Expands certificate of need requirement to certain sale or lease agreements involving hospitals.

A5204

ASSEMBLY, No. 5204

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 4, 2026

Sponsored by:

Assemblywoman� KATIE BRENNAN

District 32 (Hudson)

Assemblyman� RAVI S. BHALLA

District 32 (Hudson)

SYNOPSIS

���� Expands certificate of need requirement to certain
sale or lease agreements involving hospitals.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning hospitals and sale and lease agreements
,
and supplementing Title 26 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� a.� As used in this
section:

����
"Hospital" means an acute care general hospital
licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).

���� �Real estate investment trust�
shall have the same meaning as provided for that term in section 856 of the
federal Internal Revenue Code of 1986 (26 U.S.C. s.856).

���� b. An entity or a person with
ownership interest in a hospital shall be prohibited from entering into a sale
or lease agreement with a real estate investment trust for an interest in the
real property upon which the hospital is located, if the terms of the sale or
lease would place the public health at risk or weaken the long-term financial
status of the hospital, as determined by the Department of Health, and unless
the entity or person and the real estate investment trust have applied for and
received a certificate of need as provided by P.L.1971, c.136 (C.26:2H-1 et
seq.).� In determining whether to issue a certificate of need, pursuant to this
subsection, the Department of Health shall consider the applicants� work
experience as it pertains to the sale or lease agreement.

���� c.� (1) A sale or lease
agreement with a real estate investment trust for an interest in the real
property upon which the hospital is located shall be executed using a standard
sale or lease agreement form, which shall be developed by the Department of
Health.�

���� (2) The sale or lease
agreement form developed by the Department of Health pursuant to paragraph (1)
of this subsection shall contain provisions:

���� (a) permitting the buyer or
lessee to reclaim a portion of the lease price, purchase price, or previously
distributed funds from the seller or lessor if specific, agreed-upon
performance metrics, such as revenue targets or profitability are not met following
the execution of the sale or lease agreement;

���� (b) requiring the owner of a
hospital to prioritize the consideration of the lessee�s offer to purchase the
hospital if the owner places the hospital for sale and if the lessee submits an
offer to purchase the hospital; and

���� (c) permitting the lessor and
lessee to agree upon reduced rental payments during periods in which the
hospital is experiencing financial instability.

���� (3) The Department of Health shall
require an entity or a person with an ownership interest in a hospital that has
entered into a lease agreement with a real estate investment trust for an
interest in the real property upon which the hospital is located to submit to
the department an annual financial statement reporting the costs associated
with the lease, as determined by the department.

����
2. The Commissioner of Health shall adopt rules and
regulations, in accordance with the �Administrative Procedure Act,� P.L.1968,
c.410 (C.52:14B-1 et seq.), as are necessary to effectuate the provisions of
this act.

���� 3. This act shall take effect
on the first day of the first taxable year next following the date of enactment
of this act.

STATEMENT

���� This bill expands the
certificate of need requirement to certain sale or lease agreements involving
hospitals.

���� Under the bill, an entity or a
person with ownership interest in a hospital is to be prohibited from entering
into a sale or lease agreement with a real estate investment trust for an
interest in the real property upon which the hospital is located, if the terms
of the sale or lease would place the public health at risk or weaken the
long-term financial status of the hospital, as determined by the Department of
Health (department), and unless the entity or person and the real estate
investment trust have applied for and received a certificate of need.� In
determining whether to issue a certificate of need, the department is to
consider the applicants� work experience as it pertains to the sale or lease
agreement.

���� The bill provides that a sale
or lease agreement with a real estate investment trust for an interest in the
real property upon which the hospital is to be executed using a standard sale
or lease agreement form, which is to be developed by the department.�

���� The form is to contain
provisions:� 1) permitting the buyer or lessee to reclaim a portion of the lease
price, purchase price, or previously distributed funds from the seller or
lessor if specific, agreed-upon performance metrics, such as revenue targets or
profitability are not met following the execution of the sale or lease
agreement; 2) requiring the owner of a hospital to prioritize the consideration
of the lessee�s offer to purchase the hospital if the owner places the hospital
for sale; and 3) permitting the lessor and lessee to mutually agree upon
reduced rental payments during periods in which the hospital is experiencing
financial instability.

���� Under the bill, department is
to require an entity or a person with an ownership interest in a hospital that
has entered into a lease agreement with a real estate investment trust for an
interest in the real property upon which the hospital is located to submit to
the department an annual financial statement reporting the costs associated
with the lease, as determined by the department.