STOCK; AND
(IV) PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION FOUR THOUSAND FOUR OF
THIS  CHAPTER,  RELATING TO THE OWNERSHIP OF STOCK.  NOTWITHSTANDING THE
FOREGOING, THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL MAY REQUIRE THE
DISCLOSURE OF THE IDENTITY OF STOCKHOLDERS, PROVIDED THAT THE NUMBER  OF
STOCKHOLDERS DOES NOT EXCEED THIRTY-FIVE.
  (D) THE CORPORATE POWERS AND PURPOSES OF A BUSINESS CORPORATION ESTAB-
LISHED  AS  AN OPERATOR PURSUANT TO THIS SUBDIVISION SHALL BE LIMITED TO
THE OWNERSHIP AND OPERATION, OR OPERATION, OF A  HOSPITAL  OR  HOSPITALS
SPECIFICALLY  NAMED  AND  THE LOCATION OR LOCATIONS OF WHICH ARE SPECIF-
ICALLY DESIGNATED BY STREET ADDRESS, CITY, TOWN, VILLAGE OR LOCALITY AND
COUNTY; PROVIDED, HOWEVER, THAT THE CORPORATE POWERS  AND  PURPOSES  MAY
ALSO  INCLUDE  THE OWNERSHIP AND OPERATION, OR OPERATION, OF A CERTIFIED
HOME HEALTH AGENCY OR LICENSED HOME CARE SERVICES AGENCY OR AGENCIES  AS
DEFINED  IN  ARTICLE THIRTY-SIX OF THIS CHAPTER OR A HOSPICE OR HOSPICES
AS DEFINED IN ARTICLE FORTY OF THIS  CHAPTER,  IF  THE  CORPORATION  HAS
RECEIVED  ALL  APPROVALS  REQUIRED UNDER SUCH LAW TO OWN AND OPERATE, OR
OPERATE, SUCH HOME CARE  SERVICES  AGENCY  OR  AGENCIES  OR  HOSPICE  OR
HOSPICES.  SUCH  CORPORATE  POWERS  AND  PURPOSES SHALL NOT BE MODIFIED,
AMENDED OR DELETED WITHOUT THE PRIOR APPROVAL OF THE COMMISSIONER.
  (E) (1) IN DISCHARGING THE DUTIES OF THEIR RESPECTIVE  POSITIONS,  THE
BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND INDIVIDUAL DIRECTORS AND
OFFICERS OF A BUSINESS CORPORATION ESTABLISHED PURSUANT TO THIS SUBDIVI-
SION SHALL CONSIDER THE EFFECTS OF ANY ACTION UPON:
  (A) THE ABILITY OF THE BUSINESS CORPORATION TO ACCOMPLISH ITS PURPOSE;
  (B) THE SHAREHOLDERS OF THE BUSINESS CORPORATION;
  (C) THE EMPLOYEES AND WORKFORCE OF THE BUSINESS;
  (D) THE INTERESTS OF PATIENTS OF THE HOSPITAL OR HOSPITALS;
  (E)  COMMUNITY  AND  SOCIETAL  CONSIDERATIONS,  INCLUDING THOSE OF ANY
COMMUNITY IN WHICH FACILITIES OF THE CORPORATION ARE LOCATED;
  (F) THE LOCAL AND GLOBAL ENVIRONMENT; AND
  (G) THE SHORT-TERM AND LONG-TERM INTERESTS OF THE CORPORATION, INCLUD-
ING BENEFITS THAT MAY ACCRUE  TO  THE  CORPORATION  FROM  ITS  LONG-TERM
PLANS.
  (2)  THE CONSIDERATION OF INTERESTS AND FACTORS IN THE MANNER REQUIRED
BY PARAGRAPH ONE OF THIS PARAGRAPH:
  (A) SHALL NOT CONSTITUTE A VIOLATION  OF  THE  PROVISIONS  OF  SECTION
SEVEN  HUNDRED FIFTEEN OR SEVEN HUNDRED SEVENTEEN OF THE BUSINESS CORPO-
RATION LAW; AND
  (B) IS IN ADDITION TO THE ABILITY OF DIRECTORS TO  CONSIDER  INTERESTS
AND  FACTORS AS PROVIDED IN SECTION SEVEN HUNDRED SEVENTEEN OF THE BUSI-
NESS CORPORATION LAW.
  (F) A SALE, LEASE, CONVEYANCE, EXCHANGE, TRANSFER, OR  OTHER  DISPOSI-
TION  OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE CORPORATION SHALL
NOT BE EFFECTIVE UNLESS THE TRANSACTION IS APPROVED BY THE COMMISSIONER.
  (G) NO LATER THAN TWO YEARS AFTER  THE  ESTABLISHMENT  OF  A  BUSINESS
CORPORATION  UNDER  THIS SUBDIVISION, THE COMMISSIONER SHALL PROVIDE THE
GOVERNOR, THE MAJORITY LEADER OF THE  SENATE  AND  THE  SPEAKER  OF  THE
ASSEMBLY WITH A WRITTEN EVALUATION OF THE PILOT PROGRAM. SUCH EVALUATION
SHALL  ADDRESS  THE OVERALL EFFECTIVENESS OF THE PROGRAM IN ALLOWING FOR
ACCESS TO CAPITAL INVESTMENT IN HEALTH CARE FACILITIES  AND  THE  IMPACT
SUCH  ACCESS MAY HAVE ON THE QUALITY OF CARE PROVIDED BY HOSPITALS OPER-
ATED BY BUSINESS CORPORATIONS ESTABLISHED UNDER THIS SUBDIVISION.
  S 2. This act shall take effect immediately.

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