Bill Text: NJ S4216 | 2026-2027 | Regular Session | Introduced
Bill Title: Expands certificate of need requirement to certain sale or lease agreements involving hospitals.
Sponsorship: Partisan Bill (Democrat 2)
Status: (Introduced) 2026-05-11 - Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee [S4216 Detail]
Download: New_Jersey-2026-S4216-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
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.
