OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sSB-460

AN ACT CONCERNING HOSPITAL CONVERSIONS AND OTHER MATTERS AFFECTING HOSPITALS.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 15 $

FY 16 $

Public Health, Dept.

GF - Revenue Gain

2,000

None

State Comptroller - Fringe Benefits1

GF - Cost

79,506

83,083

Public Health, Dept.

GF - Cost

223,913

227,632

Municipal Impact: None

Explanation

The bill results in net state cost of $301,419 in FY 15 and a state cost of $310,715 in FY 16 associated with the expanded requirements for nonprofit hospitals to transfer ownership or control to for-profit entities (applications must be on file before 10/1/14) and the expansion of requirements for certain non-profit hospital agreements, which must be analyzed by the Department of Public Health's Office of Health Care Access (OHCA). It is anticipated that four non-profit to profit hospital conversion Certificate of Need (CON) applications may be filed before 10/1/14 (there is currently one under review) and that approximately four CONs associated with non-profit agreements will occur in FY 16 and annually thereafter. As the bill is anticipated to increase the non-profit to profit hospital CON applications in FY 15 (as applications filed after 10/1/14 will not be accepted), associated revenue of $2,000 is anticipated (this reflects four CONs with a fee of $500 for each). No additional revenue is anticipated in FY 16.

As the bill requires a significant expansion of information that OHCA must analyze, the cost to OCHA reflects the addition of two full-time Associate Research Analysts and one full-time Office Assistant, equipment expenses in FY 15 (computers) and other on-going expenses all totaling $223,913 in FY 15 and $227,632 in FY 16. Associated State Comptroller – Fringe Benefits costs for these positions are $79,506 in FY 15 and $83,083 in FY 16.

Current hospital conversion law requires Office of the Attorney General (OAG) approval for a nonprofit hospital's sale or transfer to a for-profit entity. This bill extends OAG approval to hospital conversions in which all parties are nonprofit. The bill has no fiscal impact on OAG because CGS Sec. 19a-486c allows OAG to hire consultants and experts to evaluate conversion proposals and bill hospital purchasers for these costs in an amount not to exceed $500,000 per application. The bill does not change other statutory responsibilities, such as giving OAG discretion to determine that the conversion process doesn't apply to transactions that fall below the threshold amount of assets.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 36.66% of payroll in FY 15 and FY 16.