Does my outpatient clinic need a facility license?

Whether your health care clinic needs a special permit or facilities license in your state is a question of local law that varies greatly depending on the state.

The answer is not always that obvious.

In New York State, for example, there are numerous rules for incorporation of a "hospital," including New York Public Health Law Section 2801-a:

 

  § 2801-a. Establishment or incorporation of hospitals. 1. No hospital,
  as defined in this article, shall be established except with the written
  approval  of  the public health council. No certificate of incorporation
  of a business membership or not-for-profit corporation  shall  hereafter
  be  filed  which  includes  among  its  corporate purposes or powers the
  establishment or operation of any hospital, as defined in this  article,
  or  the  solicitation  of  contributions for any such purpose, or two or
  more of such purposes, except with the written approval  of  the  public
  health  council,  and when otherwise required by law of a justice of the
  supreme  court,  endorsed  on  or  annexed   to   the   certificate   of
  incorporation.  No  articles  of  organization  of  a  limited liability
  company established pursuant to the New York limited  liability  company
  law  which  includes  among  its powers or purposes the establishment or
  operation of any hospital as defined in this  article,  shall  be  filed
  with  the  department  of  state  except upon the approval of the public
  health council.
And, hospitals and diagnostic & treatment centers must obtain a Certificate of Need from the Department of Public Health.

 

But what is a "hospital?" And what are "diagnostic and treatment centers?"

NYS Public Health Law § 2801defines “hospital” to mean:

a facility or institution engaged principally in providing services by or under the supervision of a physician or, in the case of a dental clinic or dental dispensary, of a dentist, for the  prevention, diagnosis or treatment of human disease, pain, injury, deformity or physical condition, including, but not limited to, a general hospital, public health center, diagnostic centertreatment centerdental clinic, dental dispensary, rehabilitation center other than a facility used solely for vocational rehabilitation, nursing home, tuberculosis hospital, chronic disease hospital, maternity hospital, lying-in-asylum, out-patient department, out-patient lodge, dispensary and a laboratory or central service facility serving one or more such  institutions…. (emphasis added)

Now we jump from a statute, the public health law, to a more obscure location--the New York Codes, Rules & Regulations.

 

The NYCRR primarily contains state agency rules and regulations adopted under the State Administrative Procedure Act (SAPA). The 22 Titles include one for each state department, one for miscellaneous agencies and one for the Judiciary. The Office of Court Administration and the Judiciary are exempt from SAPA requirements.

 

   NYCRR Section 600.8 (criteria for determining the operation of a diagnostic or treatment center under article 28 of the Public Health Law) defines a “diagnostic or treatment center” as follows:

(a) Any provision of medical or health services by a provider of medical or health services organized as a not-for-profit or business corporation other than a professional service corporation shall constitute the operation of a diagnostic or treatment center. (emphasis added)

(b) It shall be prima facie evidence that a diagnostic or treatment center is being operated when any provider of medical or health services describes itself to the public as a "center, "clinic" or by any name other than the name of one or more of the practitioners providing these services.

(c) A provider of medical or health services that does not come within subdivision (a) or (b) of this section shall be reviewed by the Commissioner of Health to determine whether medical or health services are being provided by practitioners of medicine engaged in private practice or by a facility within article 28 of the Public Health Law. The following criteria shall be used in conducting such reviews:

(1) Patient contact. Patient contact is made directly with the facility rather than the individual physician; or referral is made to the facility by the physician; or provision is made for services by the physician, not in his offices but at another location.

(2) Admission. The decisions as to admissions are made by the facility rather than by the individual practitioner, or by referral agreement or by arrangements with physicians.

(3) Choice of physician. When the physician is not chosen by the patient, the physician is assigned by the facility, or the patient is given a choice among several practitioners associated with or employed by the facility.

(4) Care of patients. Care that is provided patients is the responsibility of the facility and is provided under the following conditions, among others: (i) the facility, rather than the physician assumes responsibility for all services rendered within the facility; (ii) central services, including but not limited to laboratory, pharmacy, X-ray and narcotics are available with no free choice of the provider of such services by the patient; (iii) the facility insures adherence to standards; (iv) the facility is organized into departments or has a multi-disciplined approach; (v) the facility supplies ancillary services; or (vi) the responsibility of the facility terminates on discharge of the patient, as distinguished from the continuing responsibility of the physician; follow-up care is not provided by or at the facility.

(5) Organization and management. (i) Bills and charges are determined by the facility; (ii) medical charts and patient records are maintained by the faculty; (iii) patient care space is provided by the facility; (iv) income distribution is determined by the facility; (v) employees are selected as supervised by the facility; (vi) vital records such as fetal death certificates, etc. are maintained by the facility; (vii) bills are payable to the facility, rather than to the individual practitioner; (viii) the scope of the services to be provided is determined by the facility, subject to regulatory limitations; (ix) the structure is so physically extensive that it exceeds the usual space requirements of the private medical practitioner;(x) the departmental organization is large enough to require delegation of authority to nonmedical personnel; (xi) there is employment of other health professions such as registered nurse, physical therapist, pharmacist; or (xii) the patient registry is more extensive than that found in the usual individual practice. Many more persons are processed than are ordinarily diagnosed or treated by physicians in the private practice of medicine.

(d) The criteria set forth in subdivision (c) of this section shall not be the sole determining factors, but indicators to be considered with such other factors that may be pertinent in particular instances. Professional expertise is to be exercised in the utilization of the criteria. Establishment shall be required where a determination is made that medical services are being provided by a facility within article 28 of the Public Health Law rather than by a private practitioner of medicine. All of the listed indicia of a facility within article 28 of the Public Health Law need not be present in a given instance. The criteria are intended to assist in determining the dominant features of the services offered.[2]

Sometimes legal research will provide the answers; in other cases,  the best solution is to just pick up the phone and get the correct state bureaucrat on the line (if you can) who can point you to the right forms, statutes and rules and then seek attorney advice based on the information you receive from the state official.  It can be a bit of a treasure hunt as the rules are not always that obvious and state departments can direct the caller around the system quite a bit.

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If you have legal questions concerning telemedicine and telehealth practices in New York, California, Massachusetts, Washington DC, and other states, contact a lawyer who knows the rules.

Consult an experienced health care law attorney who knows complementary medicine and integrative medicine for legal advice pertaining to any project involving allied health or CAM professionals.

***

Our law office has attorneys with legal experience  in FDA matters, including guiding  clients involved in health care  delivery, group medical and private  medical practice, who are concerned  about issues at the interface of  federal and state law, concerned  about medical board discipline or  medical malpractice liability  issues.  We also review and draft informed  consent forms and guide  clients concerning a variety of health care law  issues.

If you  have legal questions concerning telemedicine and telehealth practices, HIPAA legal issues, health care reform questions, or        other health law matters in New York, California, Massachusetts, Washington DC, and other states, contact a lawyer who     knows the rules.

Consult an experienced  health care law attorney who                  knows     complementary medicine and  integrative    medicine     for       legal     advice     pertaining to any project     involving     allied    health    or CAM     professionals.

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