The Federation of American Health Systems, which represents for-profit hospitals, is launching an effort to educate state lawmakers and attorneys general about sales of not-for-profit hospitals to investor-owned companies.
The campaign includes the dissemination of policy documents to states and personal visits to state attorneys general by federation President Thomas Scully.
Scully, who confirmed the effort last week, said he asked to meet with attorneys general in nine states where for-profit chains are in pursuit of not-for-profit hospitals. Those states are Colorado, Georgia, Kansas, Massachusetts, Michigan, Missouri, New Jersey, Ohio and Tennessee.
A growing number of states have acted to thwart takeovers of not-for-profit hospital by challenging deals in court, investigating transactions or passing disclosure and oversight laws that could discourage such sales.
"We have not been a state lobbying organization, nor do we plan to be, but we want to be a resource and tell (states) what we think is reasonable oversight," Scully said.
He said the federation wants any state intervention or monitoring of not-for-profit sales to apply equally to all buyers, regardless of ownership status. "We just don't want discriminatory oversight," he added.
The federation supports a review process that ensures the hospital's board of directors has made an "informed decision" and is meeting its fiduciary duties whether it sells to a not-for-profit or a for-profit.
The federation outlined its hospital conversion positions in a newly developed policy statement on not-for-profit hospital sales. The federation's board formally approved the policies last week at a meeting in Dallas.
According to the federation, hospital transactions subject to attorney general reviews should include:
Mergers of not-for-profit organizations into investor-owned entities.
Transfers of assets of not-for-profit groups to investor-owned entities.
Mergers of not-for-profit healthcare organizations into other not-for-profits.
Transfers of all or most assets from not-for-profits to other not-for-profits.
Mergers of mutual benefit entities into other not-for-profit entities.
Acquisitions of all or most of the assets of mutual benefit entities by not-for-profit organizations.
The federation also says hospital boards should contact state agencies before the date of the proposed transaction. It's also encouraging state jurisdiction be "vested in a single state agency," such as the attorney general's office, rather than shared among various state health agencies.
At a future gathering, the federation is expected to approve an educational brochure on the issue for its hospital members, state lawmakers and the healthcare press.
In a draft version of the brochure, the federation also said it's a misperception that for-profit chains are gobbling up not-for-profit hospitals everywhere. "About 15% of all acute-care hospitals are investor-owned, and 85% are not-for-profit," the brochure said.
The federation has said the number of U.S. hospitals owned by investor-owned companies rose just 1.2% last year, and the beds controlled by such companies increased only 3.6% (See chart, p. 2).