Part 87 - Nursing Home Company And Hospital Mortgage Loans

Effective Date: 
Thursday, March 1, 2007
Doc Status: 
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Statutory Authority: 
Public Health Law, Sections 2862, 2878, 2880

NURSING HOME COMPANIES

Section 87.1 - General requirements

NURSING HOME COMPANIES

Section 87.1 General requirements.

(a) The term nursing home company or company as used in this Part shall mean a corporation organized under the provisions of article 28-A of the Public Health Law and the Not-For-Profit Corporation Law.

(b) A nursing home company is required to comply with all applicable provisions of law, including but not limited to articles 28 and 28-A of the Public Health Law and the State Hospital Code.

(c) A nursing home company shall apply for establishment of the proposed project, and approval of the certificate of incorporation by the Public Health Council in accordance with the provisions of section 2801-a of the Public Health Law and this Title.

(d) A nursing home shall apply for the prior approval of construction of the facility in accordance with the provisions of section 2802 of the Public Health Law and the State Hospital Code.

(e) A nursing home company shall apply for a mortgage loan by setting forth in the applications for establishment and construction the amount of the proposed mortgage loan requested for development of the project.

(f) A nursing home company shall comply with the terms and conditions set forth in the mortgage loan of the New York State Housing Finance Agency.
 

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Section 87.2 - Corporate organization

87.2 Corporate organization.

(a) Members of the board of directors of a nursing home company shall be responsible for company assets, liabilities, administration and operations as required by article 28-A of the Public Health Law and the Not-For-Profit Corporation Law.

(b) The certificate of incorporation of a nursing home company shall be in a form designated by the State Commissioner of Health as meeting the requirements of the Not-For-Profit Corporation Law, and the Public Health Law and the Public Health Council.

(c) By-laws of a nursing home company shall contain a requirement that a nursing home company be constructed and operated in accordance with all applicable provisions of the State Hospital Code. The by-laws shall require that meetings of the board of directors be held no less frequently than annually and shall set forth provisions relating to the election of members and officers of the board, the notice requirements for board meetings, the duties and powers of the board, the provisions for amendment or repeal of the by-laws, and a requirement that the board shall make every effort to avoid contracts which may involve a conflict of interest, disclosure being required in writing to the board by any board member having an interest in any contract or proposed contract relating to the development, construction or operation of a company. A nursing home company shall file a copy of the by-laws and any amendments thereto with the State Department of Health.
 

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Section 87.3 - Project development

87.3 Project development.

(a) This section shall apply to the project development period from the inception of a nursing home company to the final financing occupancy date declared by the State Commissioner of Health.

(b) All professional service contracts and all consultant contracts shall require the written approval of the State Department of Health and all of said contracts shall be in writing and executed by the parties thereto:

(1) Prior to execution, drafts of all architectural and engineering contracts shall be submitted to the State Department of Health for approval. The architect or engineer shall comply with all of the State Department of Health requirements including the provision of acceptable professional liability insurance, the assurance of continuity of professional services, the satisfactory evidence of the ability to perform the architectural services required, and agreement to attend conferences and provide professional services as required by the State Department of Health.

(2) Prior to execution, drafts of all attorney retainers shall be submitted to the State Department of Health for review and approval. The attorney shall comply with State Department of Health requirements including the assurance of continuity of professional services and the agreement to attend conferences and provide professional services as required by the State Department of Health.

(3) Prior to execution, drafts of all written consultant contracts relating to the development period shall be submitted to the State Department of Health for review and approval. The consultant shall comply with all the State Department of Health requirements including the assurance of continuity of consultive services, the satisfactory evidence of ability to perform the consultive services required, and agreement to attend conferences and provide consultive services as required by the State Department of Health.

(4) Professional service contracts and consultant contracts shall set forth fee and payment provisions in an amount no greater than contained in the fee guidelines approved by the State Department of Health.

(c) A nursing home company shall obtain exempt organization certificates from the Federal Internal Revenue Service as a hospital under section 501(c)(3) and statements of exemption from the State Department of Taxation and Finance.

(d) A nursing home company shall provide acceptable topographical surveys of the project site certified by a licensed surveyor to the company, the company's title insurance company and the State Department of Health in accordance with the requirements of the State Department of Health. A company shall also provide title reports from an acceptable title insurance company stating that the company may take title to its property free and clear of all liens as required by the State Department of Health. Updating of surveys by letter certification from the surveyor may be used providing there is no change from the exterior physical condition of the project as shown on the previous survey.

(e) Application by a company for nursing home development funds shall be on a form required by the State Commissioner of Health, be limited to eligible items and include such certifications and evidence of payment as may be required. The State Commissioner of Health may approve such applications only to the extent of nursing home development funds available.

(f) A nursing home company shall submit an acceptable schedule of estimated development costs and capital requirements, an acceptable schedule of annual expenses and income, an acceptable supporting schedule of all estimated development costs and capital requirements and annual expenses and income, an acceptable project cost analysis schedule and such other project statistics, space requirements and financial data as the State Department of Health may require.

(g) Construction contracts shall include the standard form of agreement* between owner and contractor as amended by the State Department of Health which includes the required "Modification to Standard Form of Agreement Between Owner and Contractor", the "Supplementary Conditions of the Contract for Construction" and such further terms, provisions and documents as may be required by the Department of Health. A company shall conform with the bid requirements and procedures of the State Department of Health providing for competitive bidding by contractors or subcontractors and the provisions of "Supplementary Instructions to Bidders".*

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*FOOTNOTE: (Not filed with the Department of State.)

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(h) Payment and performance bonds acceptable to the State Department of Health shall be required to insure the faithful payment for and performance of labor and the furnishing of materials for all contracts.

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Section 87.4 - Project construction

87.4 Project construction.

(a) All payments made by a nursing home company after mortgage closing for construction and development costs require the written approval of the State Department of Health. Payments may only be made for expenditures authorized in the development cost and capital requirement budget approved by the State Department of Health. Payments may be permitted monthly from either mortgage loans or capital contribution funds in accordance with procedures approved by the State Department of Health. Any capital or development costs determined by the State Department of Health to be ineligible will not be approved for payment. All payment approvals shall be subject to and conditioned upon audit by the State Department of Health.

(b) Acceptable surveys and title reports, or satisfactory updates of such acceptable to the State Department of Health, free and clear of all exceptions not approved by the State Department of Health, shall be required prior to approval of payments after mortgage closing.

(c) Any project materials to be stored off the site of the project shall require satisfactory evidence of identification of the materials and insurance coverage in a form and amount acceptable to the State Department of Health.

(d) All contract changes require prior written State Department of Health approval except changes that must be started immediately to correct emergency field conditions. Requests for change orders from contingency funds may only be approved if required to meet emergency and life safety requirements, unforeseen field conditions or errors and omissions in contract documents. Requested changes of scope or of quality or type of functions, materials or equipment may only be approved if the cost is reasonable, if funds are available and if the change will not result in an increase in operating cost. All change orders proposed must contain a statement specifying if the contract time is to be changed. The State Department of Health will limit all change order approvals from contingency funds to those necessary for completion of the project in order to protect the adequacy of the contingency budget.

(e) Acceptance of a restricted donation or a donation in kind which may result in an increase in operational costs requires the prior approval of the State Department of Health.

(f) The equity funds of a company not currently required shall be invested. Such investments shall have the prior approval of the State Department of Health.

(g) Equipment may only be purchased by projects after approval of an equipment list by the State Department of Health. Such list shall be in accordance with the requirements set forth in the State Department of Health Manual for the Preparation of Equipment Lists. Unit and total cost approval for all items shall be approved by the State Department of Health.

(h) Final payment for the completion of any contract shall require satisfactory evidence of payment of all subcontractors, the submission of all releases required by the State Department of Health, and such affidavits or certifications of the company, the architect, and the contractor as the State Department of Health may require.
 

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Section 87.5 - Development period records and reports

87.5 Development period records and reports.

(a) A nursing home company shall establish and maintain a uniform system of accounts during the development period as required by the accounting manual of the State Department of Health.

(b) The following reports during the development period after mortgage closing shall be submitted promptly to the State Department of Health:

(1) Quarterly reports commencing with the date of inception to and including the last day of March, June, September, and December.

(2) Each report for the period ending December 31 shall contain the opinion and certificate of an independent licensed or certified public accountant.

(3) The project shall file quarterly reports until the declaration of the final financial occupancy date by the State Commissioner of Health. The final development period report shall contain the opinion and certificate of an independent licensed or certified public accountant.

(c) All reports to the State Department of Health required by this Part shall be submitted within 60 days following the end of the reporting period or as otherwise specified by the State Department of Health.

(d) A nursing home company shall submit promptly such special reports as may from time to time be required by the State Department of Health.
 

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Section 87.6 - Insurance

87.6 Insurance.

(a) A nursing home company shall make provision for and obtain insurance and bonds in accordance with the requirements of the State Department of Health and of the insurance requirements for nursing homes and hospitals under article 28-A of the Public Health Law.

(b) The amount, extent and endorsements of the insurance maintained, and the custody of the insurance policies, shall be in accordance with the requirements of the State Department of Health.

(c) A nursing home company shall provide and maintain such additional insurance as may from time to time be required by the State Department of Health.
 

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Section 87.7 - Initial occupancy

87.7 Initial occupancy.

(a) A nursing home company shall obtain timely final inspections of construction and medicaid approvals. Requests for such, and the submission of an application for an operating certificate to the State Department of Health, shall be instituted six months prior to scheduled initial occupancy.

(b) A nursing home company shall forward to the State Department of Health a final proposed schedule of estimated annual expenses and income and a supporting schedule for all entries therein no later than three months prior to initial occupancy.

(c) A nursing home company shall establish and maintain a separate special patient register setting forth the income of patients and the source of payment for patient care as required by the State Department of Health.

(d) A nursing home company shall maintain a uniform system of accounts as required by the accounting manual of the State Department of Health.

(e) The following reports for the operational period from initial occupancy to discharge of the mortgage lien shall be submitted promptly to the State Department of Health:

(1) Quarterly uncertified reports during each calendar or fiscal year commencing with the date of admission of the first patient, to and including the last day of March, June, September and December, no later than 30 days following the end of the reporting period.

(2) An annual report for the period ending December 31 containing the opinion and certificate of an independent licensed or certified public accountant, no later than 90 days following the end of the reporting period.

(f) A nursing home company shall submit to the State Department of Health for approval for each budget year a schedule of estimated annual expenses and income and a supporting schedule of expenses no later than 60 days preceding the effective date of the schedule.

(g) A nursing home company shall obtain the prior approval of the State Department of Health for all written contracts except those included in the approved budget of the company.

(h) A nursing home company shall establish and maintain an inventory register of all equipment in accordance with the requirements of the State Department of Health.

(i) Any change in or addition to the services provided by a company shall require prior approval as set forth in the State Hospital Code.

(j) Such other reports as may be required by the State Department of Health shall be submitted promptly.
 

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Section 87.8 - Operational period

87.8 Operational period.

(a) A nursing home company shall be operated in accordance with the requirements of the State Hospital Code.

(b) The operational period shall commence on the financial occupancy date declared by the State Commissioner of Health.

(c) All company records, reports and schedules required during initial occupancy shall be maintained during the operational period.
 

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Section 87.9 - Real and personal tangible property

87.9 Real and personal tangible property.

(a) A property register will be maintained by a nursing home company for each type of real and personal tangible property owned other than the original purchase price of the project land and the original construction cost of the structure.

(b) The property register will contain the following information on an item basis:

(1) item inventory number;

(2) location of item by room or area;

(3) location of item by cost center;

(4) description of item;

(5) related purchase order number;

(6) date item received;

(7) payment check number;

(8) date of payment;

(9) manufacturers serial number, if any;

(10) depreciation--current year;

(11) accumulated depreciation--cumulative;

(12) salvage value; and

(13) item net delivered or installed cost.

(c) Entries in the property register will be made as soon as possible after a transaction is completed. A systematic plan of record-keeping that permits the efficient recording of purchases, transfers, trade-ins and retirements must be in existence.

(d) The types of real and personal tangible property described in subdivision (a) of this section are as follows:

(1) Other land costs representing the cost of all material improvements to the land after passage of title to a nursing home company other than improvements included in the original construction cost.

(2) Building repairs and improvements representing the complete cost of all material repairs and improvements made to the structure after completion of the building contract and any related approved change orders.

(3) Group I property, representing the installed cost of all furnishings and/or equipment which is permanently attached to the building.

(4) Group II property, representing the delivered cost of all movable furnishings and/or equipment having a useful life of five or more years.

(5) Group III property, representing the delivered cost of all movable furnishings and/or equipment having a useful life of less than five years and a unit cost of less than $50.

(e) A physical inventory of all items in the property register will be made at least once a year. The property register may be adjusted to reflect any necessary material changes resulting from the physical inventory, provided that an officer of a nursing home company certifies to the facts of the adjustment. Adequate details of the physical inventory, adjustments and certifications will be maintained for inspection by the State Department of Health.

(f) All property having a unit cost of $50 or more at time of purchase may be used as part payment for replacement equipment, or it may be offered for sale on a competitive basis. If no offers are received, it may be discarded provided an officer of a nursing home company certified to the facts of such disposal.

(g) An annual physical inventory of consumable supplies on hand must be taken and recorded on the books of a nursing home company.
 

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Section 87.10 - Escrow funds

87.10 Escrow funds.

(a) A nursing home company will submit annually to the State Department of Health a schedule detailing those amounts that it is required to fund in the operating escrow account.

(b) The operating escrow account shall be opened in a federally insured commercial bank that agrees to the uniform custodial agreement of the State Department of Health.

(c) From the financial occupancy date, a nursing home company shall deposit monthly in the operating escrow account, one-twelfth of its annual required funding.

(d) A nursing home company will establish a separate mortgage repayment escrow account and make deposits and withdrawals into and from the account as required by the mortgage and the mortgagee.

(e) A nursing home company shall invest excess fund in the operating escrow account in a manner specifically approved by the State Department of Health. Copies of the records of all transactions shall be promptly submitted to the State Department of Health.

(f) The deposited reserves for replacements shall be available to provide purchase money for necessary material replacements of furnishing and/or equipment and major repairs.

(g) To obtain the disbursement of operating escrow account funds, other than in the case of imminent peril, a nursing home company shall submit in advance to the State Department of Health such documentation as may be necessary for its approval.
 

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Section 87.11 - Use of funds of the company

87.11 Use of funds of the company.

Funds of a nursing home company shall not be used for any purpose other than the ordinary operation of the project, without the prior written approval of the State Department of Health. Company funds shall not be invested without the approval of the State Department of Health. No loans shall be made at any time.
 

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Section 87.12 - Salaries or fees to officers or directors

87.12 Salaries or fees to officers or directors.

No nursing home company shall pay any salaries or fees to any director. Salaries or fees may be paid to officers for services actually performed.
 

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Section 87.13 - Purchases and contracts

87.13 Purchases and contracts.

(a) Purchases and contracts for materials and services will be limited to those items needed for company operation. Such purchases and contracts are subject to budgetary limitations except where the expenditure is necessary to protect life or property from imminent danger.

(b) Purchases and contracts will be awarded by a nursing home company only after every reasonable effort has been made to obtain the lowest possible cost commitment consistent with prudent operation. Substantial construction contracts, as defined in the State Hospital Code, shall require verification of cost by competitive bidding acceptable to the State Department of Health.

(c) Prior to permitting any supplier or contractor to perform, a company will require the contractor to submit satisfactory evidence of any insurance coverages and performance and payment bonds that may be required by the contract or purchase documents.
 

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Section 87.14 - Default avoidance method

87.14 Default avoidance method.

(a) A nursing home company which fails to or has failed to make any monthly payment as required by its mortgage with the New York State Housing Finance Agency or the New York State Medical Care Facilities Finance Agency within five days after such payment is due, shall become subject to the default avoidance method as set forth in this section.

(b) On the sixth day after a payment as set forth in subdivision (a) of this section becomes due, the trustee of the mortgage repayment escrow account, or the agency, shall notify the State Commissioner of Health that a nursing home company has not made a required payment.

(c) Upon receipt by the State Commissioner of Health of such notice from the trustee, or the agency, the State Commissioner of Health shall communicate with the nursing home company to determine if the payment will be forthcoming.

(d) If by no later than the 15th day following the date the payment was due it has not yet been received by the trustee and/or the agency, the trustee and/or the agency shall on the same day notify the State Commissioner of Health of such failure to make the required payment and the State Commissioner of Health shall advise the Department of Social Services of the name of the nursing home company which has not made a monthly payment as required by its mortgage. The Department of Social Services shall then advise the local social services districts with respect to which the nursing home company has filed medicaid claims that the next medicaid payment to be made to the respective nursing home company which has failed to make the required mortgage payment shall be made by means of a check payable to the operating escrow reserve account of the nonpaying nursing home company.

(e) Such Medicaid payment shall remain on deposit in the operating escrow reserve account until the nursing home company draws checks as required pursuant to the mortgage. Such checks shall be transmitted to the State Department of Health forthwith.

(f) Upon receipt of the checks the State Commissioner of Health shall countersign each check and forward same to the appropriate payee.

(g) To avoid undue hardship to a nursing home company which is more than one month in arrears in its payments at the time these regulations, as embodied in this section, become effective, the State Commissioner of Health is authorized to establish special payment schedules for payment of a portion of the sum then due as specified in subdivision (e) of this section. These schedules shall require the approval of the agency.
 

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MORTGAGE LOAN CHARGES

Section 87.20 - General

MORTGAGE LOAN CHARGES

87.20 General. State Department of Health governmental supervising agency charges set forth in this Part shall be applicable to nursing homes constructed under the provisions of article 28-A of the Public Health Law and nonprofit hospitals modernized or constructed pursuant to the provisions of article 28-B of the Public Health Law.
 

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Section 87.21 - Charges for development period

87.21 Charges for development period. (Additional statutory authority: Public Health Law, õ 2868, 2881)

The governmental supervising agency charges for the development period from inception of the project to, but not including, the occupancy date, for mortgage closings on or after July 1, 1970, shall be nine-tenths of one percent of the mortgage loan, payable on requisition on or after the mortgage closing to the State Department of Health by the mortgagor. Adjustments of charges for the development period shall be made by adjusting future operational period payments.
 

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Section 87.22 RESERVED

Effective Date: 
Thursday, March 1, 2007

HOSPITAL MORTGAGE LOANS

Section 87.30 - General requirements

HOSPITAL MORTGAGE LOANS

87.30 General requirements.

(a) The terms eligible borrower, mortgagor or hospital as used in this Part shall mean a not-for-profit hospital or medical corporation that has entered into a regulatory agreement with the commissioner.

(b) A hospital is required to comply with all applicable provisions of law, including, but not limited to, the Private Housing Finance Law and the New York State Medical Care Facilities Finance Agency Act, the Public Health Law, the State Hospital Code and the administrative rules and regulations of the State Commissioner of Health.

(c) A hospital shall apply for the prior approval of construction of the facility in accordance with the provisions of section 2802 of the Public Health Law and the State Hospital Code.

(d) A hospital shall apply for a mortgage loan by setting forth in the application for construction the amount of the proposed mortgage loan requested for development of the project.
 

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Section 87.31 - Project development

87.31 Project development.

(a) This section shall apply to the project development period from the inception of a project to the final financial occupancy date declared by the State Commissioner of Health.

(b) All proposed or pre-existing professional service contracts and consultant contracts shall require the written approval of the State Department of Health to be included in eligible project cost. All such contracts shall be in writing duly executed by the parties thereto.

(1) All architectural and engineering contracts shall be submitted to the State Department of Health for approval. The architect or engineer shall comply with the State Department of Health requirements including the provision of acceptable professional liability insurance, the assurance of continuity of professional services, satisfactory evidence of the ability to perform the architectural and engineering services required, and agreement to attend conferences and provide professional services as required by the State Department of Health.

(2) All attorney retainers shall be submitted to the State Department of Health for review and approval. The attorney shall comply with the State Department of Health requirements including the assurance of continuity of professional services and the agreement to attend conferences and provide professional services as required by the State Department of Health.

(3) All written consultant contracts relating to the development period shall be submitted to the State Department of Health for review and approval. The consultant shall comply with the State Department of Health requirements including the assurance of continuity of consultive services, satisfactory evidence of ability to perform the consultive services required, and agreement to attend conferences and provide consultive services as required by the State Department of Health.

(4) All professional service contracts and consultant contracts for the project shall set forth fee and payment provisions in an amount no greater than contained in the fee guidelines approved by the State Department of Health.

(c) An eligible borrower shall obtain current exempt organization certificates from the U.S. Internal Revenue Service as a hospital under section 501 (c)(3) of the Internal Revenue Code and statements of exemption from the State Department of Taxation and Finance.

(d) An eligible borrower shall provide acceptable topographical surveys of the project site certified by a licensed surveyor to the hospital, the hospital's title insurance company, the State Department of Health, and the State Housing Finance Agency or the State Medical Care Facilities Finance Agency in accordance with the requirements of the State Department of Health. An eligible borrower shall also provide title reports and continuations thereof covering the project site from an acceptable title insurance company, free and clear of exceptions objectionable to the State Department of Health and the State Housing Finance Agency or the State Medical Facilities Finance Agency, and certified copies of certificates of incorporation and such other corporate certificates of special acts of the legislature as required by the State Department of Health.

(e) An eligible borrower shall submit for approval a schedule of estimated development costs and capital requirements, a schedule of estimated annual expenses and income, supporting schedules of all estimated development costs and capital requirements and estimated annual expenses and income, a project cost analysis schedule and such other project statistics, space requirements and financial data as the State Department of Health may require.

(f) An eligible borrower shall conform with the bid requirements and procedures of the State Department of Health providing for competitive bidding by contractors and subcontractors and the provisions of "Supplementary Instructions to Bidders".

(g) Construction contracts shall include the standard form of agreement between owner and contractor as amended by the State Department of Health which includes the required "Modification to Standard Form of Agreement Between Owner and Contractor", the "Supplementary Conditions of the Contract for Construction" and such further terms, provisions and documents as may be required by the Department of Health.

(h) Payment and performance bonds acceptable to the State Department of Health shall be required to insure the faithful performance of the contract and payment for labor and the furnishing of materials for all contracts.

(i) The Department of Health may modify the requirements for hospital projects set forth in subdivisions (g) and (h) of this section for project construction completed prior to mortgage closing.
 

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Section 87.32 - Project construction

87.32 Project construction.

(a) All payments made by a hospital after mortgage closing for construction and development costs require the written approval of the State Department of Health. Payments may only be made for expenditures authorized in the development cost and capital requirement budget approved by the State Department of Health. Payments may be permitted monthly from either mortgage loans or capital contribution funds in accordance with procedures approved by the State Department of Health. Any capital or development costs determined by the State Department of Health to be ineligible under the 28-B program will not be approved for payment as a project cost. All payment approvals shall be subject to and conditioned upon audit by the State Department of Health.

(b) From mortgage closing until completion of the development period, the hospital may only enter into construction contracts contemplated by the approved contract and/or only with the prior approval of the department.

(c) Acceptable surveys and title reports, or satisfactory updates of such acceptable to the State Department of Health and the State Housing Finance Agency or the State Medical Care Facilities Finance Agency, free and clear of all exceptions not approved by the State Department of Health, shall be submitted prior to approval of payments after mortgage closing.

(d) Satisfactory evidence of identification of materials and insurance coverage in a form and amount acceptable to the State Department of Health shall be furnished for any project materials stored off the site of the project.

(e) All construction contract changes shall have prior written State Department of Health approval, except changes that must be started immediately to correct emergency field conditions. Requests for change orders from contingency funds may only be approved if required to meet emergency and life safety requirements, unforeseen field conditions or errors and omissions in contract documents. Requested changes of scope or of quality or type of functions, materials or equipment may be approved if the cost and the proposal are reasonable, if funds are available and if the change will not result in an increase in operating cost unless such change is approved by the article 28 process and the State Housing Finance Agency, or the State Medical Care Facilities Finance Agency. All change orders proposed shall contain a statement specifying if the contract completion time is to be changed. The State Department of Health shall limit all change order approvals from contingency funds to those necessary for completion of the project in order to protect the adequacy of the contingency budget.

(f) Acceptance of a restricted donation or a donation in kind which may result in an increase in operational costs shall have the prior approval of the State Department of Health.

(g) The equity funds of a hospital not currently required shall be invested. Such investments shall have the prior approval of the State Department of Health.

(h) Equipment may only be purchased by projects after approval of an equipment list by the State Department of Health. Such list shall be in accordance with the requirements set forth in the State Department of Health "Manual for the Preparation of Equipment Lists". Unit and total cost approval for all items shall be approved by the State Department of Health.

(i) Final payment for the completion of any contract shall require satisfactory evidence of payment of all sub-contractors and materialmen, the submission of all releases required by the State Department of Health, and such affidavits, certifications and consents of the hospital, the architect, the contractor and the surety as the State Department of Health may require.
 

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Section 87.33 - Development period records and reports

87.33 Development period records and reports.

(a) A hospital shall establish and maintain a separate uniform system of accounts during the development period for all items of project cost designed to conform with the State Department of Health requirements and regulations.

(b) The following reports as required by the regulatory agreement during the development period after mortgage closing shall be submitted promptly.

(1) Quarterly reports commencing with the date of inception to and including the last day of March, June, September and December.

(2) An annual report for the period ending December 31, or the fiscal year ending date if different, which shall contain the opinion and certificate of an independent licensed or certified public accountant.

(c) Quarterly reports to the State Department of Health required by this Part shall be submitted within 60 days following the end of the reporting period and annual reports required by this Part shall be submitted within 90 days following the end of the reporting period or as otherwise specified by the regulatory agreement.

(d) A hospital shall submit promptly such special reports as may from time to time be required by the State Department of Health.
 

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Section 87.34 - Insurance

87.34 Insurance.

(a) A hospital shall make provision for and obtain insurance and bonds in accordance with the requirements of the State Department of Health and the State Housing Finance Agency or the State Medical Care Facilities Finance Agency.

(b) The amount, extent and endorsements of the insurance maintained, and the custody of the insurance policies, shall be in accordance with the requirements of the State Department of Health.

(c) A hospital shall provide and maintain such additional insurance as may from time to time be required by the State Department of Health.
 

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Section 87.35 - Initial occupancy

87.35 Initial occupancy.

(a) A hospital shall obtain timely final inspections of construction and medicaid and medicare approvals. Requests for such, and the submission of an application for an operating certificate to the State Department of Health, shall be instituted six months prior to scheduled initial occupancy of the project.

(b) A hospital shall forward to the State Department of Health a final proposed schedule of estimated annual expenses and income and a supporting schedule of all entries therein no later than three months prior to initial occupancy of the project.

(c) A hospital shall submit to the State Department of Health for approval for each budget year a balanced budget of estimated annual expenses and income no later than 15 days preceding the effective date of the budget.

(d) A hospital shall obtain the prior approval of the State Department of Health for all written contracts except those approved by inclusion in the approved budget of the hospital.

(e) A hospital shall establish and maintain an inventory register of all equipment purchased as a part of the project in accordance with the requirements of the State Department of Health.

(f) Any change in or addition to the services provided by a hospital shall require prior approval as set forth in the State Hospital Code.

(g) Such other reports as may be required by the State Department of Health shall be submitted promptly.
 

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Section 87.36 - Operational period

87.36 Operational period.

(a) The operational period shall commence on the financial occupancy date declared by the State Commissioner of Health and end on final repayment and satisfaction of the mortgage loan.

(b) A hospital shall be operated in accordance with the requirements of the State Hospital Code and the administrative rules and regulations of the State Commissioner of Health.

(c) The following reports for the operational period from the financial occupancy date to discharge of the mortgage lien shall be submitted promptly as required by the regulatory agreement:

(1) Quarterly reports during each calendar or fiscal year commencing with the final financial occupancy date to and including the last day of March, June, September and December.

(2) An annual report for the period ending December 31, or the fiscal year ending date if different, which shall contain the opinion and certificate of an independent licensed or certified public accountant.

(d) Quarterly reports to the State Department of Health required by this Part shall be submitted within 60 days following the end of the reporting period and annual reports required by this Part shall be submitted within 90 days following the end of the reporting period, or as otherwise specified by the regulatory agreement.

(e) All hospital records, reports and schedules required during the development period shall be maintained or submitted as the case may be, during the operational period.
 

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Section 87.37 - Personal tangible property

87.37 Personal tangible property.

(a) A property register shall be maintained by a hospital for each type of major movable property owned.

(b) The property register may be in the form of a subsidiary equipment ledger.

(c) Entries in the property register shall be made as soon as possible after a transaction is completed. A systematic plan of recordkeeping that permits the efficient recording of purchases, transfers, trade-ins and retirements shall be used.

(d) A sample physical inventory of all items in the proper register shall be made at least once a year. The property register may be adjusted to reflect any necessary material changes resulting from the physical inventory provided that an officer of a hospital certifies to the facts of the adjustment. Adequate details of the physical inventory, adjustments and certifications shall be maintained for inspection by the State Department of Health.

(e) All property having a unit cost of $50 or more at time of purchase may be used as part payment for replacement equipment, or it may be offered for sale on a competitive basis. If no offers are received, it may be discarded provided an officer of a hospital certifies to the facts of such disposal.

(f) An annual physical inventory of consumable supplies on hand shall be taken and recorded on the books of a hospital.
 

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Section 87.38 - Escrow funds

87.38 Escrow funds.

(a) A hospital shall submit annually to the State Department of Health a schedule detailing those amounts that it is required to fund in the reserve escrow account.

(b) The reserve escrow account shall be opened in a Federally insured commercial bank that agrees to the uniform custodial agreement of the State Department of Health.

(c) From the financial occupancy date, a hospital shall deposit monthly in a reserve escrow account one-twelfth of its annual required funding.

(d) A hospital shall establish a separate mortgage repayment escrow count and make deposits and withdrawals into and from the account as required by the mortgage and the mortgagee.

(e) A hospital shall invest excess funds in the reserve escrow account in a manner specifically approved by the State Department of Health. Copies of the records of all transactions shall be promptly submitted to the State Department of Health.

(f) The deposited reserves for replacements shall be available to provide purchase money for necessary material replacements of furnishings and/or equipment and major repairs of construction and equipment.

(g) To obtain the disbursement of reserve escrow account funds, other than in the case of imminent peril, a hospital shall submit in advance to the State Department of Health such documentation as may be necessary for its approval.
 

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Section 87.39 - Salaries or fees to officers or directors

87.39 Salaries or fees to officers or directors.

No hospital shall pay any salaries or fees to any director or trustee, except that salaries or fees may be paid to officers of the board, directors or trustees for services actually performed.
 

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Section 87.40 - Purchases and contracts

87.40 Purchases and contracts.

(a) Purchases and contracts for hospital materials and services shall be limited to those items needed for hospital operation. Such purchases and contracts shall be subject to budgetary limitations except where the expenditure is necessary to protect life or property from imminent danger.

(b) Purchases and contracts shall be awarded by a hospital only after every reasonable effort has been made to obtain the lowest possible cost commitment consistent with prudent operation. Substantial construction contracts, as defined in the State Hospital Code (10 NYCRR Part 710) shall require verification of cost by competitive bidding acceptable to the State Department of Health.

(c) Prior to permitting any supplier or contractor to perform, a hospital shall require the contractor to submit satisfactory evidence of any insurance coverages and performance and payment bonds that may be required by the contract or purchase documents.
 

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