BILL REQ. #:  S-4978.1 

READ FIRST TIME 02/07/08.   

     AN ACT Relating to a community impact study for hospital conversions; and amending RCW 70.45.070 and 70.45.080.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 70.45.070 and 1997 c 332 s 7 are each amended to read as follows:
     The department shall only approve an application if the parties to the acquisition have taken the proper steps to safeguard the value of charitable assets and ensure that any proceeds from the acquisition are used for appropriate charitable health purposes. To this end, the department may not approve an application unless, at a minimum, it determines that:
     (1) The acquisition is permitted under chapter 24.03 RCW, the Washington nonprofit corporation act, and other laws governing nonprofit entities, trusts, or charities;
     (2) The nonprofit corporation that owns the hospital being acquired has exercised due diligence in authorizing the acquisition, selecting the acquiring person, and negotiating the terms and conditions of the acquisition;
     (3) The procedures used by the nonprofit corporation's board of trustees and officers in making its decision fulfilled their fiduciary duties, that the board and officers were sufficiently informed about the proposed acquisition and possible alternatives, and that they used appropriate expert assistance;
     (4) No conflict of interest exists related to the acquisition, including, but not limited to, conflicts of interest related to board members of, executives of, and experts retained by the nonprofit corporation, acquiring person, or other parties to the acquisition;
     (5) The nonprofit corporation will receive fair market value for its assets. The attorney general ((or the department may)) shall employ, at the expense of the acquiring person, reasonably necessary expert assistance in making this determination. This expense must be in addition to the fees charged under RCW 70.45.030;
     (6) Charitable funds will not be placed at unreasonable risk, if the acquisition is financed in part by the nonprofit corporation;
     (7) Any management contract under the acquisition will be for fair market value;
     (8) The proceeds from the acquisition will be controlled as charitable funds independently of the acquiring person or parties to the acquisition, and will be used for charitable health purposes consistent with the nonprofit corporation's original purpose, including providing health care to the disadvantaged, the uninsured, and the underinsured and providing benefits to promote improved health in the affected community;
     (9) Any charitable entity established to hold the proceeds of the acquisition will be broadly based in and representative of the community where the hospital to be acquired is located, taking into consideration the structure and governance of such entity; and
     (10) A right of first refusal to repurchase the assets by a successor nonprofit corporation or foundation has been retained if the hospital is subsequently sold to, acquired by, or merged with another entity.

Sec. 2   RCW 70.45.080 and 1997 c 332 s 8 are each amended to read as follows:
     The department shall ((only)) approve an application only if the acquisition in question will not detrimentally affect the continued existence of accessible, affordable health care that is responsive to the needs of the community in which the hospital to be acquired is located. To this end, the department shall not approve an application unless, at a minimum, it determines that:
     (1) Sufficient safeguards are included to assure the affected community continued access to affordable care, and that alternative sources of care are available in the community should the acquisition result in a reduction or elimination of particular health services;
     (2) The acquisition will not result in the revocation of hospital privileges;
     (3) Sufficient safeguards are included to maintain appropriate capacity for health science research and health care provider education;
     (4) The acquiring person and parties to the acquisition are committed to providing health care to the disadvantaged, the uninsured, and the underinsured and to providing benefits to promote improved health in the affected community. Activities and funding provided under RCW 70.45.070(8) may be considered in evaluating compliance with this commitment; ((and))
     (5) Sufficient safeguards are included to avoid conflict of interest in patient referral; and
     (6) The department shall employ, at the expense of the acquiring person, a qualified independent expert to conduct an independent, comprehensive health impact study in order to determine that all of the above conditions will be met. This expense must be in addition to fees charged under RCW 70.45.030.