Directs the commissioner of health to establish demonstration projects providing for equity investment in the operation of residential health care facilities.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6336
SPONSOR: Peoples-Stokes TITLE OF BILL:
An act to amend the public health law, in relation to directing the
commissioner of health to establish demonstration projects authorizing
equity investment in the operation of residential health care facilities
PURPOSE OR GENERAL IDEA OF BILL:
Directs the commissioner of health to establish a demonstration program
authorizing private capital investments and private equity interests in
residential healthcare facilities.
SUMMARY OF PROVISIONS:
Section one amends § 2801-a to require the commissioner of health to
establish, on or before December 1, 2012, up to two demonstration
projects to develop, evaluate and implement a flexible approach to
allowing equity investors to invest in and hold an equity interest as
operators of residential health care facilities. One demonstration shall
be located in an upstate region, and one shall be in a downstate region
of the state. The demonstration shall be designed to promote the devel-
opment of new sources of capital for the operation of residential facil-
ities. Investors shall participate in a facility through the creation of
the limited liability company. The facility may be operated by a limited
liability company so long as at least one member is a natural person
with sufficient experience and expertise. Facilities participating in
this demonstration shall be subject to all current operating standards.
The commissioner is required to provide, no later than two years from
when the first facility commences operation, the legislature with a
written evaluation of the demonstration programs. Further, residential
health care facilities participating in the program are required to
submit quality reports.
Section two provides that this act shall take effect on the sixtieth day
after it shall become law; provided that, effective immediately, the
addition, amendment and/or repeal of any rule or regulation necessary
for the implementation of this act are completed before the effective
date.
JUSTIFICATION:
Many healthcare facilities in New York state suffer from inadequate
investment for capital improvements, upgrades and expansion. Private
equity is a source of such fund in many sectors, but in New York's
healthcare sector, such investing is limited. By statute ownership is
limited to individuals who are subject to character and competence
reviews. This bill provides, on a demonstration basis, the ability for a
limited liability corporation to provide an invest and hold an equity
interest in a residential health care facility; provided that at least
one member of the limited liability company is a natural person with
sufficient experience and expertise in delivering high quality health-
care.
This would not be the first venture into private ownership of health
care facilities for New York. Several years ago, certain diagnostic and
treatment centers, which provide dialysis services, were granted an
exception due to the severe shortage of service providers. That
exemption has proven successful in assuring access to quality services.
This legislation is designed to build on that success and provide simi-
larly needed capital to residential health care facilities, meanwhile
studying the effectiveness and impact of such investments on the quality
of care, staffing and access to care.
PRIOR LEGISLATIVE HISTORY:
A10765 of 2011/2012
A4496 of 2013/2014
A2712 of 2015/16
A2822 of 2017/18
A.7018 of 2019/20
A4492 of 2021/22
A2738 of 2023/2024
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall become
law; provided that, effective immediately, the addition, amendment
and/or repeal of any rule or regulation necessary for the implementation
of this act are completed before the effective date.
STATE OF NEW YORK
________________________________________________________________________
6336
2025-2026 Regular Sessions
IN ASSEMBLY
March 4, 2025
___________
Introduced by M. of A. PEOPLES-STOKES -- read once and referred to the
Committee on Health
AN ACT to amend the public health law, in relation to directing the
commissioner of health to establish demonstration projects authorizing
equity investment in the operation of residential health care facili-
ties
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 2801-a of the public health law is amended by
2 adding a new subdivision 18 to read as follows:
3 18. (a) The commissioner shall, on or before December thirty-first,
4 two thousand twenty-six, establish up to two demonstration projects to
5 develop, evaluate and implement an innovative approach to encouraging
6 equity investors to provide needed financial resources for and hold an
7 equity interest as operators of residential health care facilities. One
8 project shall be in the upstate region of the state. The other demon-
9 stration project shall be in a downstate region in the state. In antic-
10 ipation of the financial impact on residential health care facilities
11 from the state's expansion of mandatory managed care to long term care
12 services, the demonstrations shall be designed to promote the develop-
13 ment of new sources of capital for the operation of residential health
14 care facilities, and to measure the ability of such investment to posi-
15 tively impact facilities in terms of capital improvements, investment in
16 new technology, and improvement to the quality of care and quality of
17 life for facility residents measured by broadly accepted industry
18 metrics including, but not limited to, those related to reduction in
19 rates of rehospitalizaton, MDS quality indicators, end of life care,
20 medical orders for life-sustaining treatment and nursing facility
21 "culture change" initiatives. The facilities participating in the demon-
22 strations and the commissioner shall mutually develop the appropriate
23 metrics to measure such impact which shall serve as the basis for the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02026-01-5
A. 6336 2
1 report to the governor and the legislature required by paragraph (h) of
2 this subdivision.
3 (b) For purposes of such demonstrations, the commissioner may approve
4 demonstration projects each involving the purchase of up to fifteen
5 existing residential health care facilities which have histories of
6 providing high quality care to residents.
7 (c) The equity investor shall participate in each facility through the
8 creation of limited liability companies established to operate the resi-
9 dential health care facilities.
10 (d) The residential health care facilities may be operated by limited
11 liability companies formed pursuant to the limited liability company
12 law, whose members are not natural persons so long as at least one
13 member of such limited liability companies is a natural person of suffi-
14 cient experience and expertise in delivering high quality nursing and
15 health related care to whom the equity investor has delegated, to the
16 satisfaction of the public health and health planning council, responsi-
17 bility for the day to day management and operation of the facility.
18 (e) The provisions of paragraph (b) of subdivision three and paragraph
19 (c) of subdivision four of this section shall not apply to the equity
20 investor or its owners; provided, however, that the public health and
21 health planning council may require commercially reasonable disclosure
22 of the identity of limited liability company members, provided that the
23 number of investors is not greater than thirty-five.
24 (f) The provisions of paragraphs (e) and (f) of subdivision four of
25 this section shall not apply to residential health care facilities oper-
26 ated pursuant to this subdivision. Nothing in this section shall prohib-
27 it a limited liability company from being the sole member of the limited
28 liability companies referred to in paragraphs (c) and (d) of this subdi-
29 vision provided that the former limited liability company or at least
30 one of its members conforms to the requirements of such paragraphs.
31 (g) Residential health care facilities participating in this demon-
32 stration program shall be subject to all operating standards as set
33 forth in this article and the regulations promulgated pursuant thereto
34 and shall be subject to any provisions of this chapter for failure to
35 comply with such standards. Additionally, facilities in this demon-
36 stration program shall comply with all department regulations pertaining
37 to admissions of Medicaid patients.
38 (h) No later than two years after the first facility commences opera-
39 tion pursuant to this demonstration program, the commissioner shall
40 provide the governor, the temporary president of the senate and the
41 speaker of the assembly with a written evaluation of the demonstration
42 programs. Such evaluation shall address the overall effectiveness of
43 the program in providing access to capital investment by residential
44 health care facilities and evaluate the impact private equity investment
45 has on the quality of care as evidenced by staff retention and quality
46 indicators, and access to care for various resident populations.
47 (i) Residential health care facilities participating in this demon-
48 stration program shall submit such quality reports as shall be required
49 and directed by the commissioner, including information on patient care
50 quality indicators, staffing levels and patterns and access to care for
51 various patient populations.
52 § 2. This act shall take effect on the sixtieth day after it shall
53 have become a law. Effective immediately, the addition, amendment and/or
54 repeal of any rule or regulation necessary for the implementation of
55 this act on its effective date are authorized to be made and completed
56 on or before such effective date.
