United States: Illinois bill pushes long-term care operators to reveal ownership interests
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Illinois lawmakers are taking steps to increase ownership control of nursing homes. Disclosure provisions are included in Compromise Nursing Home Tariff Reform Bills (HB 4678)1. The bill also includes additional compliance measures and attempts to tie funding/rates/incentives to demonstrable and sustained nursing home performance using an evidence-based methodology that rewards staffing and improvements. quality of life for residents of nursing homes.
The bill, if passed, would require greater transparency of care home ownership. Illinois law currently provides that a provider who begins to operate or maintain a long-term care facility that was previously owned by an owner must notify the Illinois Department of Public Health of the change in ownership.2 The bill revises the law to require notification of “any change in ownership, regardless of percentage.” Currently, as a condition of the issuance or renewal of a licence, the applicant must file a declaration of ownership containing the percentage of direct or indirect financial interest of the persons who have a direct or indirect financial interest of 5% or more in the legal entity designated as the operator/licensee of the installation.3 The proposed change to the law requiring notice regardless of percentage expands reporting requirements for Illinois long-term care facilities.
In addition, the bill includes a requirement that within 90 days of the effective date of the amendment, “all providers operating or maintaining a long-term care facility must notify the Department of ‘Illinois of all individual owners and any individual or organization that is part of a limited liability company, together with the ownership of this facility and the percentage ownership of each owner.’ This ownership disclosure requirement does not include individual shareholders of a public company.
This bill represents a nationwide trend toward increased transparency in nursing home ownership.
1. HB 4678 can be viewed at https://www.ilga.gov/legislation/BillStatus.asp?DocNum=4678&GAID=16&DocTypeID=HB&LegId=138849&SessionID=110&GA=102(last accessed February 24, 2022).
2. 305 Ill. Comp. Statistics Ann. 5/5B-5.
3. 77 Ill. Adm. Code 300.250.
4. The Arnall Golden Gregory Change of Ownership (CHOW) team leads all regulatory aspects of healthcare transactions for investors, operators, managers, financial partners and developers of all sizes in all 50 states. The team streamlines the regulatory process so that clients close their transactions on time or before the scheduled date. From obtaining Medicare/Medicaid licenses and approvals, to structuring deals to expedite closings, to anticipating issues to minimize cash flow disruptions, to negotiating regulatory terms in paperwork transaction, creatively solving due diligence issues or advising on CHOW guidelines and compliance, the team provides extensive experience and hands-on solutions. To date, the CHOW team has acted as lead regulatory advisor on transactions valued at over $25 billion.
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