NYS Hospital Regulation

November 29, 2006 11:18 AM

There's a commission in New York State that's going to force closure of a bunch of hospitals across the state, including a few in my area (Buffalo). They are also going to force a few private organizations to merge. What gives them the ability to dictate this sort of thing? Is it the threat of withholding funding? I've read many news articles on the closure recommendations, but have missed out on a good ultimate explanation.

I have read the authorizing resolution (pdf), but it seems bizarre to me that NY can in effect take away a business just by arbitrarily revoking the facility's license or whatever. And forcing mergers seem to out of the bounds of any government action I've ever heard of. Does the state have to compensate these organizations for taking away their businesses?

I am not opposed to these hospitals closing, but I am desperately curious about the actions and authority of my state government. It's been bugging me all week.

posted by voidcontext to Law & Government (6 answers total)

I haven't listened to this, but it might address the issue:
A Bitter Pill. It's from WNYC's Brian Lehrer show.
posted by miniape at 11:26 AM on November 29, 2006

Response by poster: Thanks, I will give that a listen when I get home.
posted by voidcontext at 12:31 PM on November 29, 2006

Best answer: it seems bizarre to me that NY can in effect take away a business just by arbitrarily revoking the facility's license or whatever.

I'm not sure what your background is, so forgive me if I'm oversimplifying, but what you describe is exactly in some ways the purpose of government in a civilized society. This is what the State does. They grant licenses (which they get to do because they are the State) and they can also revoke them. In America, most corporations are incorporated in a specific state and they have to abide by the rules and regulations for business in that state. They are granted a charter to operate which gives them specific rights and also legal responsibilites, but it creates a legal reciprocity between the business and the state itself.

Being licensed in a state usually involves other responsibilities, like having a liquor license or a fortune tellers license or a license to sell food. If you go against the terms of these licenses (and I don't know if this applies in NY) the license can be revoked which means you're no longer legally allowed to do whatever you were licensed to do. However for things like hospitals, there are licenses, but there are also laws that are important because one of the purposes of government in many cases is the maintenance of public health.

In your particular case, on reading the PDF it looks like there are public health laws that are concerning the commission that was set up, that have some application to the way hospitals are run in the state. So on page six, you see these laws cited. (emphasis mine)

(a) Notwithstanding any contrary provision of law, rule or regulation related to the establishment, construction, approval, suspension or revocation
of the operating certificates, closure, resizing, consolidation, conversion or restructuring of the
general hospitals or nursing homes identified in the commission’s recommendations, including but
not limited to sections 2801-A, 2802, 2805, 2806, and 2806-B of the public health law, the
commissioner of health shall take all actions necessary to implement, in a reasonable, cost-efficient
manner, the recommendations of the commission pursuant to subdivisions (b) and (c) of section
eight of this act, including, but not limited to: (i) coordination with local government officials and
health departments, management and labor representatives of affected facilities, and other parties
as the commissioner deems appropriate; (ii) the rescission of operating certificates and
establishment approvals issued to those facilities selected for closure by the commission; (iii)
expediting consideration of such applications for consolidation, conversion or restructuring of
existing health care providers as are submitted in accordance with the recommendations of the
commission, provided, however, that the commissioner of health may administratively approve
such applications when such approvals are, as determined by the commissioner of health, necessary
to ensure continuity of essential health care services; and (iv) reflecting such recommendations in
the administration of funds available pursuant to section 2818 of the public health law. Such
facilities shall submit to the commissioner of health, at a time and in a form as determined by the
commissioner of health, an acceptable plan of resizing, closure, conversion, consolidation or
restructuring in accordance with applicable regulations. The commissioner of health shall take all
steps necessary to protect patient safety and preserve patient medical records.

My guess is that there is a medical librarian somewhere that could probably untangle this further and explain the laws specifically. Most hospitals have libraries and some are even open to the public, you might want to pop in and ask someone there.
posted by jessamyn at 12:56 PM on November 29, 2006

Response by poster: Jessamyn, thanks. I guess I was stuck on thinking of the hospitals as properties, which would be protected from being taken away by the government without compensation. But a license isn't really owned, and I'm sure they will keep the physical properties, so I see your point there.

I am still a bit unclear on the forced merger bit, so I will check with the University of Buffalo law library.
posted by voidcontext at 1:30 PM on November 29, 2006

Best answer: Don't weep for dispossed owners: there will be few, if any.

It is a long-standing policy in New York effectivley to ban for-profit acute care hopsitals, enforced by a network of regulations, preferential tax and bonding laws, and restrictions on Medicaid and government-employee health plans.

This same network of policies has made the non-government non-profit hopsitals (most of which are owned by bodies affiliated with the Catholic Church or other religious organizations) into quasi-governmental institutions.
posted by MattD at 3:51 PM on November 29, 2006

Response by poster: For some reason I thought at least one local group (Kaleida) was for-profit, but you are right, it is a non-profit.

That is the other piece of the puzzle I was missing. Truthfully, I never really felt bad for them. There are too many hospital beds in the area, and some hospitals have to close. I can see how NYS could force entities like this into situations a real corporation would never stand for. You saved me a trip to the library, MattD.
posted by voidcontext at 7:44 PM on November 29, 2006