LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 13, 1997 TO: Honorable Hugo Berlanga, Chair IN RE: House Bill No. 3121 Committee on Public Health By: Chavez House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB3121 ( Relating to the licensing and inspection of certain hospitals.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB3121-As Introduced Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would authorize the Department of Health to conduct an inspection of a hospital exempt from an annual licensing inspection before issuing a renewal license to the hospital if the certification or accreditation body has not conducted an on-site inspection of the hospital in the preceding three years. Methodolgy There are approximately 123 hospitals currently licensed by the Department of Health but not accredited by the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO). Hospitals accredited by the JCAHO receive an on-site inspection at least every three years. The Department of Health states that, for hospitals that are Medicare certified, funding limitations may prevent an on-site inspection from being conducted at least every three years. The Department of Health estimates that inspections would be needed at least once every three years for all hospitals not accredited by the JCAHO. In order to accomplish this, one new inspection team would be added, with seven full-time equivalent positions. It is estimated that licensing fees would be increased to cover the cost of the bill. The Department of Health anticipates increasing licensing fees to $10 per bed, which would result in an approximate minimum fee of $1,300 and an approximate maximum fee of $10,000. First year costs are reduced to reflect a start-up phase. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Probable Revenue Change in Number Savings/(Cost) Gain/(Loss) from of State from Hospital Hospital Employees from Licensing Licensing FY 1997 Account/ Account/ GR-Dedicated GR-Dedicated 0129 0129 1998 ($304,909) $304,909 5.0 1998 (418,355) 418,355 7.0 2000 (418,355) 418,355 7.0 2001 (418,355) 418,355 7.0 2002 (418,355) 418,355 7.0 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $0 1999 0 2000 0 2001 0 2002 0 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No significant fiscal implication to units of local government is anticipated. Source: Agencies: 655 Texas Department of Mental Health and Mental Retardation 501 Department of Health LBB Staff: JK ,BB ,KF