OLR Report 2014-R-0229 describes other states’ laws regarding hospital conversions from nonprofit to for-profit entities.
Like Connecticut, several states have laws requiring nonprofit hospitals to apply for approval before the hospital can be sold to a for-profit entity or otherwise convert to for-profit status. In general, these laws set out procedural requirements and timelines for the review process, as well as the criteria that the regulating entity must consider when reviewing the application. The attorney general (AG) is typically charged with reviewing the transaction; in some states, the health department or a similar state agency also must do so. Some states require court approval.
Even in those states without laws specifically addressing nonprofit hospital conversions, the AG typically has oversight over these transactions as part of his or her general authority over charitable organizations and nonprofit institutions. Thus, even if the law does not require prior approval of the transaction, the AG may require notice of the transaction or challenge it under certain circumstances (e.g., under the theory that the nonprofit hospital board breached its fiduciary duty).
In the report, we summarize common features of state laws that specifically address nonprofit hospital conversions. We then provide more detailed information for a sample of state laws on certain aspects of the process.
In some states, hospital sales also require approval under certificate of need (CON) laws. The report does not include information on such laws. For an overview of state CON requirements, see the National Conference of State Legislatures’ website.
For more information, read the full report.
