OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

SB-811

AN ACT CONCERNING PARITY IN HOSPITAL SALES OVERSIGHT.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 16 $

FY 17 $

Attorney General

GF - Cost

141,300

196,902

Department of Public Health

GF - Cost

102,500

155,000

State Comptroller - Fringe Benefits1

GF - Cost

92,054

133,111

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill results in additional salary, fringe benefit and equipment costs of $335,854 in FY 16 and $485,013 in FY 17 by extending the current hospital reporting requirements to health systems.

Currently, the Office of Health Care Access (OHCA) receives annual filings from the state's 29 acute care hospitals. By extending the reporting requirements to hospital parent corporations and affiliated entities, an additional 278 annual filings will result. It is anticipated that two additional healthcare analysts will be required to review and analyze these additional filings, beginning October 1, 2015.

The Office of the Attorney General (OAG) currently reviews only hospital transactions in which a for-profit purchaser acquires a nonprofit hospital. This bill significantly expands the agency's authority by requiring it to review all hospital transactions, including those in which both parties are nonprofit. Such reviews are formal administrative proceedings that require the agency to conduct hearings and perform an exhaustive legal and financial review of complex transactions involving millions of dollars in assets. The reviews must be conducted within statutory deadlines absent the consent of the parties to an extension.

It is anticipated that the agency would require an Assistant Attorney General 2 position ($110,500 for salary and $42,708 for fringe costs) and a Paralegal position ($70,400 for salary and $27,210 for fringe costs) to handle the additional work associated with the administrative proceedings and the review process. In addition, the agency would require $7,500 in Other Expenses to cover associated costs, including court reporters. The fiscal impact in the first year reflects implementation beginning October 1, 2015.

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 38.65% of payroll in FY 16 and FY 17.