Chapter 11 Health Facilities and Resources
Part 13 Hospital Cooperation ACT of 1993
Tenn. Code Ann. § 68-11-1303 (2014)
68-11-1303. Cooperative agreements — Certificate of public advantage.
(a) A hospital may negotiate and enter into cooperative agreements with other hospitals in the state, if the likely benefits resulting from the agreements outweigh any disadvantages attributable to a reduction in competition that may result from the agreements.
(b) Parties to a cooperative agreement may apply to the department for a certificate of public advantage governing that cooperative agreement. The application must include an executed written copy of the cooperative agreement and describe the nature and scope of the cooperation in the agreement and any consideration passing to any party under the agreement. A copy of the application and copies of all additional related materials must be submitted to the attorney general and reporter and to the department at the same time. The attorney general and reporter and the department are entrusted with the active and continuing oversight of all cooperative agreements.
(c) The department shall review the application in accordance with the standards set forth in subsection (d) and may hold a public hearing in accordance with the rules adopted by the department. The department shall give notice of the application to interested parties by publishing a notice in the Tennessee administrative register in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. Any intervenor may intervene in the proceeding and shall have standing under the Uniform Administrative Procedures Act. The department shall grant or deny the application within ninety (90) days of the date of filing of the application, and that decision must be in writing and set forth the basis for the decision. The department shall furnish a copy of the decision to the applicants, the attorney general and reporter and any intervenor.
(d) After consultation with and agreement from the attorney general and reporter, the department shall issue a certificate of public advantage for a cooperative agreement, if it determines that the applicants have demonstrated by clear and convincing evidence that the likely benefits resulting from the agreement outweigh any disadvantages attributable to a reduction in competition that may result from the agreement.
(1) In evaluating the potential benefits of a cooperative agreement, the department shall consider whether one (1) or more of the following benefits may result from the cooperative agreement:
(A) Enhancement of the quality of hospital and hospital-related care provided to Tennessee citizens;
(B) Preservation of hospital facilities in geographical proximity to the communities traditionally served by those facilities;
(C) Gains in the cost-efficiency of services provided by the hospitals involved;
(D) Improvements in the utilization of hospital resources and equipment; and
(E) Avoidance of duplication of hospital resources.
(2) The department’s evaluation of any disadvantages attributable to any reduction in competition likely to result from the agreement shall include, but need not be limited to, the following factors:
(A) The extent of any likely adverse impact on the ability of health maintenance organizations, preferred provider organizations, managed health care organizations or other health care payors to negotiate optimal payment and service arrangements with hospitals, physicians, allied health care professionals or other health care providers;
(B) The extent of any reduction in competition among physicians, allied health professionals, other health care providers or other persons furnishing goods or services to, or in competition with, hospitals that is likely to result directly or indirectly from the cooperative agreement;
(C) The extent of any likely adverse impact on patients in the quality, availability and price of health care services; and
(D) The availability of arrangements that are less restrictive to competition and achieve the same benefits or a more favorable balance of benefits over disadvantages attributable to any reduction in competition likely to result from the agreement.
(e) The department shall consult with the attorney general and reporter regarding its evaluation of any potential reduction in competition resulting from a cooperative agreement. The attorney general and reporter may consult with the United States department of justice or the federal trade commission regarding its evaluation of any potential reduction in competition resulting from a cooperative agreement.
(f) If the department determines that the likely benefits resulting from a certified agreement no longer outweigh any disadvantages attributable to any potential reduction in competition resulting from the agreement, the department may initiate contested case proceedings to terminate the certificate of public advantage in accordance with the Uniform Administrative Procedures Act.
(g) The department shall maintain on file all cooperative agreements for which certificates of public advantage remain in effect. Any party to a cooperative agreement who terminates the agreement shall file a notice of termination with the department within thirty (30) days after termination.
