Health Facilities Planning Act PA 99-0154
July 29, 2015
Memorandum
Healthcare facilities need increased flexibility to consolidate affiliations and improve efficiencies. IHA worked with the Health Facilities and Services Review Board to streamline Section 8.5 of the Health Facilities Planning Act dealing with:
- Change of ownership of a healthcare facility;
- Closure of a healthcare facility; and
- Discontinuation of a category of service, other than a healthcare facility maintained by the State or a county nursing home.
Change of Ownership
Previously, to initiate an application for a Certificate of Exemption (COE) for a change of ownership, an applicant was required to submit completed and signed transaction documents before the Board’s review process could even begin. This unnecessarily delayed the progress of the transaction.
PA 99-0154 allows the applicant to submit to the Board “key terms” of the transaction in lieu of completed and signed transaction documents. The COE is contingent upon the applicant submitting a statement to the Board within 90 days after the closing date of the transaction, certifying that the change of ownership has been completed in accordance with the key terms.
If such key terms change, a new application is required. Key terms include:
- Names and background of the parties;
- Structure of the transaction;
- Person who will be the licensed or certified entity after the transaction;
- Ownership or membership interests in such licensed or certified entity prior to and after the transaction;
- Fair market value of assets to be transferred; and
- Purchase price or other form of consideration to be provided for those assets.
The applicant will pay the Board’s cost to publish notice of the application in the newspaper for one day, rather than three days, and the public will continue to have the opportunity to request a public hearing on the application.
Change of Ownership Among Related Persons
Under PA 99-0154, the process is even more streamlined for changes of ownership among related persons, such as where the parties to the transaction are under common control or ownership before and after the transaction is completed.
If there are no other changes proposed that would otherwise require a permit or exemption, the applicant must submit an application consisting of a standard notice in a form set forth by the Board briefly explaining the reasons for the proposed change of ownership. Once submitted to the Board and reviewed by Board staff, the Board Chair shall take action within 45 days after the application has been deemed complete, provided the application meets the applicable standards. If the Chair has a conflict of interest or for other good cause, the Chair may request review by the Board.
Limitations Imposed on a Change of Ownership
Applicants seeking a change of ownership for a hospital must still certify that for a period of two years the hospital shall not adopt a charity care policy that is more restrictive than the policy in effect during the year prior to the transaction.
PA 99-0154 restricts the Board from imposing additional conditions, obligations or limitations when issuing a COE for a change of ownership. For example, the Board may no longer limit the time period before which a subsequent change of ownership of the healthcare facility could be sought, or require the commitment to continue to offer for a specified time period any services currently offered by the healthcare facility.
This new provision should remove the Board’s imposing time barriers on new owners who wish to create efficiencies by eliminating a service or more rapidly effecting further consolidation. While such limitations may no longer be imposed as a condition of a COE for a change of ownership, any action that would otherwise require a CON, regardless of timing, will still require one.
Closure of Healthcare Facility
For a proposed healthcare facility closure, the requirement of the Board to publish a legal notice on three consecutive days has not changed and the public maintains the opportunity to request a public hearing on any proposed closure.
Under PA 99-0154, an applicant proposing to close a healthcare facility may obtain a Certificate of Exemption (COE) rather than a Certificate of Need (CON). Current law requires the Board to establish by regulation the procedures and requirements regarding issuance of exemptions and to approve a COE when information required by the Board by rule is submitted (20 ILCS 3960/6). Therefore, the specific information that the Board will require for a COE to close a facility may be developed by rule.
Discontinuation of a Category of Service
PA 99-0154 states, “Upon a finding that an application to discontinue a category of service is complete and provides the requested information as specified by the State Board, an exemption shall be issued. No later than 30 days after the issuance of the exemption, the healthcare facility must give written notice of the discontinuation of the category of service to the State Senator and State Representative serving the legislative district in which the health care facility is located.”
Because the procedures and requirements regarding issuance of exemptions must be established by regulation, the specific information that the Board will require for a COE to discontinue a category of service may be developed by rule.
PA 99-0154 Provisions at a Glance
Change of Ownership (CHOW) | Old | New |
Notice Requirements | - Publication for 3 days | - 1 day |
Application Components | Complete and signed transcation documents | - "Key terms" of CHOW transaction |
Limitations | Board may impose limitations via affirmations at 1130.520 | Review Board may not impose limitations other than those required by this Section, including, but not limited to: time period for subsequent CHOW; commitment to continue to offer current services |
CHOWS Among Related Persons | - CHOW application | - Standard notice explaining reasons |
Closure of Healthcare Facility | Old | New |
Publication of Notice | - 3 days | No change |
Required Document | Certificate of Need | Certificate of Exemption, except for State facility, county nursing home |
Discontinuation of a Category of Service | Old | New |
Notice | Required as above | Not Required |
Required Document | Certificate of Need | COE, except for State facilities and county nursing homes |
Notice to State Legislators | Within 30 days of reduction in service of 50% or more | Within 30 days after issuance of the COE |
Read about PA 99-0114 for the administrative and procedural requirements of the Health Facilities Planning Act.