HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 1421 Independent Hospital Districts
SPONSOR(S): State Affairs Committee, Fine and others
TIED BILLS: IDEN./SIM. BILLS: SB 1700
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Local Administration, Federal Affairs & Special 12 Y, 4 N Roy Darden
Districts Subcommittee
2) Select Committee on Health Innovation 7 Y, 3 N DesRochers Calamas
3) State Affairs Committee 14 Y, 5 N, As CS Mwakyanjala Williamson
SUMMARY ANALYSIS
A “special district” is a unit of local government created for a particular purpose, with jurisdiction to operate
within a limited geographic boundary. Special districts are created by general law, special act, local ordinance,
or rule of the Governor and Cabinet. A special district has only those powers expressly provided by, or
reasonably implied from, the authority provided in the district’s charter.
Hospital districts are a type of independent special district specializing in the provision of health care services.
The charters of hospital districts generally possess a set of core features: a board appointed by the Governor,
the authority to build and operate hospitals, the power of eminent domain, the ability to issue bonds payable
from ad valorem taxes, the use of ad valorem tax revenue for operating and maintaining hospitals, and
providing that such facilities are established for the benefit of the indigent sick. Florida law provides a process
for the lease or sale of special district hospitals or hospital systems, but does not provide a process for the
conversion of a district into another type of entity.
The bill establishes a procedure for any of Florida’s 26 independent hospital districts to individually convert into
a private non-profit entity, allowing the governing body of the district to vote, by a majority vote plus one, to
evaluate the benefits of conversion for residents of the district by contracting with an independent entity
meeting certain criteria to render a certified, independent evaluation.
If the governing body of the district determines conversion is in the best interests of the district’s residents, the
governing body may negotiate an agreement with the governing body of each county in which any part of the
district’s boundary is located. This agreement must include the terms and conditions necessary for both
disposing of the assets and liabilities of the system and ensuring health care services are provided to the
district’s residents. After completing the negotiation, the governing body of the district and each county that is a
party to the agreement may elect to approve the conversion of the district to a private non-profit entity, subject
to providing documentation to the public before the vote to approve of the conversion. If the district levies,
collects, or receives ad valorem taxes in the current fiscal year and preceding five fiscal years, the conversion
must be approved by the electors of the district voting in a referendum held during the next general election.
The bill also requires each independent hospital district to conduct a financial evaluation of converting to a non-
profit entity or transacting a sale to a for-profit entity by December 31, 2024, unless the district has conducted a
financial evaluation within the past 10 years or is currently conducting an evaluation.
The bill may have a positive effect on state revenues and no impact on state expenditures. The bill may have a
negative fiscal impact on independent hospital districts.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Present Situation
Special Districts
A “special district” is a unit of local government created for a particular purpose, with jurisdiction to
operate within a limited geographic boundary.1 Special districts are created by general law, special act,
local ordinance, or rule of the Governor and Cabinet.2 A special district has only those powers
expressly provided by, or reasonably implied from, the authority provided in the district’s charter.
Special districts provide specific municipal services in addition to, or in place of, those provided by a
municipality or county.3 Special districts are funded through the imposition of ad valorem taxes, fees, or
charges on the users of those services as authorized by law. 4
Special districts may be classified as dependent or independent based on their relationship with local
general-purpose governments. A special district is classified as “dependent” if the governing body of a
single county or municipality:
Serves as governing body of the district;
Appoints the governing body of the district;
May remove members of the district’s governing body at-will during their unexpired terms; or
Approves or can veto the budget of the district.5
A district is classified as “independent” if it does not meet any of the above criteria or is located in more
than one county, unless the district lies entirely within the boundaries of a single municipality.6
Special districts do not possess “home rule” powers and may impose only those taxes, assessments,
or fees authorized by special or general law. The special act creating an independent special district
may provide for funding from a variety of sources while prohibiting others. For example, ad valorem tax
authority is not mandatory for a special district.7
Hospital and Health Care Districts
Hospital districts are a type of independent special district specializing in the provision of health care
services. As of January 15, 2024, there are 30 special districts classified as hospital or health care
districts.8 The charters of hospital districts generally possess a set of core features: a board appointed
by the Governor, the authority to build and operate hospitals, the power of eminent domain, the ability
to issue bonds payable from ad valorem taxes, the use of ad valorem revenue to be used for operating
1 See Halifax Hospital Medical Center v. State of Fla., et al., 278 So. 3d 545, 547 (Fla. 2019).
2
See ss. 189.02(1), 189.031(3), and. 190.005(1), F.S. See generally s. 189.012(6), F.S.
3 Local Administration, Federal Affairs & Special Districts Subcommittee, The Local Government Formation Manual, 62,
https://myfloridahouse.gov/Sections/Committees/committeesdetail.aspx?CommitteeId=3227 (last visited Jan. 16, 2024).
4 The method of financing a district must be stated in its charter. Ss. 189.02(4)(g), 189.031(3), F.S. Independent special dist ricts may be
authorized to impose ad valorem taxes as well as non-ad valorem special assessments in the special acts comprising the ir charters.
See, e.g., ch. 2023-335, s. 6 of s. 1, Laws of Fla. (East River Ranch Stewardship District). See also, e.g., ss. 190.021 (community
development districts), 191.009 (independent fire control districts), 197.3631 (non -ad valorem assessments), 298.305 (water control
districts), and 388.221, F.S. (mosquito control), and ch. 2004-397, s. 27 of s. 3, Laws of Fla. (South Broward Hospital District).
5 S. 189.012(2), F.S.
6 S. 189.012(3), F.S.
7 See, e.g., ch. 2006-354, Laws of Fla. (Argyle Fire District may impose special assessments, but has no ad valorem tax authority).
8 Dept. of Commerce, Official List of Special Districts Online, available at
https://specialdistrictreports.floridajobs.org/OfficialList/CustomList (last visited Jan. 15, 2024).
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and maintaining hospitals, and a provision that the facilities be established for the benefit of the indigent
sick.9
Florida Hospital and Health Care Districts
Dependent Special Districts
Carrabelle Hospital Tax District Hillsborough County Hospital Authority
Gadsden County Hospital Marion County Hospital District
Highlands County Hospital District
Independent Special Districts
Baker County Hospital District Jackson County Hospital District
Bay Medical Center Lake Shore Hospital Authority
Campbellton-Graceville Hospital District Lee Memorial Health System
Cape Canaveral Hospital District Lower Florida Keys Hospital District
Citrus County Hospital Board Madison County Health and Hospital District
DeSoto County Hospital District North Brevard County Hospital District
Doctors Memorial Hospital North Broward Hospital District
George E. Weems Memorial Hospital North Lake County Hospital District
Halifax Hospital Medical Center Sarasota County Public Hospital District
Hamilton County Memorial Hospital South Broward Hospital District
Health Care District of Palm Beach County Southeast Volusia Hospital District
Hendry County Hospital Authority West Volusia Hospital Authority
Indian River County Hospital District
Lease or Sale of Local Government Hospitals or Hospital Systems
Current law authorizes the sale or lease of local government owned hospitals. 10 The governing board of
the hospital or hospital system must find that the sale or lease is in the best interest of the affected
community11 and must state the basis of the finding. The governing board is responsible for
determining the terms of the lease, sale, or contract. The hospital or hospital system may be leased or
sold to a for-profit or a not-for-profit Florida entity, but the lease, contract, or agreement must:
Subject the articles of incorporation of the lessee or buyer to approval by the board of the
hospital.
Require that not-for-profit lessees or buyers become qualified under s. 501(c)(3) of the United
States Internal Revenue Code.
Provide for orderly transition of operations and management.
Provide for return of the facility upon termination of the lease, contract, or agreement.
Provide for continued treatment of the indigent sick. 12
9 Florida TaxWatch, Florida’s Fragmented Hospital Taxing District System in Need of Reexamination, Briefings (Feb. 2009), availab le at
https://floridataxwatch.org/Research/Full-Library/ArtMID/34407/ArticleID/16012/Floridas -Fragmented-Hospital-Taxing-District-System-
in-Need-of-Reexamination (last visited Jan. 17, 2023).
10 S. 155.40, F.S.
11 “Affected community” means those persons residing within the geographic boundaries defined by the charter of the county, dist rict, or
municipal hospital or health care system, or if the boundaries are not specifically defined by charter, by the geographic area from which
75 percent of the county, district, or municipal hospital’s or health care system’s inpatient admissions are derived. S. 155. 40(4)(a), F.S.
12 Continued treatment of the indigent sick must comply with the Florida Health Care Responsibility Act and pursuant to chapter 87 -92,
Laws of Florida. S. 155.40(2)(e), F.S. Ss. 154.301-154.316, F.S., are the Florida Health Care Responsibility Act. S. 154.301, F.S.
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The lease, sale, or contract must be done through a public process that includes:
Consideration of proposals by and negotiations with all qualified buyers or lessees following
public notice to identify them.13
Detailed, written board findings regarding the accepted proposal that meets specified
requirements and disclosure of all information and documents relevant to the board’s
determination must occur.14
A 120-day timeline for conclusion of the lease, sale, or agreement measured in advance of the
anticipated closing date that:
o Begins with publishing all findings, information and documents specified by law and a
public notice of the proposed transaction.15
o Allows receipt of public comment.16
o Is subject to approval by the Secretary of the Agency of Health Care Administration
(AHCA), unless law requires approval by the registered voters of the local government
where the hospital or hospital system is located.17
o Requires a petition for approval of and a final order by AHCA.18
o Provides an appeal right for any interested party.19
o Makes the costs the responsibility of the board, unless any interested party appeals,
then the costs can be equitably assigned to the parties.20
o Allows voiding of the transaction by any party if specified provisions are not followed. 21
If a hospital is sold, all tax authority associated with the hospital ceases. 22 Fifty percent of the proceeds
from the sale or lease must be deposited into a health care economic development trust fund serving
specified health care related purposes.23 The district board must appropriate the other 50 percent to
funding to care for the indigent sick.24 Other taxing, financial, and liability considerations are provided
by the law, including prohibitions on the transfer of government functions. 25 A streamlined process is
provided if the property represents less than 20 percent of the hospital’s net revenue.26
Commission on Review of Taxpayer Funded Hospital Districts
In March 2011, the Governor issued Executive Order 11-63, creating the Commission on Review of
Taxpayer Funded Hospital Districts (Commission). 27 This Commission was tasked with assessing and
making recommendations as to the role of hospital districts, including what is in the public interest as to
hospital operation and an effective access model for the economically disadvantaged. 28 Specifically,
the Governor ordered the following areas to be examined: quality of care, cost of care, access to care
for the poor, oversight and accountability, physician employment, and changes in ownership and
13
S. 155.40(6), F.S.
14 S. 155.40(7)(a), F.S.
15 S. 155.40(8), F.S.
16 S. 155.40(9), F.S.
17 S. 155.40(10), F.S.
18 S. 155.40(11), F.S. The AHCA final order is limited to whether the board complied with law and must require the board to appr ove or
reject the proposal based on specified findings by AHCA.
19 S. 155.40(12), F.S. “Interested party” includes a person submitting a proposal for sale or lease of the county, district, or municipal
hospital or health care system, as well as the governing board. S. 155.40(4)(c), F.S.
20 S. 155.40(13), F.S.
21 S. 155.40(14), F.S. If any board member negligently or willfully violates specified provisions, they are subject to penalty b y the
Commission on Ethics.
22 S. 155.40(15), F.S.
23 S. 155.40(16)(a), F.S. The trust fund is controlled by the local government where the leased or sold property is located. The net
proceeds in trust fund shall be distributed, in consultation with the Department of Economic Opportunity, to promote job crea tion in the
health care sector of the economy through new or expanded health care business development, new or expanded health care services,
or new or expanded health care education programs or commercialization of health care research within the affected community.
24 S. 155.40(16)(b), F.S. Funding the delivery of indigent care, includes, but not limited to, primary care, physician specialty care, out-
patient care, in-patient care, and behavioral health, to hospitals within the boundaries of the district with consideration given to the
levels of indigent care provided.
25 S. 155.40(17)-(21), F.S.
26 S. 155.40(22), F.S.
27 Fla. Exec. Order No. 11-63 (Mar. 23, 2011).
28 Id.
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governance.29 In a final report issued on December 30, 2011, the Commission recommended a
transition from hospital districts to indigent health care districts, which would include decoupling district
owned hospitals from the district, among other recommendations. 30
Not-for-Profit Corporations
Not-for-profit corporations are regulated by the Florida Not For Profit Corporation Act (Non-Profit Act),
which outlines the requirements for creating and managing a private not-for-profit corporation as well as
the powers and duties of the corporation.31 The Non-Profit Act authorizes not-for-profit corporations to
be created for any lawful purpose or purposes that are not for pecuniary profit and that are not
specifically prohibited to corporations by other state laws. 32 The Non-Profit Act specifies that such
purposes include charitable, benevolent, eleemosynary, educational, historical, civic, patriotic, political,
religious, social, fraternal, literary, cultural, athletic, scientific, agricultural, horticultural, animal
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