Office of House Bill AnalysisH.B. 393
By: Maxey
Public Health


Many nonprofit hospitals, health maintenance organizations, and health
insurers are converting to for-profit or mutual corporations or
transferring to another nonprofit.  Under state law, a  nonprofit  health
care organization is obligated to dedicate its assets to a nonprofit
organization that is dedicated to similar purposes. However, without
careful monitoring, such newly converted organizations may seek to hold on
to the nonprofit's public assets and devote them to serving the
corporation's stockholders. The attorney general is responsible for
protecting charitable trusts, gifts, and entities and for ensuring that
nonprofits are used for their dedicated purpose and not for individual
gain.  Prior to the 77th Legislature, nonprofit organizations were not
required to inform the attorney general when considering whether to sell or
change their nonprofit status. House Bill 393 establishes provisions so
that charitable assets continue to serve the public's health care needs,
especially the needs of uninsured or underinsured individuals. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 393 sets forth the Charitable Health Care Trust Act (Act) to
guide transfers, leases,  exchanges, conversions, restructurings, or sales
of a nonprofit health care provider (nonprofit) to another nonprofit, a
for-profit entity, or a mutual plan provider and the closing or the
dissolving of a licensed facility operated by the nonprofit. The Act sets
forth applicability standards based on the type of proposed agreement or
transaction, whether previous agreements or transactions are involved, and
the fair market value of the assets or gross revenues of the nonprofit
(SECTION 4).  The fair market value is determined by an independent
assessor paid for by the nonprofit at the time the agreement or transaction
takes effect (SECTION 5). 

The bill requires a nonprofit that enters into an agreement or transaction
to establish the fair market value of the assets of the nonprofit and to
request an appraisal from the chief appraiser or appraisers of the
appraisal district or districts in which the nonprofit's property is
located. The bill provides that a nonprofit provider that enters into an
agreement or transaction with another nonprofit provider is not required to
request an appraisal from the chief appraiser or appraiser of the appraisal
district or districts in which the nonprofit's property is located (SECTION

 The bill requires the nonprofit to:

 _notify the attorney general with a written disclosure of the agreement

_publish a public notice of the transaction;

_publish the time and place of at least one public meeting for the public
to make written  comments; and 

_notify the commissioners court in each county in the publication area of
the nonprofit of the request for written comment (SECTION 8). 

The bill provides that the notice is public information (SECTION 6).  The
bill sets forth the contents  the notification must include (SECTION 7). 

The bill sets forth the attorney general's powers of enforcement, including
the imposition of a civil penalty not to exceed $10,000 for each day of a
continuing violation for organizations that fail to comply with the Act