ARTICLE 26 SUBSTITUTE A

Relating To Health Care Quality Program

SECTION 1. Section 23-17.17-7 of the General Laws in Chapter 23-17.17 entitled “Health Care Quality Program” is hereby repealed.

§ 23-17.17-7. Rhode Island hospital efficiency, leverage and profitability (RI HELP) program. – (a) There is established in the department of health a program to provide state assistance to those Rhode Island hospitals that have the greatest need for assistance relative to all hospitals.

(b) Establishment of indices. Three (3) indices shall be established to determine eligibility of the program. Using 2004 data as reported in "The Health of RI's Hospitals (2004) " (Report), each hospital shall be ranked by each index and any hospital that meets the requirements on at least two (2) of the three (3) indices shall be eligible to receive assistance. The General Assembly may from time to time change the year from which data is used to determine eligibility for the RI HELP program. The three (3) indices are established as follows:

(1) Efficiency. This shall be computed by determining the Total Asset Turnover and Fixed Asset Turnover of each hospital. Any hospital with a total rating above zero (0) as displayed in the Report, Chart 9, shall meet the requirements for this index.

(2) Leverage. This shall be computed by determining the Debt to capitalization ratio and the Debt Service Coverage ratio for each hospital. Any hospital with a total rating less than zero (0) as displayed in the Report, Chart 8, shall meet the requirements for this index.

(3) Profitability. This shall be computed by determining the average Profit Margin for each hospital for the previous three (3) fiscal years (2002, 2003, 2004). Any hospital with a three (3) year average rating below negative three percent (-3.0%) as calculated from the data in the Report, Table 1, shall meet the requirements for this index.

(c) Distribution of funds. Funds shall be distributed to each eligible hospital on the basis of the ratio of each eligible hospital's inpatient discharges in 2004 to the sum of all eligible hospitals' inpatient discharges in 2004.

(d) Appropriation of funds. Funds for this program are subject to appropriation by the General Assembly, and may be ratably reduced at any time the General Assembly determines that insufficient funding is available to pay the full amount due to all hospitals that are determined to be eligible for assistance under this program. The budget appropriation for FY 2006 is set at three million three hundred thousand dollars ($3,300,000).

(e) Payments. Payments shall be made to eligible hospitals on or before December 31 of each year that funds are appropriated for this program by the General Assembly.

SECTION 2. This article shall take effect as of July 1, 2006.