0001|                            HOUSE BILL 469
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0002|     43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003|                            INTRODUCED BY
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0004|                            J. PAUL TAYLOR
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO HEALTH CARE; ENACTING THE HOSPITAL SALE ACT;
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0012|     ESTABLISHING PROCEDURES AND CRITERIA FOR REVIEW AND APPROVAL
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0013|     OF HOSPITAL ACQUISITIONS BY THE ATTORNEY GENERAL; MAKING AN
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0014|     APPROPRIATION; DECLARING AN EMERGENCY.
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0015|     
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0016|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0017|          Section 1.  SHORT TITLE.--This act may be cited as the
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0018|     "Hospital Sale Act". 
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0019|          Section 2.  DEFINITIONS.--As used in the Hospital Sale
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0020|     Act: 
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0021|               A.  "acquire" or "acquisition" means the acquiring
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0022|     by a person of an interest in a hospital, whether by purchase,
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0023|     merger, lease, gift or otherwise, that results in a change of
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0024|     ownership or control of twenty percent or greater or that
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0025|     results in the acquiring person holding a fifty percent or
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0001|     greater interest in the ownership or control of a hospital;
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0002|               B.  "hospital" means a general or acute care or
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0003|     specialty hospital licensed by the department of health;
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0004|               C.  "person" means an individual or other legal
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0005|     entity, including the state or a department, agency,
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0006|     institution or political subdivision of the state. 
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0007|          Section 3.  ACQUISITIONS--APPLICATIONS--APPROVALS.--
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0008|               A.  No person shall acquire a hospital without
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0009|     first applying for and receiving the approval of the attorney
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0010|     general pursuant to the Hospital Sale Act. 
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0011|               B.  Approval of the attorney general is not
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0012|     required for the acquisition of a hospital if the acquisition
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0013|     is a result of the: 
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0014|                    (1)  lease of a county hospital; 
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0015|                    (2)  dissolution of a hospital district; or 
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0016|                    (3)  merger of hospital districts or hospitals
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0017|     of the state or a department, agency, institution or political
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0018|     subdivision of the state. 
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0019|               C.  The acquisition application shall be submitted
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0020|     to the attorney general on forms provided by the attorney
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0021|     general and shall include the name of the seller, the name of
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0022|     the purchaser or other parties to the acquisition, the terms
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0023|     of the proposed agreement, the sale price, a copy of the
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0024|     acquisition agreement, a financial and economic analysis and
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0025|     report from an independent expert or consultant of the effect
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0001|     of the acquisition based on the criteria set forth in Section
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0002|     6 of the Hospital Sale Act and all other related documents.  A
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0003|     copy of the application and copies of all additional related
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0004|     materials shall be submitted to the attorney general. 
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0005|     Applications and all related documents are public records. 
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0006|                D.  A person not required to obtain approval for
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0007|     an acquisition described in Subsection B of this section shall
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0008|     notify the attorney general in writing at least thirty days
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0009|     before the acquisition.  The notice shall briefly describe the
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0010|     impeding acquisition, including any change in ownership of
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0011|     tangible and intangible assets. 
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0012|          Section 4.  APPLICATION--CONTENTS--TIME PERIODS--
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0013|     APPROVALS OR DISAPPROVALS.--
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0014|               A.  Within ten days after receipt of an
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0015|     application, the attorney general shall publish notice of the
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0016|     application in a newspaper of general circulation in the
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0017|     county where the hospital is located and shall notify by mail
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0018|     any person who has requested notice of the filing of
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0019|     applications.  The notice shall state that an application has
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0020|     been received, state the names of the parties to the
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0021|     agreement, describe the contents of the application and state
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0022|     the date by which a person may submit written comments about
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0023|     the application to the attorney general.
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0024|               B.  Within sixty days after receiving an
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0025|     application, the attorney general shall review the application
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0001|     in accordance with the standards set forth in the Hospital
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0002|     Sale Act and shall: 
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0003|                    (1) approve the acquisition, with or without
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0004|     any specific modifications; or 
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0005|                    (2) disapprove the acquisition.
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0006|               C.  If during the review the attorney general
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0007|     determines that the application is incomplete, he may return
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0008|     the application to the applicant or may request additions or
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0009|     changes to the application.  All deadlines are suspended
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0010|     during the time an application is incomplete. 
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0011|               D.  The attorney general shall not make his
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0012|     decision subject to any condition or modification not directly
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0013|     related to criteria enumerated in Section 6 of the Hospital
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0014|     Sale Act, and any condition or modification shall bear a
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0015|     direct and rational relationship to the application under
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0016|     review. 
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0017|          Section 5.  PUBLIC HEARING.--The attorney general shall
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0018|     hold a public hearing at which any person may file written
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0019|     comments and exhibits or appear and make a statement.  The
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0020|     attorney general may subpoena additional information or
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0021|     witnesses, require and administer oaths, require sworn
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0022|     statements, take depositions and use related discovery
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0023|     procedures for purposes of the hearing and at any time prior
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0024|     to making a decision on the application.  The hearing shall be
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0025|     held not later than forty days after receipt of an
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0001|     application.  The hearing shall be held upon ten working days'
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0002|     notice, not including days the application is deemed
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0003|     incomplete. 
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0004|          Section 6.  ATTORNEY GENERAL--APPROVAL CRITERIA.--
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0005|               A.  The attorney general shall approve the
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0006|     application unless he finds that the acquisition is not in the
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0007|     public interest or does not meet the requirements of the
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0008|     Hospital Sale Act.  An acquisition is not in the public
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0009|     interest unless appropriate steps have been taken to safeguard
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0010|     the value of charitable assets and to ensure that any proceeds
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0011|     of the transaction are used for appropriate charitable health
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0012|     care purposes as provided in Paragraph (8) of Subsection B of
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0013|     this section.  
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0014|               B.  In determining whether the acquisition meets
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0015|     the requirements of the Hospital Sale Act and is in the public
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0016|     interest, the attorney general shall consider: 
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0017|                    (1)  whether the acquisition is permitted by
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0018|     the Business Corporation Act, the Nonprofit Corporation Act
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0019|     and other laws of New Mexico governing public procurement,
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0020|     corporations, or nonprofit entities;
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0021|                    (2)  whether the hospital exercised due
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0022|     diligence in deciding to sell, in selecting the purchaser and
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0023|     in negotiating the terms and conditions of the sale;
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0024|                    (3)  the procedures used by the seller in
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0025|     making its decision, including whether appropriate expert
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0001|     assistance was used; 
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0002|                    (4)  whether conflicts of interest were
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0003|     disclosed, including conflicts of interest related to board
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0004|     members of, executives of and experts retained by the seller,
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0005|     purchaser or other parties to the acquisition; 
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0006|                    (5)  whether the seller will receive
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0007|     reasonable consideration and fair value for its assets.  The
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0008|     attorney general may employ, at the seller's expense,
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0009|     reasonably necessary expert assistance in making this
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0010|     determination; 
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0011|                    (6)  whether public and charitable funds are
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0012|     placed at unreasonable risk, if the acquisition is financed in
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0013|     part by the seller;
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0014|                    (7)  whether any management contract under the
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0015|     acquisition is for reasonable consideration and fair value; 
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0016|                    (8)  if the seller is a nonprofit entity,
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0017|     whether the sale proceeds will be used for appropriate public
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0018|     and charitable health care purposes consistent with the
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0019|     seller's original purpose or for the support and promotion of
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0020|     health care in the affected community and whether the proceeds
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0021|     will be controlled as public or charitable funds independent
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0022|     of the purchaser or parties to the acquisition; 
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0023|                    (9)  whether a right of first refusal has been
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0024|     retained to repurchase the assets by a successor corporation
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0025|     or foundation if the hospital is subsequently sold to,
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0001|     acquired by or merged with another entity; 
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0002|                    (10)  whether sufficient safeguards are
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0003|     included to ensure the affected community continued access to
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0004|     affordable and appropriate health care; 
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0005|                    (11)  whether the purchaser and parties to the
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0006|     acquisition have made a commitment to provide health care to
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0007|     the disadvantaged, the uninsured and the underinsured and to
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0008|     provide benefits to the affected community to promote health
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0009|     care.  Activities and funding provided by the seller to
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0010|     provide such health care may be considered in evaluating
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0011|     compliance with this paragraph; and 
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0012|                    (12) if health care providers will be offered
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0013|     the opportunity to invest in or own an interest in the
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0014|     purchaser or an entity related to the purchaser, whether
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0015|     procedures or safeguards are in place to avoid conflicts of
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0016|     interest in patient referral and the nature of the procedures
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0017|     or safeguards. 
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0018|               C.  This section does not apply higher standards to
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0019|     hospitals covered by the provisions of the Hospital Sale Act
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0020|     than those applicable to hospitals not covered by the
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0021|     provisions of that act. 
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0022|          Section 7.  ACQUISITION--FAILURE TO FULFILL OBLIGATIONS--
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0023|     REVOCATION OF LICENSE.--If the attorney general receives
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0024|     information indicating that the acquiring person is not
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0025|     fulfilling the commitment to the affected community pursuant
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0001|     to Section 6 of the Hospital Sale Act, the attorney general
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0002|     shall hold a hearing on ten working days' notice to the
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0003|     affected parties.  If after the hearing, the attorney general
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0004|     determines that the information is true, he may institute
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0005|     proceedings to revoke the license issued to the purchaser.
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0006|          Section 8.  LICENSURE--DENIAL, SUSPENSION OR REVOCATION.--
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0007|     No license to operate a hospital shall be issued or renewed by
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0008|     the attorney general and a license that has been issued shall
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0009|     be suspended or revoked if there is an acquisition of a
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0010|     hospital without first having received the approval of the
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0011|     attorney general pursuant to the Hospital Sale Act, if there is
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0012|     an acquisition of a hospital and there is a judicial
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0013|     determination that the acquisition is not in the public
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0014|     interest or if a licensed hospital is not fulfilling its
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0015|     commitment pursuant to Subsection 11 of Section 6 of the
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0016|     Hospital Sale Act. 
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0017|          Section 9.  APPROPRIATION.--Twenty thousand dollars
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0018|     ($20,000) is appropriated from the general fund to the office
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0019|     of the attorney general for expenditure in fiscal year 1999 for
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0020|     the purpose of implementing and enforcing the Hospital Sale
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0021|     Act.  Any unexpended or unencumbered balance remaining at the
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0022|     end of fiscal year 1999 shall revert to the general fund. 
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0023|          Section 10.  EMERGENCY.--It is necessary for the public
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0024|     peace, health and safety that this act take effect immediately.
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