CALIFORNIA: NEW BILL REGULATES NONPROFIT MERGERS
The California Legislature unanimously approved a bill thatThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
would strengthen the state attorney general's "control over the
transfer of tax-exempt health care assets to for-profit
companies." MODERN HEALTHCARE reports that the legislation would
require "charitable health care organizations, such as not-for-
profit hospitals, to obtain the attorney general's consent before
agreeing to transfer a 'material' amount of assets or control of
those assets to a for-profit or mutual organization." The
measure is expected to receive Gov. Pete Wilson's (R) signature
by late September.
THE LANGUAGE: The bill gives the attorney general 60 days
to approve a deal, with an option to "to extend it another 45
days." The attorney general must also hold a public meeting on
the deal and may also consult with "any state agency" or outside
consultants "at the corporation's expense." In making a
decision, the attorney general may consider "the fairness of the
deal, whether anyone will profit from it, whether the assets will
be transferred for their fair market value and whether the
proceeds will be used for charitable purposes." Since the
attorney general determines what material assets are involved in
the deal, he may "challenge even mergers involving less than 50%
of a hospital's assets" (Jaklevic, 8/26 issue).