§ 23-17.14-6. Initial application — Conversions involving for-profit corporations or not-for-profit
corporations as acquirors or acquirees.
(a) No person shall engage in a conversion with a for-profit corporation or a not-for-profit
corporation as the acquiror or acquiree involving the establishment, maintenance,
or operation of a hospital or a conversion subject to § 23-17.14-9 without prior approval of both the department of attorney general and the department
of health. The review of the two (2) departments shall occur concurrently, and neither
department shall delay its review or determination because the other department has
not completed its review or issued its determination. The applicant may request that
the review by the departments occur concurrently with the review of any relevant federal
regulatory authority. The transacting parties shall file an initial application in
accordance with subsection (b) of this section that shall, at minimum, include the
following information with respect to each transacting party and to the proposed new
hospital:
(1) A detailed summary of the proposed conversion;
(2) Names, addresses, and phone numbers of the transacting parties;
(3) Name, address, phone number, occupation, and tenure of all officers, members of the
board of directors, trustees, executives, and senior managers, including for each
position, current persons and persons holding such position during the past two (2)
years;
(4) A list of all committees, subcommittees, task forces, or similar entities of the board
of directors or trustees, including a short description of the purpose of each committee,
subcommittee, task force, or similar entity and the name, address, phone number, occupation,
and tenure of each member;
(5) Agenda and minutes of all meetings of the board of directors or trustees and any of
its committees, subcommittees, task forces related to the conversion, or similar entities
excluding those focused on peer review and confidential medical matters, that occurred
within the two-year (2) period prior to submission of the application, including,
upon the request of the department or attorney general, any meeting packages;
(6) Articles of incorporation and certificate of incorporation;
(7) Bylaws and organizational charts;
(8) Organizational structure for existing transacting parties and each partner, affiliate,
parent, subsidiary, or related corporate entity in which the acquiror has a twenty
percent (20%) or greater ownership interest;
(9) Conflict of interest statements, policies, and procedures;
(10) Names, addresses, and phone numbers of professional consultants engaged in connection
with the proposed conversion;
(11) Copies of audited income statements, balance sheets, other financial statements, and
management letters for the past three (3) years and to the extent they have been made
public, audited interim financial statements and income statements together with detailed
description of the financing structure of the proposed conversion including equity
contribution, debt restructuring, stock issuance, partnership interests, stock offerings,
and the like;
(12) A detailed description of real estate issues including title reports for land owned
and lease agreements concerning the proposed conversion;
(13) A detailed description as each relates to the proposed transaction for equipment leases,
insurance, regulatory compliance, tax status, pending litigation or pending regulatory
citations, pension plan descriptions and employee benefits, environmental reports,
assessments, and organizational goals;
(14) Copies of reports analyzing the proposed conversion during the past three (3) years
including, but not limited to, reports by appraisers, accountants, investment bankers,
actuaries, and other experts;
(15) Copies of any opinions or memoranda addressing the state and federal tax consequences
of the proposed conversion prepared for a transacting party by an attorney, accountant,
or other expert;
(16) A description of the manner in which the price was determined including which methods
of valuation and what data were used, and the names and addresses of persons preparing
the documents, and this information is deemed to be proprietary;
(17) Patient statistics for the past three (3) years and patient projections for the next
one year including patient visits, admissions, emergency room visits, clinical visits,
and visits to each department of the hospital, admissions to nursing care, or visits
by affiliated home healthcare entities;
(18) The name and mailing address of all licensed facilities in which the for-profit corporation
maintains an ownership interest or controlling interest or operating authority;
(19) A list of pending or adjudicated citations, violations or charges against the facilities
listed in subdivision (a)(18) brought by any governmental agency or accrediting agency
within the past three (3) years and the status or disposition of each matter with
regard to patient access and care and charitable asset matters;
(20) A list of uncompensated care provided over the past three (3) years by each facility
listed in subdivision (a)(18) and detail as to how that amount was calculated;
(21) Copies of all documents related to:
(i) Identification of all charitable assets;
(ii) Accounting of all charitable assets for the past three (3) years; and
(iii) Distribution of the charitable assets including, but not limited to, endowments, restricted,
unrestricted, and specific purpose funds as each relates to the proposed transaction;
(22) A description of charity care and uncompensated care provided by the existing hospital(s)
for the previous three-year (3) period to the present including a dollar amount and
a description of services provided to patients;
(23) A description of bad debt incurred by the existing hospital for the previous three
(3) years for which payment was anticipated but not received;
(24) A description of the plan as to how the new hospital will provide community benefit
and charity care during the first three (3) years of operation;
(25) A description of how the new hospital will monitor and value charity care services
and community benefit;
(26) The names of persons currently holding a position as an officer, director, board member,
or senior manager who will or will not maintain any position with the new hospital
and whether any said person will receive any salary, severance stock offering, or
any financial gain, current or deferred, as a result of or in relation to the proposed
conversion;
(27) Copies of capital and operating budgets or other financial projections for the new
hospital during the first three (3) years of operation;
(28) Copies of plans relative to staffing during the first three (3) years at the new hospital;
(29) A list of all medical services, departments and clinical services, and administrative
services that will be maintained at the new hospital, including staffing levels;
(30) A description of criteria established by the board of directors of the transacting
parties for pursuing a proposed conversion with one or more healthcare providers;
(31) Copies of reports of any due diligence review performed by each transacting party
in relation to the proposed conversion. These reports are to be held by the attorney
general and department of health as confidential and not released to the public regardless
of any determination made pursuant to § 23-17.14-32 and notwithstanding any other provision of the general laws;
(32) A description of request for proposals issued by the transacting parties relating
to pursuing a proposed conversion;
(33) Copies of reports analyzing affiliations, mergers, or other similar transactions considered
by any of the transacting parties during the past three (3) years, including, but
not limited to, reports by appraisers, accountants, investment bankers, actuaries,
and other experts;
(34) A copy of proposed contracts or description of proposed contracts or arrangements
with senior managers, board members, officers, or directors of the transacting parties
for severance consulting services or covenants not to compete following completion
of the proposed conversion;
(35) A copy or description of all agreements or proposed agreements reflecting any current
and/or future employment or compensated relationship between the acquiror (or any
related entity) and any officer, director, board member, or senior manager of the
acquiree (or any related entity);
(36) A copy or description of all agreements executed or anticipated to be executed by
any of the transacting parties in connection with the proposed conversion;
(37) Copies of documents or description of any proposed plan for any entity to be created
for charitable assets, including but not limited to, endowments, restricted, unrestricted,
and specific purpose funds, the proposed articles of incorporation, bylaws, mission
statement, program agenda, method of appointment of board members, qualifications
of board members, duties of board members, and conflict of interest policies;
(38) Description of all departments, clinical, social, or other services or medical services
that will be eliminated or significantly reduced by transacting parties at either
the new hospital(s) or the existing hospital(s);
(39) Description of staffing levels for five (5) years of all categories of employees,
including full-time, part-time, and contract employees currently working at or providing
services to the existing hospital and description of any anticipated or proposed changes
in current staffing levels, including any reduction in staffing, relocation of staffing,
or additional staffing affecting the new hospital and the existing hospital;
(40) Description of retirement plan(s) for all employees, full-time or part-time, including
any supplemental executive retirement plans;
(41) Copies of retirement plans' accounting; management letters, and reports, including
unfunded liabilities for retirement plans for the last five (5) years;
(42) Copies of plans to fund unfunded liabilities for pension and any retirement plans;
(43) Copies of any impact analysis for the affected communities both before conversion
and after proposed conversion, including benefits to the community, economic impact,
and staffing;
(44) Copies of current conflict of interest forms from all incumbent or recently incumbent
officers, directors, members of the boards of directors or trustees, and senior management
and the medical directors of the transacting parties on a form acceptable to the department
of attorney general;
(45) If the acquiror is a for-profit corporation that has acquired a not-for-profit hospital
under the provisions of this chapter, the application shall also include a complete
statement of performance during the preceding one year with regard to the terms and
conditions of approval of conversion and each projection, plan, or description submitted
as part of the application for any conversion completed under an application submitted
pursuant to this section and made a part of an approval for the conversion pursuant
to § 23-17.14-7, § 23-17.14-8, or § 23-17.14-19; and
(46) Copies of IRS Form 990 for any transacting party required by federal law to file such
a form for each of the three (3) years prior to the submission of the application.
(b) Two (2) copies of the initial application shall be provided to each of the department
of health and department of the attorney general simultaneously by United States mail,
certified, return receipt requested. Filings may be submitted electronically if acceptable
to the department of health and/or attorney general.
(c) Except for information determined by the attorney general in accordance with § 23-17.14-32 to be confidential and/or proprietary, or otherwise required by law to be maintained
as confidential, the initial application and supporting documentation shall be considered
public records and shall be available for inspection upon request.