Current Ministry of Health Policy & Procedure Manual

Transcription

1 Saskatchewan Health Regional Health Services Status: Current Policy & Procedure Manual Effective Date: November 2008 Guideline/General Information Page: 1 of 16 Approved By: CAPITAL AND REGIONAL SERVICES BRANCH Branch Contact: Section: GOVERNANCE Title: REGIONAL HEALTH AUTHORITY HEALTH CARE ORGANIZATIONS GUIDELINES FOR AMALGAMATION INTENT: The intent of the Guidelines for Amalgamations is to provide guidance to the regional health authorities and prescribed health care organizations in the amalgamation process LEGISLATIVE AUTHORITY: The Regional Health Services Act Sections 24 and 25 of the Act sets out the requirements for amalgamating a regional health authority and a prescribed health care organization. GUIDELINE INFORMATION: The Guidelines for Amalgamation will assist regional health authorities and prescribed health care organizations in the amalgamation process to ensure both parties have abided by the requirements set out in legislation.

2 Saskatchewan Guidelines For Amalgamation Pursuant to Section 25 of The Regional Health Services Act

3 GUIDELINES FOR AMALGAMATION... 1 SECTION Introduction... 1 SECTION 2.0 Steps to the Amalgamation Prcocess... 1 SECTION Authorizations... 1 Health Care Organization General Membership Authorization... 1 Regional Health Authority Authorization... 2 Notice of Amalgamation... 2 Ministerial Authorization... 2 SECTION Effects of the amalgamation... 2 SECTION Due Diligence/Risk Assessment... 3 Administrative Items... 3 Financial Items... 3 SECTION Disposition of Assets and Liabilities... 4 Disposition of Regional/Provincial Funding... 4 Disposition of Community Generated Funds... 4 SECTION Procedure for Processing Amalgamation Documents... 6 SAMPLE Notice of Amalgamation... 7 SAMPLE Amalgamation Resolution (Health Care Organization)... 8 SAMPLE Amalgamation Resolution (Regional Health Authority)... 8 SAMPLE Special Resolution... 9 SAMPLE Amalgamation Agreement January 2008

4 GUIDELINES FOR AMALGAMATION SECTION INTRODUCTION The following guidelines have been developed to assist regional health authorities and health care organizations through the amalgamation process. These guidelines are not all inclusive and the regional health authority and health care organization must undertake due diligence to ensure that the amalgamation is entered into with full information. This due diligence involves seeking guidance and expertise from other qualified individuals such as insurance brokers, solicitors, accountants, auditors, etc. to ensure all aspects involved in the contemplated amalgamation are understood and resolved prior to the submission of the notice of amalgamation to the Minister of Health for approval. SECTION STEPS TO THE AMALGAMATION PROCESS Section 25 of The Regional Health Services Act allows a non-profit health care organization that has been prescribed in Table 2 of The Regional Health Services Administration Regulations and regional health authority to amalgamate. Health care organizations are non-profit hospital boards, special care home boards and organizations providing mental health and addiction services and ambulance services. The following information outlines the procedure for amalgamating a prescribed non-profit health care organization and regional health authority. SECTION AUTHORIZATIONS A regional health authority and health care organization that wish to amalgamate shall execute a notice of amalgamation (sample attached) and file the notice with the Minister of Health. Health Care Organization General Membership Authorization Prior to executing the notice of amalgamation the general membership of the prescribed health care organization must pass a special resolution, which will allow the health care organization to amalgamate with the regional health authority. To that end, the health care organization must call a special general membership meeting. Notice periods and other requirements for general meetings are contained in the health care organization s articles of incorporation, bylaws and/or in accordance with the requirements of The Non-profit Corporations Act, In order to meet the requirements of The Non-profit Corporations Act, 1995 the special resolution: January of 13

5 (i) (ii) must be passed by a majority of not less than two-thirds of the votes cast by the members who voted in respect to the resolution empowering the health care organization s board of directors to amalgamate with the regional health authority, and each member of the health care organization is entitled to vote on the special resolution, whether or not the member s membership otherwise carries the right to vote, and the members vote as on class. Please refer to section 2(u)(v)(ii) and section 6(1)(e) of The Non-profit Corporations Act, After the special resolution has been passed by the general membership of the health care organization, the board of the health care organization is required to pass a resolution designating authority to a specific individual to execute the notice of amalgamation. Regional Health Authority Authorization Section 25(4)(b) of The Regional Health Services Act requires the regional health authority to pass a resolution designating authority to a specific individual to execute the notice of amalgamation. Notice of Amalgamation Once the appropriate resolutions are passed, the health care organization and the regional health authority will sign the notice of amalgamation Ministerial Authorization Sections 25(4) and (6) of The Regional Health Services Act state that once the notice of amalgamation is executed by the regional health authority and the health care organization the notice is submitted to the Minister of Health. The minister then issued an order amalgamating the regional health authority and the health care organization in accordance with the notice and declaring the effective date of the amalgamation to be the effective date specified in the notice. SECTION EFFECTS OF THE AMALGAMATION The amalgamation of the health care organization and regional health authority creates on corporation under the name of the regional health authority and all membership interests in the amalgamating health care organization are extinguished. The assets, liabilities, rights and obligations of the amalgamating regional health authority and the amalgamating health care organization continue as the assets, liabilities, rights and obligations of the amalgamated regional health authority. Examples of assets, liabilities may include but are not limited to: January of 13

6 assets (cash and fixed assets) surpluses/reserves accumulated from provincial funding and other sources employees (including any contracts and/or collective agreements) debts such as mortgages all contractual arrangements entered into by the health care organization accounts payable Please note that it takes at least thirty (30) days to issue an order. Therefore, if the effective date of the amalgamation id to be June 30 th, then all the documents must be submitted to the Ministry of Health no later than May 15 th. SECTION DUE DILIGENCE/RISK ASSESSMENT Administrative Items The health care organization and the regional health authority need to address a number of issues and these may include, but are not limited to, those items that will facilitate the continuation of business such as: conducting a financial audits of the health care organization; issuance of T-4s to employees of the health care organization to coincide with the date of amalgamation; amending vehicle registrations, insurance policies, etc.; amending corporate tax and payroll registrations; and amending signing authorities, etc. Financial Items Section 15 of The Health Districts Act allowed health corporations and district health boards to enter into a pre-amalgamation agreement, which was approved by the Minister of Health. This provision was included in the Act in order to allow health corporations to restrict the future use of community-generated funds accumulated by the health corporation. The health corporation and district health board typically entered into a pre-amalgamation agreement if the financial analysis and audit of the health corporation verified that there were community-generated funds. These funds were then included in the pre-amalgamation agreement as envisioned by The Health Districts Act. Prior to amalgamation, it is imperative that the regional health authority is aware of the health care organization s financial position and other items to consider are potential obligations related to pending legal proceedings, environmental and occupational health and safety issues and as such risk assessment must be a part of the amalgamation process. The regional health authority must review and analyze the health care organization s financial statement and records to determine whether or not the health care organization owns property, has any outstanding debts and/or mortgages, community-generated funds as well as cash assets accumulated through regional or provincial funding. January of 13

7 The regional health authority and the health care organization may enter into an agreement prior to amalgamation. This agreement does not require approval by the Minister of Health and may include issues of concern to the health care organization, i.e. disposal of specific property, the handling of funds not provided by Saskatchewan and items of significant meaning to the health care organization. Saskatchewan can assist the health care organization and regional health authority in developing an agreement. SECTION DISPOSITION OF ASSETS AND LIABILITIES Disposition of Regional/Provincial Funding Cash assets accumulated through provincial or district/regional funding are not considered community-generated funds and therefore must be transferred unconditionally to the regional health authority upon amalgamation. Disposition of Community Generated Funds With the exception of real property donated by local residents, community-generated funds are cash assets which have been accumulated through community fund-raising, donations, bequests or revenue raised pursuant to The Hospital Revenue Act. If there are community-generated funds, the health care organization may want to ensure that these funds continue to be used to benefit the health care needs of residents in the facility or the community. All funds that are determined to be externally restricted, will continue to have the same restrictions retained upon amalgamation. Tracking of all community-generated funds should be transparent and readily accessible to address any public concerns regarding the use and continued restriction of these funds. The following are some options the health care organization may consider when dealing with its community-generated funds that were not externally restricted. OPTION 1 Amalgamation Agreement The health care organization could include the community-generated funds as part of the amalgamation. Through an agreement prior to amalgamation, the health care organization could request that the regional health authority restrict these funds to be used for providing health care services to the residents in the community. Since 1993, there have been approximately 408 amalgamations. In addition, the majority of these amalgamations have included a preamalgamation agreement. The regional health authority and/or the health care organization are encouraged to contact Saskatchewan for assistance in developing amalgamation agreements. January of 13

8 OPTION 2 Transfer funds to the Regional Health Authority Prior to amalgamation, the health care organization could transfer the community-generated funds to the regional health authority. The funds would then be considered externally restricted funds and could only be used by the regional health authority as specified by the health care organization. NOTE: Under options 1 or 2, the health care organization and the regional health authority need to ensure they are consistent with Generally Accepted Accounting Principles as per the CICA Handbook. OPTION 3 Transfer Funds to a Foundation Prior to amalgamation and after the financial analysis has been determined there are communitygenerated funds available, the health care organization could transfer the community-generated funds to a foundation. Foundations, however, are independent, non-profit corporations and are only accountable to their members. Initially a foundation may be restricted by their articles of incorporation to disburse these funds for the purpose outlined by the health care organization. The directors of the foundation, however, could amend their articles of incorporation at any point in the future. As a result, the health care organization s objective for these funds might be achiever if the foundation holds the funds and decides to change its articles. January of 13

9 SECTION PROCEDURE FOR PROCESSING AMALGAMATION DOCUMENTS After the regional health authority and the health care organization have executed all amalgamation documents, the procedures outlined below should be followed: 1. The Health care organization and the regional health authority submit the following amalgamation documents to Saskatchewan (Capital and Regional Services Branch) for review and approval: Special Resolutions signed by the members of the health care organization empowering the board to amalgamate with the regional health authority; Resolution from the health care organization giving authority to a specific individual to sign the notice of amalgamation ; Resolution from the regional health authority giving authority to a specific individual to sign the notice of amalgamation ; and Signed notice of amalgamation. 2. If the package includes a pre-amalgamation agreement between the parties, the Capital and Regional Services Branch will be required to review the agreement with the Regional Accountability Branch to ensure the agreement only deals with community-generated funds and items that can be included in an agreement. 3. If the package contains all the appropriate documents and if the notice of amalgamation has been executed, the Capital and Regional Services Branch will prepare the Amalgamation Order for the Minister s signature. 4. After the Minister s Order has been signed the documents are returned to the Policy and Planning Branch for an Order number and the Policy and Planning Branch retains one original Minister s Order and associated documents. 5. The Policy and Planning Branch sends the documents to the Capital and Regional Services Branch for distribution. 6. The Capital and Regional Services Branch will update all files relevant to amalgamations. January of 13

10 SAMPLE NOTICE OF AMALGAMATION NOTICE OF AMALGAMATION (Subsection 25(3) of The Regional Health Services Act) (Name of the Health Care Organization) and the (Name of the Regional Health Authority) hereby give notice pursuant to subsection 25(3) of The Regional Health Services Act: a) that they wish to amalgamate; and b) that they have obtained the approval of their members by special resolution. The effective date of the amalgamation is (date of amalgamation). Executed at (City/Town/Village), Saskatchewan this day of, 2008 on: behalf of the (Health Care Organization) (signature of duly authorized officer) (name of duly authorized officer) (office of duly authorized officer) Executed at (City/Town/Village), Saskatchewan, this day of, 2008, on behalf of the (Name of the Regional Health Authority) (signature of duly authorized officer) (signature of duly authorized officer) (office of duly authorized officer) January of 13

11 SAMPLE AMALGAMATION RESOLUTION (HEALTH CARE ORGANIZATION) (NAME OF THE HEALTH CARE ORGANIZATION) Address AMALGAMATION RESOLUTION "Resolved that, Chairperson, be authorized to execute a Notice of Amalgamation pursuant to subsection 25(3) of The Regional Health Services Act for the amalgamation of (Name of the Health Care Organization) and the (Name of the Regional Health Authority, provided that the effective date of the amalgamation is on or before (date of amalgamation). (signature of duly authorized officer) (office of duly authorized officer) (Name of the Health Care Organization) Dated this day of, 2008 (City/Town/Village), Saskatchewan SAMPLE AMALGAMATION RESOLUTION (REGIONAL HEALTH AUTHORITY) January of 13

12 REGIONAL HEALTH AUTHORITY Address AMALGAMATION RESOLUTION "Resolved that, (Title), be authorized to execute a Notice of Amalgamation pursuant to subsection 25(3) of The Regional Health Services Act for the amalgamation of (Name of the Health Care Organization) and the (Name of the Regional Health Authority), provided that the effective date of the amalgamation is on or before (amalgamation date). (signature of duly authorized officer) (office of duly authorized officer) Dated this day of, (City/Town/Village), Saskatchewan SAMPLE SPECIAL RESOLUTION January of 13

13 (Name of the HEALTH CARE ORGANIZATION) Address SPECIAL RESOLUTION "Resolved, as a special resolution, that the amalgamation of (Name of the Health Care Organization) and (Name of the Regional Health Authority), pursuant to subsection 25(3) of The Regional Health Services Act, is hereby approved, provided that the effective date of the amalgamation is on or before (date). Board Member Board Member Board Member Board Member Board Member Board Member Board Member Dated this day of, (City/Town/Village), Saskatchewan SAMPLE AMALGAMATION AGREEMENT January of 13

14 THIS AGREEMENT is made in duplicate this day of, A.D BETWEEN: And REGIONAL HEALTH AUTHORITY, a regional health authority incorporation pursuant to The Regional Health Services Act. (hereinafter referred to as the Regional Health Authority ) a corporation incorporated pursuant to The Non-profit Corporations Act, 1995 and prescribed as a health care organization under The Regional Health Services Act (hereinafter referred to as the Health Care Organization ) WHEREAS: A) The Regional Health Authority was established pursuant to section 14 of The Regional Health Services Act; B) The Health Care Organizations operates the and has been prescribed as a Health Care Organization that may amalgamate with a regional health authority; C) Pursuant to section 25 of The Regional Health Services Act, the Regional Health Authority and the Health Care Organization intend to amalgamate; D) Upon amalgamation a new Corporation will be formed (hereinafter referred to as the Amalgamated Corporation ); E) Upon amalgamation, all of the assets of the Regional Health Authority and the Health Care Organization shall become the assets of the Amalgamated Corporation; and F) The Regional Health Authority and the Health Care Organization may enter into an Agreement in contemplation of the amalgamation and that Agreement will be binding on the Amalgamated Corporation. January of 13

15 - 2 - NOW THEREFORE THIS AGREEMENT WITNESSES AS FOLLOWS: 1. Subject to the terms of this Agreement the Regional Health Authority and the Health Care Organization agree to be amalgamated pursuant to section 25 of The Regional Health Services Act, with the effective date of the amalgamation being, From the date of this Agreement to the date of amalgamation, the Health Care Organization shall continue to provide services and the Regional Health Authority shall continue to provide funding in the ordinary course. 3. On and after the effective date of the amalgamation, the assets, liabilities, rights and obligations of the Health Care Organization continue as the assets, liabilities, rights and obligations of the Amalgamated Corporation subject to the following understanding of both parties. 4. Within sixty (60) days after the Regional Health Authority and the Health Care Organization amalgamate, the Amalgamated Corporation shall establish a trust account and transfer the recognized sum of plus accrued interest to the trust account. The trust account shall be operated and administered by the Amalgamated Corporation. The funds in the trust account and any accumulated interest shall be used exclusively for the (include specific requirements such as: for the purchase of equipment; for the provision of specific health services to the residents of the ; for the renovation of a specific facility). 5. The Health Care Organization authorizes the Regional Health Authority to take such steps as it may be advised in respect of the Collective Bargaining Agreement(s) in place, and any contract of employment or contracts of service in place in order to allow proper preparation for the transition upon the occurrence of the amalgamation. In this regard, the Health Care Organization agrees to give any layoff or termination notice that may be required to be given to the employees of the Health Care Organization. 6. The Amalgamated Corporation agrees to indemnify anyone who is or was a Director of the Health Care Organization regarding any claims made against said Director regarding acts or omissions of such a Director up to the effective date of the amalgamation. 7. To give full effect to this Agreement, the parties agree to: (a) pass all resolutions required to fulfill the terms of the Agreement, including the resolutions required under subsection 25(4) of The Regional Health Services Act; January of 13

16 (b) (c) execute all necessary conveyances, bills of sale, insurance, transfers, assignments and other documents necessary or reasonably required to transfer assets, as contemplated herein; and execute all documents and forms for amalgamation required under the Act, including the Notice of Amalgamation under subsection 25(4) of the Act. 8. The parties agree that all rights and obligations under this Agreement will expire if the Regional Health Authority and the Health Care Organization do not amalgamate on or before, This Agreement constitutes the entire agreement between the parties and there are no representations or warranties and no Agreements collateral thereto other than as expressly set forth or referred to herein. 10. Time shall be of the essence in this Agreement. 11. This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Saskatchewan. IN WITNESS WHEREOF the parties have executed this Agreement on the date first written above. For the Regional Health Authority: Chairperson, Regional Health Authority For the Health Care Organization: Chairperson, (name of the Health Care Organization) January of 13