HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Section 323D-2, Hawaii Revised Statutes is
 2 amended to read as follows:
 3      "323D-2 Definitions. As used in this chapter:
 4      ["Applicant" means any person who applies for a certificate
 5 of need under part V.
 6      "Assisted living facility" means a combination of housing,
 7 health care services, and personalized support services designed
 8 to respond to individual needs, and to promote choice,
 9 responsibility, independence, privacy, dignity, and
10 individuality.  In this context, "health care services" means the
11 provision of services in an assisted living facility that assists
12 the resident in achieving and maintaining the highest state of
13 positive well-being (i.e., psychological, social, physical, and
14 spiritual) and functional status.  This may include nursing
15 assessment and monitoring, and the delegation of nursing tasks by
16 registered nurses pursuant to chapter 457, care management,
17 monitoring, records management, arranging for, and/or
18 coordinating health and social services.
19      "Capital expenditure" means any purchase or transfer of

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 1 money or anything of value or enforceable promise or agreement to
 2 purchase or transfer money or anything of value incurred by or in
 3 behalf of any person for construction, expansion, alteration,
 4 conversion, development, initiation, or modification as defined
 5 in this section.  The term includes the:
 6      (1)  Cost of studies, surveys, designs, plans, working
 7           drawings, specifications, and other preliminaries
 8           necessary for construction, expansion, alteration,
 9           conversion, development, initiation, or modification;
10 2    (2)  Fair market values of facilities and equipment obtained
11           by donation or lease or comparable arrangements as
12           though the items had been acquired by purchase; and
13      (3)  Fair market values of facilities and equipment
14           transferred for less than fair market value, if a
15           transfer of the facilities or equipment at fair market
16           value would be subject to review under section 323D-43.
17      "Certificate of need" means an authorization, when required
18 pursuant to section 323D-43, to construct, expand, alter, or
19 convert a health care facility or to initiate, expand, develop,
20 or modify a health care service.
21      "Construct", "expand", "alter", "convert", "develop",
22 "initiate", or "modify" includes the erection, building,

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 1 reconstruction, modernization, improvement, purchase,
 2 acquisition, or establishment of a health care facility or health
 3 care service; the purchase or acquisition of equipment attendant
 4 to the delivery of health care service and the instruction or
 5 supervision therefor; the arrangement or commitment for financing
 6 the offering or development of a health care facility or health
 7 care service; any obligation for a capital expenditure by a
 8 health care facility; and studies, surveys, designs, plans,
 9 working drawings, specifications, procedures, and other actions
10 necessary for any such undertaking, which will:
11      (1)  Result in a total capital expenditure in excess of the
12           expenditure minimum,
13      (2)  Substantially modify, decrease, or increase the scope
14           or type of health service rendered, or
15      (3)  Increase, decrease, or change the class of usage of the
16           bed complement of a health care facility.]
17      "Department" means department of Health.
18      ["Expenditure minimum" means $4,000,000 for capital
19 expenditures, $1,000,000 for new or replacement medical equipment
20 and $400,000 for used medical equipment.]
21      "Extended care adult residential care home" means an adult
22 residential care home providing twenty-four-hour living

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 1 accommodation for a fee, for adults unrelated to the licensee.
 2 The primary caregiver shall be qualified to provide care to
 3 nursing facility level individuals who have been admitted to a
 4 medicaid waiver program, or persons who pay for care from private
 5 funds and have been certified for this type of facility.  There
 6 shall be two categories of extended care adult residential care
 7 homes, which shall be licensed in accordance with rules adopted
 8 by the department of health:
 9      (1)  Type I home shall consist of five or less unrelated
10           persons with no more than two extended care adult
11           residential care home residents; and
12      (2)  Type II home shall consist of six or more unrelated
13           persons and one or more persons may be extended care
14           adult residential care home residents.
15      "Health" includes physical and mental health.
16      "Health care facility" and "health care service" include any
17 program, institution, place, building, or agency, or portion
18 thereof, private or public, other than federal facilities or
19 services, whether organized for profit or not, used, operated, or
20 designed to provide medical diagnosis, treatment, nursing,
21 rehabilitative, or preventive care to any person or persons.  The
22 terms include, but are not limited to, health care facilities and

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 1 health care services commonly referred to as hospitals, extended
 2 care and rehabilitation centers, nursing homes, skilled nursing
 3 facilities, intermediate care facilities, hospices for the
 4 terminally ill that require licensure or certification by the
 5 department of health, kidney disease treatment centers including
 6 freestanding hemodialysis units, outpatient clinics, organized
 7 ambulatory health care facilities, emergency care facilities and
 8 centers, home health agencies, health maintenance organizations,
 9 and others providing similarly organized services regardless of
10 nomenclature.
11      "Health care provider" means a health care facility,
12 physician, dentist licensed under chapter 448, chiropractor
13 licensed under chapter 442, optometrist licensed under chapter
14 459, podiatrist licensed under chapter 463E, psychologist
15 licensed under chapter 465, occupational therapist subject to
16 chapter 457G, and physical therapist licensed under chapter 461J.
17      ["Organized ambulatory health care facility" means a
18 facility not part of a hospital, which is organized and operated
19 to provide health services to outpatients. The [state agency]
20 department may adopt rules to establish further criteria for
21 differentiating between the private practice of medicine and
22 organized ambulatory health care facilities.]

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 1      "Person" means an individual or a natural person, a trust or
 2 estate, a society, a firm, an assembly, a partnership, a
 3 corporation, a professional corporation, an association, the
 4 State, any political subdivision of the State, a county, a [state
 5 agency] department or any instrumentality of the State, a county
 6 agency or any instrumentality of a county.
 7      "Physician" means a doctor of medicine or osteopathy who is
 8 legally authorized to practice medicine and surgery by the State.
 9      ["Primary care clinic" means a clinic for outpatient
10 services providing all preventive and routine health care
11 services, management of chronic diseases, consultation with
12 specialists when necessary, and coordination of care across
13 health care settings or multiple providers or both. Primary care
14 clinic providers include:
15      (1)  General or family practice physicians;
16      (2)  General internal medicine physicians;
17      (3)  Pediatricians;
18      (4)  Obstetricians and gynecologists;
19      (5)  Physician assistants; and
20      (6)  Advanced practice registered nurses.
21      "Review panel" means the panel established pursuant to
22 section 323D-42.]

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 1      "Secretary" means the secretary of the United States
 2 Department of Health and Human Services, or the secretary of the
 3 federal agency that is the successor to the United States
 4 Department of Health and Human Services.
 5      ["State agency" means the state health planning and
 6 development agency established in section 323D-11.]
 7      "State health services and facilities plan" means the
 8 comprehensive plan for the economical delivery of health services
 9 in the State prepared by the statewide council.
10      "Statewide council" means the statewide health coordinating
11 council established in section 323D-13.
12      "Subarea" means one of the geographic subareas designated by
13 the [state agency] department pursuant to section 323D-21.
14      "Subarea council" means a subarea health planning council
15 established pursuant to section 323D-21.
16      ["Substantially modify, decrease, or increase the scope or
17 type of health service" refers to the establishment of a new
18 health care facility or health care service or the addition of a
19 clinically related (i.e., diagnostic, curative, or
20 rehabilitative) service not previously provided or the
21 termination of such a service which had previously been
22 provided."]

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 1      SECTION 2.  Section 323D-11, Hawaii Revised Statutes is
 2 repealed.
 3      SECTION 3.  Section 323D-12, Hawaii Revised Statutes, is
 4 amended to read as follows:
 5      "323D-12 Health planning and development functions; [state
 6 agency] department.(a) The [state agency] department shall:
 7      (1)  Have as a [principal] function the responsibility for
 8           promoting accessibility for all the people of the State
 9           to quality health care services at reasonable cost. The
10           [state agency] department shall conduct such studies
11           and investigations as may be necessary as to the causes
12           of health care costs including inflation. The [state
13           agency] department may contract for services to
14           implement this paragraph. [The certificate of need
15           program mandated under part V shall serve this
16           function.]  The [state agency] department shall promote
17           the sharing of facilities or services by health care
18           providers whenever possible to achieve economies and
19           shall restrict unusual or unusually costly services to
20           individual facilities or providers where appropriate;
21      (2)  Serve as staff to and provide technical assistance and
22           advice to the statewide council and the subarea

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 1           councils in the preparation, review, and revision of
 2           the state health services and facilities plan;
 3      (3)  Conduct the health planning activities of the State in
 4           coordination with the subarea councils, implement the
 5           state health services and facilities plan, and
 6           determine the statewide health needs of the State after
 7           consulting with the statewide council; and
 8      [(4) Administer the state certificate of need program
 9 pursuant to part V.]
10      (b)  The [state agency] department may:
11      (1)  Prepare such reports and recommendations on Hawaii's
12           health care costs and public or private efforts to
13           reduce or control costs and health care quality as it
14           deems necessary.  The report may include, but not be
15           limited to, a review of health insurance plans, the
16           availability of various kinds of health insurance and
17           malpractice insurance to consumers, and strategies for
18           increasing competition in the health insurance field.
19      (2)  Prepare and revise as necessary the state health
20           services and facilities plan.
21      (3)  Prepare, review, and revise the annual implementation
22           plan.
23      (4)  Assist the statewide council in the performance of its

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 1           functions.
 2      (5)  Determine the need for new health services proposed to
 3           be offered within the State.
 4      (6)  Assess existing health care services and facilities to
 5           determine whether there are redundant, excessive, or
 6           inappropriate services or facilities and make public
 7           findings of any that are found to be so.  The [state
 8           agency] department shall weigh the costs of the health
 9           care services or facilities against the benefits the
10           services or facilities provide and there shall be a
11           negative presumption against marginal services.
12      (7)  Provide technical assistance to persons, public or
13           private, in obtaining and filling out the necessary
14           forms for the development of projects and programs.
15      (8)  Prepare reports, studies, and recommendations on
16           emerging health issues, such as medical ethics, health
17           care rationing, involuntary care, care for the
18           indigent, and standards for research and development of
19           biotechnology and genetic engineering.
20      (9)  Conduct such other activities as are necessary to meet
21           the purposes of this chapter."
22      SECTION 4.  Section 323D-13, Hawaii Revised Statutes, is

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 1 amended to read as follows:
 2      "323D-13 Statewide health coordinating council. (a) There
 3 is established a statewide health coordinating council which
 4 shall be advisory to the [state agency] department and the
 5 membership of which as appointed by the governor shall not exceed
 6 twenty members.
 7      (b)  The members of the statewide council shall be appointed
 8 by the governor in accordance with section 26-34, provided that a
 9 nonvoting, ex officio member who is the representative of the
10 Veterans' Administration shall be designated by the Veterans'
11 Administration.  The membership of the statewide council shall be
12 broadly representative of the age, sex, ethnic, income, and other
13 groups that make up the population of the State and shall include
14 representation from the subarea councils, business, labor, and
15 health care providers.  A majority but not more than eleven of
16 the members shall be consumers of health care who are not also
17 providers of health care.
18      (c)  The statewide council shall select a chairman from
19 among its members. The members of the statewide council shall not
20 be compensated but shall be reimbursed for necessary expenses
21 incurred in the performance of their duties.
22      (d)  The number of members necessary to constitute a quorum

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 1 to do business shall consist of a majority of all members who
 2 have accepted nomination to the council, and have been confirmed
 3 and qualified as members of the council.  When a quorum is in
 4 attendance, the concurrence of a majority of the members in
 5 attendance shall make any action of the council valid.
 6      (e)  No member of the statewide council shall, in the
 7 exercise of any function of the statewide council described in
 8 section 323D-14(5), vote on any matter before the statewide
 9 council respecting any individual or entity with which the member
10 has or, within the twelve months preceding the vote, had any
11 substantial ownership, employment, medical staff, fiduciary,
12 contractual, creditor, or consultative relationship.  The
13 statewide council shall require each of its members who has or
14 has had such a relationship with an individual or entity involved
15 in any matter before the statewide council to make a written
16 disclosure of the relationship before any action is taken by the
17 statewide council with respect to the matter in the exercise of
18 any function described in section 323D-14 and to make the
19 relationship public in any meeting in which the action is to be
20 taken."
21      SECTION 5.  Section 323D-14, Hawaii Revised Statutes, is
22 amended to read as follows:

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 1      "323D-14 Functions; statewide health coordinating council.
 2 The statewide council shall:
 3      (1)  Prepare and revise as necessary the state health
 4           services and facilities plan;
 5      (2)  Advise the [state agency] department on actions under
 6           section 323D-12; and
 7     [(3)  Appoint the review panel pursuant to section 323D-42;
 8           and]
 9     [(4)] (3) Review and comment upon the following actions by
10           the [state agency] department before [such actions are
11           made final:
12           (A)  The making of findings as to applications for
13                certificate of need; and
14           (B)  The] making [of] findings as to the
15                appropriateness of those institutional and
16                noninstitutional health services offered in the
17                State."
18      SECTION 6.  Section 323D-17, Hawaii Revised Statutes, is
19 amended to read as follows:
20      "323D-17 Public hearings required.  In the preparation of
21 the state health services and facilities plan or amendments to
22 the state health services and facilities plan, the [state agency]

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 1 department and the statewide council shall conduct a public
 2 hearing on the proposed plan or the amendments and shall comply
 3 with the provisions for notice of public bearings in chapters 91
 4 and 92."
 5      SECTION 7.  Section 323D-18, Hawaii Revised Statutes, is
 6 amended to read as follows:
 7      "323D-18 Information required of providers.  Providers of
 8 health care doing business in the State shall submit such
 9 statistical and other reports of information related to health
10 and health care as the [state agency] department finds necessary
11 to the performance of its functions.  The information deemed
12 necessary includes but is not limited to:
13      (1)  Information regarding changes in the class of usage of
14           the bed complement of a health care facility under
15           section 323D-54(9);
16      (2)  Implementation of services under section 323D-54;
17      (3)  Projects that are wholly dedicated to meeting the
18           State's obligations under court orders, including
19           consent decrees, under section 323D-54(10);
20      (4)  Replacement of existing equipment with an updated
21           equivalent under section 323D-54(11);
22      (5)  Primary care clinics under the expenditure thresholds

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 1           under section 323D-54(12); and
 2      (6)  Equipment and services related to that equipment, that
 3           are primarily intended for research purposes as opposed
 4           to usual and customary diagnostic and therapeutic
 5           care."
 6      SECTION 9.  Section 323D-18.5, Hawaii Revised Statutes, is
 7 amended to read as follows:
 8      "323D-18.5 Information from providers of health insurance.
 9 The [state agency] department may request providers of health
10 insurance doing business in the State to submit to the [state
11 agency] department available statistical, financial, and other
12 reports of information that the [state agency] department finds
13 necessary to perform its functions."
14      SECTION 9.  Section 323D-18.6, Hawaii Revised Statutes, is
15 amended to read as follows:
16      "323D-18.6 Confidentiality of information.  The [state
17 agency] department may adopt rules in accordance with chapter 91
18 to provide that information submitted to the [state agency]
19 department by providers of health care and health care insurance
20 concerning recipients of health care or health care insurance, or
21 both, shall be confidential."
22      SECTION 10.  Section 323-21, Hawaii Revised Statutes, is

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 1 amended to read as follows:
 2      "323D-21 Subarea health planning councils, established.
 3 There are established, subarea health planning councils for
 4 geographical areas which shall be designated by the [state
 5 agency] department in consultation with the statewide council.
 6 Each county shall have at least one subarea health planning
 7 council.  The subarea health planning councils shall be placed
 8 within the [state agency] department for administrative
 9 purposes."
10      SECTION 11.  Section 323D-22, Hawaii Revised Statutes, is
11 amended to read as follows:
12      "323D-22 Subarea health planning councils, functions,
13 quorum and number of members necessary to take valid action.
14      (a)  Each subarea health planning council shall review, seek
15 public input, and make recommendations relating to health
16 planning for the geographical subarea it serves.  In addition,
17 the subarea health planning councils shall:
18      (1)  Identify and recommend to the [state agency] department
19           and the council the data needs and special concerns of
20           the respective subareas with respect to the preparation
21           of the state plan.
22      (2)  Provide specific recommendations to the [state agency]

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 1           department and the council regarding the highest
 2           priorities for health services and resources
 3           development.
 4      (3)  Review the state health services and facilities plan as
 5           it relates to the respective subareas and make
 6           recommendations to the [state agency] department and
 7           the council.
 8      [(4) Advise the state agency in the administration of the
 9           certificate of need program for their respective
10           subareas.]
11     [(5)] (4)  Advise the [state agency] department on the cost
12           of reimbursable expenses incurred in the performance of
13           their functions for inclusion in the [state agency]
14           department budget.
15     [(6)] (5)  Advise the [state agency] department in the
16           performance of its specific functions.
17     [(7)] (6)  Perform other such functions as agreed upon by the
18           [state agency] department and the respective subarea
19           councils.
20     [(8)] (7)  Each subarea health planning council shall
21           recommend for gubernatorial appointment at least one
22           person from its membership to be on the statewide

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 1           council.
 2      (b)  The number of members necessary to constitute a quorum
 3 to do business shall consist of a majority of all the members who
 4 have accepted nomination to the council, and have been confirmed
 5 and qualified as members of the council.  When a quorum is in
 6 attendance, the concurrence of a majority of the members in
 7 attendance shall make any action of the council valid."
 8      SECTION 12.  Chapter 323D, part V, Hawaii Revised Statutes,
 9 is repealed.
10      SECTION 13.  Chapter 323D, Part VI is amended to read as
11 follows:
12                             "PART VI.
13                      GENERAL ADMINISTRATION
14      323D-61 Personnel.  The administrator of the [state agency]
15 department shall hire necessary personnel under chapters 76 and
16 77 to carry out the purposes of this chapter.
17      323D-62 Rules.  The [state agency] department and the
18 statewide health coordinating council may adopt necessary rules
19 for the purposes of this chapter in accordance with chapter 91."
20      SECTION 14.  Chapter 323D, Part VII is amended to read as
21 follows:
22               "[[]PART VII[.]] HOSPITAL ACQUISITION

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 1      [[]323D-71[]] Definitions.  For the purpose of this part,
 2 unless the context requires otherwise:
 3      "Acquisition" means any acquisition by a person or persons
 4 of an ownership or controlling interest in a hospital, whether by
 5 purchase, merger, lease, gift, or otherwise, that results in a
 6 change of ownership or control of twenty per cent or greater or
 7 which results in the acquiring person or persons holding a fifty
 8 per cent or greater interest in the ownership or control of that
 9 hospital, but does not include the acquisition of an ownership or
10 controlling interest in a private nonprofit hospital by a
11 transferee that:
12      (1)  Is a nonprofit corporation having a substantially
13           similar charitable health care purpose as the
14           transferor or is a governmental entity;
15      (2)  Is exempt from federal income tax under section
16           501(c)(3) of the Internal Revenue Code of 1986, as
17           amended, or [is] a governmental entity; and
18      (3)  Maintains representation from the affected community on
19           the local board.  ["Agency" means the state health
20           planning and development agency.]
21      "Hospital" means an institution with an organized medical
22 staff, regulated under section 321-11(10) which admits patients

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 1 for inpatient care, diagnosis, observation, and treatment, but
 2 does not include a public health facility under chapter 323F.
 3      "Person" has the meaning found in section 323D-2.
 4      [[]323D-72[]] Acquisition of hospital.(a) No person shall
 5 engage in the acquisition of a hospital without first:
 6      (1)  Applying for and receiving the approval of the [agency]
 7           department; and
 8      (2)  Notifying the attorney general and, if applicable,
 9           receiving approval from the attorney general pursuant
10           to this part; unless the acquiring person is a
11           nonprofit corporation exempt from federal income tax
12           under section 501(c)(3) of the Internal Revenue Code of
13           1986, as amended, or is a governmental entity.
14      (b)  Any person not required to obtain the approval of the
15 [agency] department under this part shall give the attorney
16 general at least ninety days prior notice of an impending
17 acquisition, during which time the attorney general may take any
18 necessary and appropriate action consistent with general duties
19 of oversight with regard to the conduct of charities, if
20 applicable.  The notice shall briefly describe the impending
21 acquisition, including any change in ownership of tangible or
22 intangible assets.

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 1      (c)  The application shall be submitted to the [agency]
 2 department and the attorney general on forms provided by the
 3 [agency] department and shall include:
 4      (1)  The name of the seller, the name of the purchaser, and
 5           the names of other parties to an acquisition;
 6      (2)  The terms of the proposed agreement;
 7      (3)  The sale price;
 8      (4)  A copy of the acquisition agreement;
 9      (5)  A financial and economic analysis and report from an
10           independent expert or consultant of the effect of the
11           acquisition under the criteria set forth in section
12           323D-76; and
13      (6)  All other related documents.
14      A copy of the application and copies of all additional
15 related materials shall be submitted to the [agency] department
16 and to the attorney general at the same time.  The applications
17 and all related documents shall be considered government records.
18      [[]323D-73[]] Notice; procedures.(a) Within five working
19 days after receipt of a complete application under section 323D-
20 72, the [agency] department shall give public notice of the
21 application in the affected county or counties where the hospital
22 is located and shall notify by first-class mail any person who

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 1 has requested notice of the filing of such applications.  The
 2 public notice shall state that a completed application has been
 3 received, state the names of the parties to the agreement,
 4 describe the contents of the application, and state the date by
 5 which a person may submit written comments about the application
 6 to the [agency] department.
 7      (b)  Within ninety days after receiving a complete
 8 application, the [agency] department shall review the application
 9 in accordance with the standards set forth in this part and
10 approve or disapprove the acquisition.
11      Within twenty days after receiving a complete application,
12 the attorney general shall determine whether a review of the
13 application in accordance with section 323D-76 is appropriate and
14 notify the applicant if a review is warranted.  If the attorney
15 general determines that a review is unnecessary or not
16 appropriate, then none of the other provisions of this part
17 applicable to review by the attorney general shall apply.
18      (c)  For acquisitions which require approval from the
19 [agency] department under this part [and a certificate of need],
20 the applicant shall submit [a single] an application [for both
21 purposes] and the application shall be reviewed under a [single]
22 unified review process by the [agency] department.  Following the

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 1 [single unified] review process, the [agency] department shall
 2 [simultaneously] issue its decision regarding the [certificate of
 3 need and its decision for] purposes of the sale of a hospital
 4 under this part.
 5      [[]323D-74[]] Hearings.(a) The [agency] department, after
 6 consultation with the attorney general, shall, if appropriate,
 7 hold a public hearing during the course of review, [which hearing
 8 may be held jointly with the certificate of need review panel or
 9 the statewide health coordinating council, and] in which any
10 person may file written comments and exhibits or appear and make
11 a statement.  The [agency] department or the attorney general may
12 subpoena additional information or witnesses, require and
13 administer oaths, require sworn statements, take depositions, and
14 use related discovery procedures for purposes of the hearing and
15 at any time prior to making a decision on the application.
16      (b)  The hearing shall be held no later than sixty days
17 after receipt of a complete application.  The hearing shall be
18 held upon ten working days notice, not including days the
19 application is deemed to be incomplete.
20      [[]323D-75[]] Review; decision; rules.(a) The attorney
21 general shall conduct its review of the application in accordance
22 with the standards enumerated in section 323D-76.  Within ninety

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 1 days after receipt of an application, the attorney general shall
 2 review and approve or disapprove the acquisition.
 3      (b)  If the attorney general does not act within ninety days
 4 after receipt of an application, the application shall be deemed
 5 approved.  If the attorney general approves or disapproves the
 6 acquisition, the applicant, or any person who has submitted
 7 comments and has a legal interest in the hospital being acquired
 8 or in another hospital that has contracted with the acquired
 9 hospital for the provision of essential health services, may
10 bring an action for declaratory judgment for a determination that
11 the acquisition is or is not in the public interest under the
12 criteria set forth in section 323D-76.
13      (c)  The [agency] department shall review the completed
14 application in accordance with the standards enumerated in
15 section 323D-77.  Within ninety days after receipt of a completed
16 application, the [agency] department shall:
17      (1)  Approve the acquisition, with or without any specific
18           modifications; or
19      (2)  Disapprove the acquisition.  The [agency] department
20           shall not make its decision subject to any condition
21           not directly related to criteria enumerated in section
22           323D-77, and any condition or modification shall bear a

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 1           direct and rational relationship to the application
 2           under review.
 3      (d)  Any affected person may appeal a final decision by the
 4 [agency] department to the reconsideration committee created
 5 under section 323D-47 under procedures substantially similar to
 6 those for appeals of health care certificate of need decisions.
 7 The reconsideration committee shall have the [same] powers and
 8 duties with respect to appeals under this part [as exist for
 9 appeals to the reconsideration committee regarding issuance of
10 certificates of need].  The findings, conclusions, and decisions
11 of the reconsideration committee shall constitute the
12 determination of the [agency] department.  The [agency]
13 department, the applicant, or any affected person who has
14 intervened in the matter before the reconsideration committee may
15 seek judicial review of any [agency] department determination.
16      (e)  If both the [agency] department and the attorney
17 general review the application, it shall not be granted unless it
18 is approved by both.
19      [[]323D-76] Acquisition in the public interest; decision of
20 attorney general.  If the attorney general determines that a
21 review of the application is appropriate, the attorney general
22 shall approve the application unless the attorney general finds

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 1 that the acquisition is not in the public interest.  An
 2 acquisition of a private nonprofit hospital is not in the public
 3 interest unless appropriate steps have been taken to safeguard
 4 the value of charitable assets and ensure that any proceeds of
 5 the transaction are used for appropriate charitable health care
 6 purposes as provided in paragraph (8).  In determining whether
 7 the acquisition meets such criteria, the attorney general shall
 8 consider, as applicable:
 9      (1)  Whether the acquisition is permitted under chapter 415B
10           governing nonprofit entities, trusts, or charities;
11      (2)  Whether the hospital acted in a duly diligent manner in
12           deciding to sell, selecting the purchaser, and
13           negotiating the terms and conditions of the sale;
14      (3)  The procedures used by the seller in making its
15           decision, including whether appropriate expert
16           assistance was used;
17      (4)  Whether all conflicts of interest were disclosed,
18           including, but not limited to, conflicts of interest
19           related to board members of, executives of, and experts
20           retained by the seller, purchaser, or parties to the
21           acquisition;
22      (5)  Whether the seller will receive reasonably fair value

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 1           for its assets. The attorney general may employ, at the
 2           seller's expense, reasonably necessary expert
 3           assistance in making this determination;
 4      (6)  Whether charitable funds are placed at unreasonable
 5           risk, if the acquisition is financed in part by the
 6           seller;
 7      (7)  Whether any management contract under the acquisition
 8           is for reasonably fair value;
 9      (8)  Whether the sale proceeds will be used for appropriate
10           charitable health care purposes consistent with the
11           seller's original purpose or for the support and
12           promotion of health care in the affected community, and
13           will be controlled as charitable funds independent of
14           the purchaser or parties to the acquisition; and
15      (9)  Whether a right of first refusal to repurchase the
16           assets by a successor nonprofit corporation or
17           foundation has been retained, if the hospital is
18           subsequently sold to, acquired by, or merged with
19           another entity.
20      [[]323D-77[]] Acquisition; decision by [agency] department.
21 In making a decision whether to approve or disapprove an
22 application, the [agency] department shall consider:

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 1      (1)  Whether sufficient safeguards are included to ensure
 2           that the affected community has continued access to
 3           affordable care;
 4      (2)  Whether the purchaser and parties to the acquisition
 5           have made a commitment to provide health care to the
 6           disadvantaged, uninsured, and underinsured, and to
 7           provide benefits to the affected community to promote
 8           improved health care.  Current and prior health care
 9           activities and funding for those activities by the
10           seller or its successor nonprofit corporation or
11           foundation may be considered in evaluating compliance
12           with this commitment;
13      (3)  If health care providers will be offered the
14           opportunity to invest or own an interest in the
15           purchaser or a related entity to the purchaser; and
16      (4)  Whether procedures or safeguards are in place to avoid
17           conflict of interest in patient referral and the nature
18           of those procedures or safeguards.
19      This section does not apply higher standards to hospitals
20 covered by this part than those applicable to hospitals not
21 covered by this part.
22      [[]323D-78[]] Revocation; hearing.  If the [agency]

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 1 department  receives information indicating that the acquiring
 2 person is not fulfilling the commitment to the affected community
 3 under section 323D-77, the [agency] department shall hold a
 4 heating upon ten days notice to the affected parties.  If after
 5 the hearing the [agency] department determines that the
 6 information is true, the department may institute proceedings to
 7 revoke the license issued to the purchaser.
 8      [[]323D-79[]] Public interest.  The attorney general shall
 9 have the authority to ensure compliance with commitments made
10 pursuant to section 323D-77.
11      [[]323D-80[]] License renewal.  No license to operate a
12 hospital may be issued or renewed by the department of health
13 pursuant to this chapter, and a license which has been issued
14 shall be subject to revocation or suspension, if:
15      (1)  There is an acquisition of a hospital without first
16           having received the approval of the [agency] department
17           under this part;
18      (2)  There is an acquisition of a hospital without the
19           approval of the attorney general, if the attorney
20           general determines that a review of the application is
21           appropriate under this part;
22      (3)   There is an acquisition of a hospital and the attorney

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 1           general disapproves the acquisition and there is a
 2           judicial determination that the acquisition is not in
 3           the public interest; or
 4      (4)  The hospital is not fulfilling its commitment under
 5           section 323D-77 or is not following procedures or
 6           safeguards required under section 323D-77(4).
 7      This section does not limit the right to a hearing or the
 8 right of appeal for a hospital from such decision.
 9      [[]323D-81[]] Prior acquisitions.  Any acquisition of a
10 hospital before July 20, 1998 [and any acquisition in which an
11 application for a certificate of need has been granted by the
12 [agency] department before July 20, 1998] is not subject to this
13 part.
14      [[]323D-82[]] Maintenance of services.  A person who has
15 acquired or is engaged in the acquisition of a hospital shall not
16 substantially reduce [or] eliminate direct patient care services
17 at the hospital below the levels at which those services were
18 available at the time of the acquisition, without first giving
19 written notice of the planned reduction or elimination to the
20 [agency] department and receiving the [agency's] department's
21 approval, prior to implementing the reduction or elimination of
22 services.

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 1      [[]323D-83[]] Statutory authority.  No provision of this
 2 part shall derogate from the common law or statutory authority of
 3 the attorney general.
 4      SECTION 15.  All rights, powers, functions, and duties of
 5 the State Health Planning and Development Agency are transferred
 6 to the Department of Health.
 7      All officers and employees whose functions are transferred
 8 by this Act shall be transferred with their functions and shall
 9 continue to perform their regular duties upon their transfer,
10 subject to the state personnel laws and this Act.
11      No officer or employee of the State having tenure shall
12 suffer any loss of salary, seniority, prior service credit,
13 vacation, sick leave, or other employee benefit or privilege as a
14 consequence of this Act, and such officer or employee may be
15 transferred or appointed to a civil service position without the
16 necessity of examination; provided that the officer or employee
17 possesses the minimum qualifications for the position to which
18 transferred or appointed; and provided that subsequent changes in
19 status may be made pursuant to applicable civil service and
20 compensation laws.
21      An officer or employee of the State who does not have tenure
22 and who may be transferred or appointed to a civil service

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 1 position as a consequence of this Act shall become a civil
 2 service employee without the loss of salary, seniority, prior
 3 service credit, vacation, sick leave, or other employee benefits
 4 or privileges and without the necessity of examination; provided
 5 that such officer or employee possesses the minimum
 6 qualifications for the position to which transferred or
 7 appointed.
 8      If an office or position held by an officer or employee
 9 having tenure is abolished, the officer or employee shall not
10 thereby be separated from public employment, but shall remain in
11 the employment of the State with the same pay and classification
12 and shall be transferred to some other office or position for
13 which the officer or employee is eligible under the personnel
14 laws of the State as determined by the head of the department of
15 the governor.
16      SECTION 16.  All appropriations, records, equipment,
17 machines, files, supplies, contracts, books, papers, documents,
18 maps, and other personal property heretofore made, used,
19 acquired, or held by the state health planning and development
20 agency relating to the functions transferred to the department of
21 health shall be transferred with the functions to which they
22 relate.

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 1      SECTION 17.  Statutory material to be repealed is bracketed.
 2 New statutory material is underscored.
 3      SECTION 18.  This Act shall take effect upon its approval.
 5                           INTRODUCED BY: ________________________

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