Type: Law Bulletins
Date: 07/02/2021

Ohio's Biennial Budget Bill Brings New Hospital Licensure System

Ohio’s final budget bill signed by Governor DeWine in the early morning hours of July 1, 2021 includes a hospital licensure system. While Ohio has for many years licensed other types of health care facilities, including ambulatory surgical facilities and nursing facilities, this is a significant change for hospitals. Hospitals in Ohio are currently only subject to registration requirements in order to operate. The new law will be codified at Ohio Revised Code Sections 3722.01 et seq. Below is a summary of the licensure system.

Who needs a license?

Within three years of the section’s effective date, all hospitals operating in Ohio must be licensed by the Ohio Director of Health (Director). The term “hospital” includes any institution or facility, including a children’s hospital, that provides inpatient medical or surgical services for a continuous period longer than 24 hours. Some facilities are exempt from the licensure requirement, including:

  • Hospitals operated by the federal government;
  • Ambulatory surgical facilities;
  • Nursing homes or residential care facilities;
  • Hospitals or inpatient units licensed to receive mentally ill persons;
  • Facilities used exclusively for the care of hospice patients; and
  • Clinics providing ambulatory patient services where patients are not regularly admitted as inpatients.

Obtaining a license to operate a hospital in Ohio

The Director will begin to consider licensure applications one year after this section becomes effective. To be eligible for a license, applicants must submit a complete application; pay a fee; be certified under Title XVIII of the “Social Security Act,” or accredited by a national accrediting organization approved by the Centers for Medicare and Medicaid Services; and list the number of beds for the hospital, including skilled nursing beds, long-term care beds, and special skilled nursing beds. After receiving the license, the license holder must post a copy of it in a conspicuous place in the hospital. A license is valid for three years from the date it is issued unless it is revoked or suspended, and it may be renewed for additional three-year periods upon expiration.

Prior to issuing a license, the Director may inspect the hospital. An applicant can avoid inspection by submitting a copy of the hospital’s most recent on-site survey report from the Centers for Medicare and Medicaid Services or an approved accrediting organization demonstrating that the hospital is certified or accredited. But at least once every 36 months, the Director must inspect each licensed hospital’s maternity unit, newborn care nursery, and any unit providing health care services. The Director may also inspect a licensed hospital at any time to address an incident that may impact public health or patient safety, or to respond to a complaint. Any inspection is subject to a fee to cover its cost, and the applicant must pay the fee within 15 days of receiving the fee statement.

Additional requirements related to hospital licensure

Each hospital licensed in Ohio must have a governing board to oversee the hospital’s management, operation, and control. The board will be responsible for overseeing the appointment, reappointment, and assignment of privileges to medical staff.

If a hospital is assigned, sold, or transferred, the new owner must apply for a license transfer within 30 days. The new owner then becomes responsible for compliance with the hospital licensure sections’ requirements.

Additionally, within one year of this section’s effective date, the Director will adopt rules establishing health, safety, welfare, and quality standards for licensed hospitals. These rules will include standards for maternity units, newborn care nurseries, and health care services. The Director will also adopt rules establishing standards and procedures, including the following:

  • Procedures for applying, renewing, and transferring licenses;
  • Procedures for inspections following complaints;
  • Fees for license applications, renewals, transfers, as well as inspections;
  • Standards and procedures for imposing civil penalties according to a scale and correcting violations;
  • Standards and procedures for identifying, monitoring, managing, reporting, and reducing exposures to certain risk conditions;
  • Standards and procedures for data reporting;
  • Standards and procedures for emergency preparedness; and
  • Standards and procedures for the provision of technical assistance.

The hospital licensure system also includes reporting requirements that take effect three years after the effective date of the section. Each quarter, all hospitals that operate a maternity unit or newborn care nursery must report to the Director the number of newborns born to Ohio residents that were diagnosed as opioid dependent. Hospitals must also report to the Director the contagious, environmental, or infectious diseases, illnesses, or health conditions or unusual infectious agents or biological toxins for which it provides treatment to patients.

Penalties for failing to obtain a license or violating licensure requirements

If a hospital is operating without a license, the Director may give the hospital 30 days to apply for licensure, and they may direct the hospital to stop operating. Additionally, the Director may impose a $250,000 civil penalty and fine the hospital between $1,000 and $10,000 for each day it operates without a license. The Director can petition the Court of Common Pleas to enjoin the hospital from operating if it continues to operate without a license. Beginning three years from the section’s effective date, operating a hospital without a license is a first degree misdemeanor.

If a hospital violates any of the licensure requirements, the Director may impose a civil penalty in an amount between $1,000 and $250,000, or require the license holder to submit a corrective action plan. If the license holder is not in substantial compliance with the requirements, the Director may suspend a health care service or revoke the license. The hospital will receive written notice if the Director decides to suspend a service or revoke its license. Then, the hospital can notify the Director when it corrects the problematic condition, and the Director will conduct an inspection to determine if the license holder has come into substantial compliance. If, however, the hospital fails to come into substantial compliance, the Director may suspend a health care service or revoke the license upon issuing a written order of suspension or revocation.

If the Director determines an imminent threat of harm exists at a licensed hospital, the Director may petition the Court of Common Pleas for injunctive relief or give written notice of proposed action to the hospital. A written notice of proposed action must include the nature of the condition giving rise to the imminent threat of harm, what the hospital must do to respond to the condition, and when the Director will seek an injunction if the condition is not corrected. If an injunction is issued, it will be lifted upon a showing that the harmful condition has been eliminated.

Taft Summer Associate Kennedy McGuire also contributed to the research and writing of this article.

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