Hospital Conversion

Existing laws regarding charities and corporations give responsibility for hospital conversions to state attorneys general and tax commissioners, in some cases subject to court approval.  However, in part because most state nonprofit statutes do not require notification of the attorney general or court approval, the principal motivation behind these regulations is to ensure the protection of charitable assets on behalf of the public. A number of states have enacted legislation that specifically addresses hospital or other health care conversions (e.g., health plans). These statutes vary widely in scope and in terms of the procedures triggered when a hospital intends to convert. Some merely require the filing of information to a designated state agency to ensure that the decision-making process is fair, that the community has fully considered the potential impacts of conversion and that it is receiving fair market value for the hospital being converted. Some states require public hearings or similar mechanisms to achieve these objectives; others permit the agency or individual responsible for approving the transaction to obtain independent estimates of the value of the transaction or other details about it. The Duke Center for Health Policy has developed a draft working paper assessing the costs and benefits of hospital conversion regulations (pdf).

Links

  • See Regulation of Conversions at Hospital Conversions in the Carolinas.
  • A Guide for Communities Considering Hospital Conversion in the Carolinas. May 1998. Copyright 1998 by Center for Health Policy, Law and Management, Duke University. The entire guide, or selected chapters, may be downloaded here.
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