The transfer or sale of hospital assets raises legal issues which have not yet been well analyzed. Hospitals have historically not disposed of their assets in any significant measure; however, with the current wave of hospital restructuring and refinancing, such transactions will become more common, making it timely to review the legal issues surrounding asset sales or dispositions by a hospital.
In the halcyon days of Canadian healthcare, federal and provincial governments funded a large proportion of a hospital's asset acquisitions. Assets were routinely acquired, but seldom financed and rarely disposed of. Now we are experiencing declining levels of public funding and significant restructuring of hospitals, accompanied by mergers, asset dispositions and the introduction of private financing structures such as sale-leaseback transactions. The existing hospital infrastructure was put in place in the belief that hospitals would be permanent, stable and growing institutions, and so the rules for transferring or disposing of hospitals' assets are not yet well established. In the current Ontario restructuring climate, there have been a few well-publicized closures and mergers to date, and more have been directed by the Health Services Restructuring Commission (HSRC).
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