1.1                          A bill for an act 
  1.2             relating to health; establishing a rural hospital 
  1.3             capital improvement grant and loan program; 
  1.4             appropriating money. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [RURAL HOSPITAL CAPITAL IMPROVEMENT GRANT AND 
  1.7   LOAN PROGRAM.] 
  1.8      Subdivision 1.  [DEFINITION.] (a) For purposes of this 
  1.9   section, the following definitions apply. 
  1.10     (b) "Eligible rural hospital" means a hospital that: 
  1.11     (1) is the only hospital in a county; 
  1.12     (2) has 25 or fewer licensed hospital beds with a net 
  1.13  hospital operating margin not greater than an average of two 
  1.14  percent over the three fiscal years prior to application; 
  1.15     (3) is located in a medically underserved area (MUA) or a 
  1.16  health practitioner shortage area (HPSA); 
  1.17     (4) is located near a migrant worker employment site and 
  1.18  regularly treats significant numbers of migrant workers and 
  1.19  their families; and 
  1.20     (5) has not previously received a loan under Minnesota 
  1.21  Statutes, section 144.148. 
  1.22     (c) "Eligible project" means a modernization project to 
  1.23  update, remodel, or replace aging hospital facilities and 
  1.24  equipment necessary to maintain the operations of a hospital. 
  1.25     Subd. 2.  [PROGRAM.] The commissioner of health shall award 
  2.1   rural hospital capital improvement grants or loans to eligible 
  2.2   rural hospitals.  A grant or loan shall not exceed $1,500,000 
  2.3   per hospital.  Grants or loans shall be interest free.  An 
  2.4   eligible rural hospital may apply the funds retroactively to 
  2.5   capital improvements made during the two fiscal years preceding 
  2.6   the fiscal year in which the grant or loan was received, 
  2.7   provided the hospital met the eligibility criteria during that 
  2.8   time period.  The grant or loan must be matched at least 50 
  2.9   percent by nonstate funds.  
  2.10     Subd. 3.  [APPLICATIONS.] Eligible hospitals seeking a 
  2.11  grant or loan shall apply to the commissioner.  Applications 
  2.12  must include a description of the problem that the proposed 
  2.13  project will address, a description of the project including 
  2.14  construction and remodeling drawings or specifications, sources 
  2.15  of funds for the project, uses of funds for the project, the 
  2.16  results expected, and a plan to maintain or operate any facility 
  2.17  or equipment included in the project.  The applicant must 
  2.18  describe achievable objectives, a timetable, and roles and 
  2.19  capabilities of responsible individuals and organization.  
  2.20  Applicants must submit to the commissioner evidence that 
  2.21  competitive bidding was used to select contractors for the 
  2.22  project.  
  2.23     Subd. 4.  [CONSIDERATION OF APPLICATIONS.] The commissioner 
  2.24  shall review each application to determine whether or not the 
  2.25  hospital's application is complete and whether the hospital and 
  2.26  the project are eligible for a grant or loan.  In evaluating 
  2.27  applications, the commissioner shall score each application on a 
  2.28  100 point scale, assigning:  a maximum of 40 points for an 
  2.29  applicant's clarity and thoroughness in describing the problem 
  2.30  and the project; a maximum of 40 points for the extent to which 
  2.31  the applicant has demonstrated that it has made adequate 
  2.32  provisions to ensure proper and efficient operation of the 
  2.33  facility once the project is completed; and a maximum of 20 
  2.34  points for the extent to which the proposed project is 
  2.35  consistent with the hospital's capital improvement plan or 
  2.36  strategic plan.  The commissioner may also take into account 
  3.1   other relevant factors.  During application review, the 
  3.2   commissioner may request additional information about a proposed 
  3.3   project, including information on project cost.  Failure to 
  3.4   provide the information requested disqualifies a loan applicant. 
  3.5      Subd. 5.  [PROGRAM OVERSIGHT.] The commissioner of health 
  3.6   shall review audited financial information of the hospital to 
  3.7   assess eligibility.  The commissioner shall determine the amount 
  3.8   of a grant or loan to be given to an eligible rural hospital 
  3.9   based on the relative score of each eligible hospital's 
  3.10  application and the funds available to the commissioner.  The 
  3.11  grant or loan shall be used to update, remodel, or replace aging 
  3.12  facilities and equipment necessary to maintain the operations of 
  3.13  the hospital.  
  3.14     Subd. 6.  [LOAN PAYMENT.] Loans shall be repaid as provided 
  3.15  in this subdivision over a period of 15 years.  In those years 
  3.16  when an eligible rural hospital experiences a positive net 
  3.17  operating margin in excess of 3.5 percent, the eligible rural 
  3.18  hospital shall pay to the state one-half of the excess above 3.5 
  3.19  percent, up to the yearly payment amount based upon a loan 
  3.20  period of 15 years.  If the amount paid back in any year is less 
  3.21  than the yearly payment amount, or if no payment is required 
  3.22  because the eligible rural hospital does not experience a 
  3.23  positive net operating margin in excess of 3.5 percent, the 
  3.24  amount unpaid for that year shall be forgiven by the state 
  3.25  without any financial penalty.  As a condition of receiving an 
  3.26  award through this program, eligible hospitals must agree to any 
  3.27  and all collection activities the commissioner finds necessary 
  3.28  to collect loan payments in those years a payment is due. 
  3.29     Subd. 7.  [ACCOUNTING TREATMENT.] The commissioner of 
  3.30  finance shall record as grants in the state accounting system 
  3.31  funds obligated by this section.  Loan payments received under 
  3.32  this section shall be deposited in the health care access fund. 
  3.33     Subd. 8.  [EXPIRATION.] This section expires June 30, 2003. 
  3.34     Sec. 2.  [APPROPRIATION.] 
  3.35     $7,500,000 is appropriated from the health care access fund 
  3.36  to the commissioner of health for grants and loans according to 
  4.1   section 1.  The money is available until expended.