Relates to credit enhancement for health reform projects to assist in restructuring health care delivery systems by providing credit enhancement solely to hospitals that lack the credit resources necessary to finance health reform projects from conventional lenders.
STATE OF NEW YORK
________________________________________________________________________
5784
2013-2014 Regular Sessions
IN SENATE
June 14, 2013
___________
Introduced by Sen. HANNON -- read twice and ordered printed, and when
printed to be committed to the Committee on Health
AN ACT to amend the public health law and the public authorities law, in
relation to credit enhancement for health reform projects
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The public health law is amended by adding a new section
2 2807-zz to read as follows:
3 § 2807-zz. Credit enhancement program for health reform projects. 1.
4 The commissioner is authorized to establish a program to assist in
5 restructuring health care delivery systems by providing credit enhance-
6 ment solely to hospitals that lack the credit resources necessary to
7 finance health reform projects from conventional lenders. The program
8 shall apply to regions (including portions of a single county) desig-
9 nated by the commissioner as medically underserved, including rural
10 regions. A hospital subject to active parent control (as defined in
11 regulations under this article) shall qualify under this section even if
12 other hospitals in that same holding company structure do not qualify
13 under this section. The program shall apply to hospitals operating
14 pursuant to this article, but the financing may also include projects
15 undertaken by non-hospital affiliates of the applicant hospital.
16 Projects eligible for credit enhancement include renovations and repur-
17 posing of facilities, medical high technology equipment and health
18 information technology, working capital, care management infrastructure,
19 and "soft" costs not typically eligible for loans from commercial lend-
20 ers. All projects under this section must meet defined regional needs to
21 advance the state's health reform agenda of better care, better health
22 for populations, lower costs, and system right-sizing. Preference will
23 be given to applicants that include collaborations with other health
24 care providers in the region. An applicant hospital shall be affiliated,
25 the extent of the affiliation to be determined by the commissioner, with
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11511-01-3
S. 5784 2
1 at least one academic medical institution approved by the commissioner,
2 provided that the commissioner may waive that requirement in rural
3 regions.
4 2. Applicants must commit that the uses of the credit-enhanced loans
5 under this section will promote agreed upon regional health reform
6 objectives. Applicants must submit a comprehensive program and business
7 plan and such plan must promote agreed upon regional health reform
8 objectives. Application documents shall contain health reform covenants
9 and milestone dates and statistical targets to be attained by the
10 borrower. Such application covenants may include, but are not limited
11 to, acute care right-sizing, expansion of primary care, expansion and
12 integration of mental health or other service capacity required in the
13 region, and implementation of care delivery and care coordination models
14 consistent with health reform goals. The application must address how
15 the applicant will undertake the improvements in formal or informal
16 cooperation with other health care providers in the region. Steps to
17 avoid duplication of services and high cost medical resources in the
18 region shall be a condition of approval. To the extent required to
19 provide legal protection for such cooperative endeavors, the commission-
20 er shall exercise all necessary powers pursuant to article twenty-nine-F
21 of this chapter and any fees associated with such oversight may be
22 included in the project financing costs. Health reform covenants
23 contained in the application shall be monitored and enforced by the
24 commissioner, in a manner determined by the commissioner, and shall not
25 constitute loan covenants between the borrower and the lender.
26 3. The credit enhancement program shall be administered by the dormi-
27 tory authority. The commissioner shall chair the credit enhancement
28 application and approval committee. The commissioner shall designate
29 three or more members of the credit enhancement application and approval
30 committee. The chief executive officer of the dormitory authority shall
31 also serve as a member of the committee, and shall determine all rules
32 for reviewing and approving applications, and administering approved
33 credit enhancements. Notwithstanding any other law, no person serving
34 as a member of the credit enhancement application and approval committee
35 shall have any personal liability, or incur liability for his or her
36 employer, by virtue of the person's reasonable and good faith role or
37 vote in the credit enhancement application and approval process.
38 4. The purpose of the credit enhancement program shall be to provide
39 additional resources to borrowers sufficient to attract conventional
40 lenders to invest in health reform projects pursuant to loans to quali-
41 fying hospital borrowers. The credit enhancement may consist of the
42 commissioner expending funds, with the approval of the director of the
43 budget, through the use of one or more measures including, but not
44 limited to, mortgage insurance, letters of credit, bond insurance, post-
45 ing collateral or other financial commitments of appropriated funds. A
46 debt service reserve fund may be created to facilitate the credit
47 enhancement.
48 5. (a) In the event of a default by a borrower to a lender, the amount
49 of the defaulted payment shall be paid by the commissioner to the lend-
50 er. To finance the commissioner's remittance of those defaulted
51 payments, the commissioner shall draw upon funds allocated for such
52 potential defaults, including but not limited to funds made available
53 for that purpose pursuant to the state's August sixth, two thousand
54 twelve section eleven hundred fifteen partnership plan waiver applica-
55 tion, additional federal funds made available through implementation of
56 the federal Affordable Care Act (health reform), or other sources. The
S. 5784 3
1 commissioner shall inform potential lenders of the sum total amounts
2 appropriated so that lenders can determine the ratio of loans to be made
3 in relation to default resources appropriated. The commissioner and the
4 director of the dormitory authority of the state of New York shall enter
5 into an agreement, subject to the approval of the director of the budg-
6 et, for the purpose of administering the credit enhancement funds.
7 (b) All payment of defaulted amounts shall be made solely from the
8 appropriated funds pursuant to paragraph (a) of this subdivision.
9 Neither the state of New York, the commissioner, the department, the
10 dormitory authority, nor any other instrumentality of the state of New
11 York, shall be legally responsible for payment of the defaulted amounts,
12 other than pursuant to the process and financial resources appropriated
13 as described in paragraph (a) of this subdivision. No assets or
14 resources of the state shall be pledged, or considered to be pledged or
15 obligated in any form, to payment of the defaults, other than pursuant
16 to the process and financial resources described in paragraph (a) of
17 this subdivision.
18 § 2. Subdivision 1 of section 1680 of the public authorities law is
19 amended by adding a new undesignated paragraph to read as follows:
20 Such hospitals and affiliates as are approved for credit enhancement
21 under section twenty-eight hundred seven-zz of the public health law.
22 § 3. This act shall take effect immediately.
