OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

SB-35

AN ACT CONCERNING NOTICE OF ACQUISITIONS, JOINT VENTURES AND AFFILIATIONS OF GROUP MEDICAL PRACTICES.

AMENDMENT

LCO No.: 3648

File Copy No.: 419

Senate Calendar No.: 286


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 15 $

FY 16 $

Public Health, Dept.

GF - Cost

53,452

71,220

State Comptroller - Fringe Benefits1

GF - Cost

19,192

26,073

Resources of the General Fund

GF - Revenue Gain

4,000

4,000

Municipal Impact: None

Explanation

The amendment expands Certificate Of Need (CON) requirements to include transfers of ownership of a group practice to a hospital, hospital system, medical foundation or other entity that is owned by or affiliated with a hospital. This results in a net state cost of 68,644 in FY 15 and $93,292 in FY 16, which reflects an anticipated cost to the Department of Public Health (DPH) of $53,452 in FY 15 and $71,220 in FY 16, an anticipated cost to the State Comptroller Fringe Benefits of $19,192 in FY 15 and $26,073 in FY 16 and an anticipated revenue gain to the General Fund of $4,000 in both fiscal years.

In 2013, 31 new CON applications were filed with DPH's Office of Health Care Access (OHCA) and 37 decisions were rendered.2 OHCA estimates that there were approximately 23 transfers of ownership of a group practice to a hospital, hospital system, medical foundation or other entity that is owned by or affiliated with a hospital over the past three years or approximately eight annually. Currently, six OHCA analysts work on CON decisions (analyzing slightly more than five to six CON applications annually), but they are not solely dedicated to the CON program. They are also assigned to process hospital financial filings and support the Connecticut Statewide Health Care Facilities and Services Plan. As such, the cost to DPH reflects only one full-time Health Care Analyst to analyze and decide approximately eight more CONs annually, anticipated under the bill. The cost for this position reflects a 10/1/14 hire date ($52,352 in FY 15 and $71,120 in FY 16), equipment ($1,000 for a computer in FY 15 only) and supplies ($100 annually). The associated State Comptroller - Fringe Benefits cost for this position is $19,192 in FY 15 and $26,073 in FY 16. Revenue of $4,000 annually reflects eight CON applications filed with a fee of $500 each.

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation and the number of CON applications filed for the transfer of ownership of a group practice to a hospital, hospital system, medical foundation or other entity that is owned by or affiliated with a hospital.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 36.66% of payroll in FY 15 and FY 16.

2 Not all decisions are made in the same year that the CON application is filed.