HB 2346
Initials AG Page 1 Transmitted
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
First Regular Session
House: HHS DP 9-0-0-0 | 3
rd
Read 44-14-2-0
Senate: HHS DPA 7-0-0 | 3
rd
Read 28-2-0-0
Final Pass: 56-0-3-1
HB 2346: outpatient treatment centers; exemption
Sponsor: Representative Shah, LD 5
Transmitted to the Governor
Overview
Specifies that for an outpatient treatment center (OTC) to be exempt from licensure, supervision,
regulation or control of the Arizona Department of Health Services (DHS) it must have the same
direct or indirect owner as a licensed hospital, be staffed by licensed health care providers and
provide notice to DHS of its decision to be exempt.
History
An exempt OTC is a facility with the same governing authority as a licensed hospital, that does
not have inpatient beds, provides health services or behavioral health services for the diagnosis
and treatment of patients and that is exempt from licensure if certain criteria are met (A.R.S. § 36-
439).
Governing authority means the individual, agency, partners, owner, group or corporation, whether
appointed, elected or otherwise designated, in which the ultimate responsibility and authority for
the conduct of the health care institution are vested. An owner means a person who has an
ownership interest of at least 51% of a health care institution (A.R.S. § 36-401).
An OTC that has the same governing authority as a licensed hospital and is staffed by licensed
health care providers is exempt from DHS's supervision, licensure, regulation or control unless:
1) patients are kept overnight or are treated under general anesthesia, except when the
treatment by general anesthesia is regulated under the dentistry statutes;
2) is an abortion clinic; or
3) is a pain management clinic (A.R.S. § 36-402).
An exempt OTC is subject to reasonable inspection by DHS if the Director has reasonable cause
to believe that patient harm is or may be occurring. A substantiated complaint that harm is
occurring at an exempt OTC is a violation against the hospital's license (A.R.S. § 36-422).
Provisions
1. Exempts an OTC from licensure, supervision, regulation or control of DHS if it has the same
direct owner or indirect owner as a licensed hospital, rather than the same governing authority
and provides notice to DHS of its decision to be exempt from licensure. (Sec. 2)
2. Clarifies that a substantiated complaint that harm is occurring at an exempt OTC is a violation
against the license of the hospital listed in the exemption notice provided to DHS. (Sec. 3)
3. Defines direct owner as a person that has an ownership or control interest in a health care
institution totaling 51% or more. (Sec.1)
4. Defines indirect owner as:
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note
HB 2346
Initials AG Page 2 Transmitted
a) a person that has an ownership or control interest in a direct owner totaling 51% or more;
and
b) includes an ownership or control interest in an indirect owner totaling 51% or more and a
combination of direct ownership and indirect ownership or control interests totaling 51%
or more in the health care institution. (Sec. 1)
5. Requires licensed hospitals to provide and maintain with DHS a current list of exempt OTCs
that have the same direct or indirect owner as the hospital. (Sec. 4)
6. Requires each OTC licensed on September 23, 2022, that does not provide notice to DHS of
its intent to be exempt from licensure to remain licensed if the OTC pays the lapsed licensing
fees within 60 days of the general effective date. (Sec. 5)
7. Repeals, on January 1, 2025, the requirement for OTCs licensed on September 23, 2022, that
do not provide the licensure exemption notice to pay lapsed licensing fees within 60 days of
the general effective date to remain licensed. (Sec. 5)
8. Modifies terms. (Sec.1)
9. Makes technical and conforming changes. (Sec. 1-4)