HospitalInspections.org

Based upon record review and interview, the facility failed to ensure federal and state laws were observed as evidence by not making application for change of ownership with federal and state agencies.

Review of a lease agreement between the Hospital (Landlord) and new owner (Tenant) revealed the agreement as follows: "Landlord owns the "Hospital; and Landlord believes it is in the best interests of the community to lease the Hospital to Tenant in order to continue providing medical care to the community; and this Agreement provides for the Lease by Landlord to Tenant of the assets, real and personal, tangible and intangible, constituting the Hospital as described herein; and this Agreement will accomodate the transfer of all licenses, permits, certification, and other agreements as necessary from the Landlord to Tenant for continued operations of Hospital by Tenant." Review of the Lease further revealed the following in Article IV-Section 2.0 - "Tenant and Landlord acknowledge and agree that on and after the Delivery Date (3/2/09), Tenant will have sole responsibility for the operations, business decisions, assets and liabilities, and other committments Tenant enters into associated with operating Hospital. Landlord is not a risk for the operations of Hospital and shall be held harmless with respect to the operation of the Hospital and, in addition, Landlord has no financial responsibility, contractual or otherwise, for Hospital. Section 2.1 - Tenant will maintain all license, permits, assignments, and agreements necessary for operating Hospital, including, but not limited to, business permits, state licensure, Medicare and Medicaid Certifications, and any and all payor agreements."

Review of the Federal Code of Regulations(CFR), Subsection 489.18, titled "CHANGE OF OWNERSHIP OR LEASING: EFFECT ON PROVIDER AGREEMENT" revealed the following: "(a)What constitutes change of ownership - (4)Leasing. The lease of all or part of a provider facility constitutes change of ownership of leased portion. (b)Notice to CMS (Centers for Medicare and Medicaid). A provider who is contemplating or negotiating a change of ownership must notify CMS. Further review of CFR Subsection 420.206 titled "DISCLOSURE OF PERSONS HAVING OWNERSHIP, FINANCIAL, OR CONTROL INTEREST - (b)TIME AND MANNER OF DISCLOSURE: "Any disclosing entity that is subject to periodic survey and certification of its compliance with Medicare standards mut supply the information specified in paragraph (a) of this section to the State survey agency at the time it is surveyed. (3)A disclosing entity must furnish updated information to HCFA (Health Care Financing Administration) at intervals between recertification, or re-enrollment, or contract renewals, within 35 days of a written request."

Review of the Texas Administrative Code (TAC) Subection 133.24 titled "Change of Ownership" revealed the following: (a) "Change of Ownership defined. A change of ownership of a hospital occurs when there is a change in the person legally responsible for the operation of the hospital, whether by lease or by ownership. (2)(b)License application required. The new owner shall submit an application for an initial license to the Department of State Health Services prior to the date of the change of ownership prior to the date of the change of ownership or not later than 10 calendar days following the date of a change of ownership."

An interview with the Administrator on 9/1/2010 at 1:30 pm revealed the new owner took over operation of the facility on March 2, 2009( 19 months ago). The Administrator reported the new owner had not notified Centers for Medicare/Medicaid Services or the fiscal intermediary of the change of ownership and had not applied for hospital licensure with the State Licensing Agency. The Administrator reported that he had been told by the owner that the corporation was only leasing the facility and therefore did not have to apply for change of ownership.