A piece of legislation moving through Delaware’s General Assembly would put up significant legal barriers to prevent for-profit companies from taking over the state’s nonprofit acute care hospitals.
The bill makes several key changes to Delaware law. First, it clarifies that the state’s existing Conversion Act — which governs healthcare ownership changes — applies to transactions carried out indirectly through affiliated companies or shell entities. The goal is to close loopholes that could allow a buyer to sidestep the Attorney General’s review by routing a deal through intermediaries.
Under the legislation, any sale, transfer, or lease of a nonprofit acute care hospital’s primary real estate — meaning its core land and buildings — to a for-profit entity would now permanently trigger the same Attorney General notice and review process that applies to a full change in corporate control.
The bill also requires the Attorney General to notify the Governor and the Secretary of the Department of Health and Social Services within 10 days of receiving any Conversion Act notice related to an acute care hospital.
A central provision of the legislation outright bans any person or organization — other than a charity or nonprofit — from entering into a deal that would give them control over a nonprofit acute care hospital. The bill defines “control” broadly, covering ownership of voting shares, changes to a hospital’s board of directors, and contractual arrangements. It also specifically targets incremental acquisition strategies, such as purchasing minority stakes or securing the right to appoint board members or executive officers. Any transaction that violates this prohibition would be considered legally void.
Additionally, the bill would bar any for-profit applicant from even submitting — and the Health Resources Board from accepting — a Certificate of Public Review application for the construction or acquisition of an acute care hospital. Any such application would also be void under the law.
These protections are set to remain in effect until July 1, 2028, though the General Assembly has the authority to end or extend them before that date.
