Public Health and Health Planning Council Discusses "Limited Establishment" Co-Operators of Article 28 Facilities
The Establishment and Project Review Committee and Planning Committee of the State's Public Health and Health Planning Council (PHHPC) met this week to discuss a new model of governance for health care facilities licensed under Article 28 of the Public Health Law. These facilities include hospitals, nursing homes, clinics, and ambulatory surgery centers. The proposed model would permit the establishment of a co-operator of an Article 28 facility that is authorized to exercise only a subset of the required governing body powers but can nevertheless share in the revenues of the facility. This proposal would enable large national health care systems to play a more active role in New York State.
Under current law, only entities that receive "establishment" approval from the PHHPC are permitted to exercise certain governance powers over the facilities they operate. These powers include, among others, approval of budgets, authorization of certificate of need applications, approval of management and clinical contracts, and issuance of certain types of debt. Established operators are not only authorized to exercise these powers, but they are also responsible for all of them and held accountable for any failures in governance. A parent of a facility that has been established as an operator by the PHHPC is known as an "active parent." A parent that is not established may not exercise any of the designated powers and is known as a "passive parent." Passive parents are not permitted to share in the revenues of their affiliated facilities.
Under the proposed governance model, a co-operator of a health care facility could be established to exercise, and be held accountable for, only some of the active parent powers. However, another co-operator would have to be established to exercise and assume responsibility for all of the powers. This would allow parents of large national health systems to join with a local health system to co-operate facilities. Local facilities would retain a certain degree of autonomy to manage daily operations of the facility while receiving an infusion of resources from the national parent. In turn, the national parent would be able to enter into a revenue sharing arrangement with the local facilities.
According to participants in the meeting, no changes in regulations are needed to implement a limited co-operator model. Committee members were asked to consider the types of information they would require to assess an application based on this model. The full Council will likely consider the proposal at its next meeting on Oct. 4th. The meeting materials are available here.
Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8383, ext. 124