HB2502

SECTION 1. The legislature finds that there is a shortage of healthcare professionals in the State, and that this shortage is especially acute in rural areas. According to the federal Health Resources and Services Administration, an entity of the United States Department of Health and Human Services, there were 17,657 geographic areas, populations, and facilities designated as having too few primary care, dental, and mental health care providers.

In Hawaii, the Health Resources and Services Administration reported that the counties of Hawaii and Maui each have an average deficiency of twenty-five full-time healthcare service professionals, while the county of Kauai has a shortage of thirteen full-time healthcare service professionals. These shortages are expected to worsen as physicians and nurses working in rural areas retire faster than new healthcare recruits can replace them. Simultaneously, the population in the State's rural areas has increased in recent years, even as the State's overall population has seen a decline. These two factors combined will lead to a worsening of the ratio between healthcare professionals to patients. The legislature recognizes that as this ratio worsens, so may patient quality of care.

To counteract this trend, there is a demand for an increase in healthcare facilities in the State's rural areas. However, each new healthcare facility that opens must hire qualified healthcare professionals to staff the facility. Unfortunately, this often results in the new facility seeking to hire professionals from existing facilities in the local area.

The legislature finds that recruitment of this nature may negatively impact the quality of medical care at existing facilities by increasing the ratio of healthcare professionals to patients and forcing the facility to increase overtime or hire temporary staff to cover the resulting staffing shortfall. The legislature recognizes that there is a demand for expanded healthcare services in rural areas; however, the legislature also recognizes that policies must be adopted to protect the viability and quality of existing healthcare services while not restricting the ability of new healthcare facilities to open in rural areas. The legislature further finds that the state health planning and development agency currently does not specifically address this issue through its certificate of need program.

Accordingly, the purpose of this Act is to provide existing hospitals and dialysis facilities in rural communities with the right of first refusal to internally expand their facilities to address the needs of their communities prior to issuing a certificate of need to an applicant seeking to open a new hospital or dialysis facility in the same rural subarea.

SECTION 2. Chapter 323D, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"§323D- Existing hospitals and dialysis facilities; right of first refusal. (a) If:

(1) An applicant for a certificate of need is seeking to establish a new hospital or dialysis facility in a rural subarea; and

(2) The state agency determines that there is a public need for the hospital or dialysis facility pursuant to section 323D-43(b),

the state agency, before issuing a certificate of need, shall offer existing hospitals, in the case of an applicant seeking to establish a new hospital, or dialysis facilities, in the case of an applicant seeking to establish a new dialysis facility, operating in that rural subarea a right of first refusal to expand their facilities or services to meet the public need identified in paragraph (2).

(b) An existing hospital or dialysis facility that elects to exercise a right of first refusal pursuant to this section shall do so within sixty days of the date the state agency offers the right of first refusal to the hospital or dialysis facility. The hospital or dialysis facility that wishes to exercise a right of first refusal shall file an application with the state agency that includes:

(1) A statement evaluating the hospital or dialysis facility's proposed expansion to meet the public need identified by the state agency in subsection (a)(2), including the probable impact on health care costs and any other information required by the state agency as provided by rule; and

(2) Cost projections for at least the first and third years after its approval.

(c) The state agency shall review the application submitted pursuant to subsection (b) in consultation with appropriate subarea councils, the review panel, the statewide council, appropriate individuals, and appropriate public agencies. If the state agency determines that the cost of the facility or service will not be unreasonable in the light of the benefits it will provide and its impact on health care costs, the state agency shall:

(1) Approve the existing hospital or dialysis facility's application and issue a certificate of need to the existing hospital or dialysis facility; and

(2) Deny the pending application from the applicant seeking to establish a new hospital or dialysis facility.

(d) If multiple hospitals or dialysis facilities operate in a rural subarea elect to exercise a right of first refusal, the state agency, in consultation with the appropriate subarea councils, the review panel, the statewide council, appropriate individuals, and appropriate public agencies, may select and issue a certificate of need to one or more hospitals or dialysis facilities.

(e) The state agency shall issue a decision on the application submitted pursuant to subsection (b) within sixty days of the application's submission, unless the state agency within the sixty days notifies the applicant in writing that the period for agency review has been extended by the state agency; provided that the extension shall be for a period of no more than an additional sixty days. The decision shall be subject to post-decision review procedures that the state agency may provide for by rules adopted pursuant to chapter 91.

(f) The state agency may adopt rules pursuant to chapter 91 to implement this section.

(g) For the purpose of this section:

"Hospital" means an entity licensed as a hospital by the department of health pursuant to section 321-14.5.

"Dialysis facility" means an entity licensed by the department of health to provide dialysis services."

SECTION 2. Section 323D-2, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Rural subarea" means a subarea whose population density is less than or equal to eight hundred people per square mile, as determined by the population of the last official census conducted by the United States Census Bureau."

SECTION 3. Section 323D-43, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) No certificate of need shall be issued unless the state agency has determined that:

(1) There is a public need for the facility or the service; and

(2) The cost of the facility or service will not be unreasonable in the light of the benefits it will provide and its impact on health care costs[.];

provided that an application for a certificate of need that seeks to establish a new hospital within a rural subarea shall be subject to a right of first refusal by existing hospitals or dialysis facilities pursuant to section 323D- ."

SECTION 4. Section 323D-44, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The state agency shall issue a decision on the application within ninety days after the beginning of the period for agency review, unless the state agency within the ninety days notifies the applicant in writing that the period for agency review has been extended by the state agency sixty days beyond the ninety days[.]; provided that a decision for an application for a certificate of need for a new hospital or dialysis facility in a rural subarea shall include only a determination of:

(1) Whether there is a public need for the facility or service; and

(2) Whether the cost of the facility or service will not be unreasonable in the light of the benefits it will provide and its impact on health care costs,

provided further that the application for the certificate of need for a new hospital or dialysis facility in a rural subarea shall be subject to a right of first refusal pursuant to section 323D- . The decision shall be subject to post-decision review procedures which the state agency may provide for by rules adopted in conformity with chapter 91."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2502
THIRTIETH LEGISLATURE, 2020
STATE OF HAWAII