On November 1, the Delaware Department of Health and Social Services (“DHSS”) promulgated new regulations governing the licensure and operation of free standing surgical centers (“FSSCs”), more commonly referred to as ambulatory surgery centers. The comprehensive regulatory changes became effective November 11 and raise a number of new issues for owners and potential investors of FSSCs.
Most significant of these new changes is that any modification of ownership and control (“MOC”) of a facility will result in the current license being “void,” requiring the facility to seek licensure as a new applicant. Importantly, the regulation explicitly states that the FSSC must then meet the current design and construction standards recognized by DHSS. “MOC” is defined by the regulations to be “a change of ownership or transfer of responsibility for the FSSC’s operation” and will occur “whenever the ultimate legal authority for the responsibility of the FSSC’s operation is transferred.” The regulation includes a number of examples of an MOC, including the transfer of a majority interest to a new owner.
In responding to comments on this new requirement, DHSS stated that it “follows a protocol to ensure the continuity of operations during the transition.” Licensees have not been apprised of exactly what this “protocol” is or how it actually works. What is troubling is that the FSSC license is “void” upon an MOC; this carries rather strong connotations. Reapplication for a license following an MOC is apparently not just about approving ownership, but reapproving the operation and physical environment of a currently operational facility, regardless of the history of quality care and excellent patient outcomes. Before going forward with an ownership change, the facility should reach out to DHSS to understand the protocol, the time frame for approval, and the impact on the viability of the facility that relies on ongoing relationships with providers.
Also of significance is the rule that licenses will be issued for specific hours of operation and FSSCs may not operate beyond those hours. In addition, if a prospective licensee or a currently licensed FSSC wishes to accommodate patient stays of 23 hours and 59 minutes, it must request approval in writing from the local government having jurisdiction.
Multiple commenters inquired whether the new regulations would impact a 1995 Delaware Attorney General’s opinion that exempted single specialty diagnostic endoscopy and pain management centers from licensure as FSSCs. While DHSS would not amend the regulations to specifically exempt these facilities, it did recognize that the Attorney General’s Office opinion was still in effect.
Finally, in one brief sentence, the new regulations provide that a license is subject, at any time, to revision or revocation by the State. Unlike regulations that govern licensure of other types of facilities and health care providers, this regulation does not tie the revision or revocation to any specific reason (such as violation of the regulations) or detail any process due to the licensee to challenge such a decision. The State Administrative Procedures Act does not apply to DHSS in regard to process for case decisions or judicial review of such decisions.
FSSC prospective licensees, current licensees, and potential investors in these facilities should review the new regulations carefully. The former regulations were wholly rewritten, and in addition to the above, the new regulations set forth requirements relating to the governing body, administration and personnel, medical staff, and nursing services, among other things. Current licensees should be aware that they are not grandfathered under the prior regulations, and will be subject to compliance with all new regulatory requirements.
The regulations can be reviewed here.