Ohio's not-for-profit healthcare entities would need the state attorney general's approval to transfer assets to for-profit companies under legislation introduced last week.
The measures, proposed by Ohio Attorney General Betty Montgomery and two state legislators, follow laws that strengthened oversight of such transactions in California and Nebraska.
The Ohio plan would require a provider or health plan that wishes to transfer 20% or more of its assets to notify the attorney general's office 60 days prior to the proposed completion date. It also would require public hearings to allow the community to determine how the transfer's proceeds would be used for charitable healthcare.
All documents submitted to the attorney general's office in the approval process would become public record. Currently, healthcare entities may conceal the sale price, value of assets, the amount going to charity, payments to officers and trustees, and other details.
Also, the legislation would prohibit "excess" compensation to officers, directors or board members of the not-for-profit in connection with a sale.
Violators would be subject to criminal felony charges, punishable by up to five years in prison and a $15,000 fine. The bill also would allow the courts to levy an additional $1 million fine and to rescind the transaction, grant injunctive relief and assess a civil penalty of up to $10 million.
State Rep. Dale Van Vyven (R-Sharonville) and state Sen. Grace Drake (R-Solon) are co-sponsoring the legislation.
Current law requires charitable assets to be fairly valued and proceeds of the sale to go to a charitable cause. It gives the attorney general oversight duties but not the clear authority to obtain documents need for a review.
The attorney general's office cannot always disseminate information it does obtain, even to its own staff, according to spokesman Christopher Davey.
Ohio is the only state to have such mandatory secrecy laws, Montgomery said.
"Let there be light," she said.
Regarding a proposed sale of assets by Blue Cross and Blue Shield of Ohio, attorneys reviewing the case for the state insurance department could not share data with attorneys reviewing the disposition of charitable assets, he said. Montgomery has filed a lawsuit to block the deal.
Three for-profit companies, Columbia/HCA Healthcare Corp., Primary Health Systems and Quorum Health Group, have launched a buying spree in Ohio. Since Montgomery took office in 1995, 10 not-for-profit providers have agreed to sell assets to for-profit companies. They include three-hospital Sisters of Charity of St. Augustine Health Care System, seven stand-alone hospitals, a hospice and a visiting nurse society. The attorney general's office has completed reviews of five deals.
"These charitable assets were accumulated over decades but were converted to for-profit assets in just days-without any public input," Montgomery said.