A BILL TO BE ENTITLED
AN ACT to clarify the purpose of the University of north CAROLINA health care system, to increase the authority of the university of north carolina board of governors to govern the health care system, to reduce the number and change the composition of the members of the Board of Directors of the Health Care system, to increase the system's accountability and transparency, to clarify its status as a state agency, and to limit future expansion, as recommended by the House select committee on state‑owned assets.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 116‑37 reads as rewritten:
"§ 116‑37.  University of North Carolina Health Care System.
(a)	Creation of System. –
(1)	There is hereby established the University of North Carolina Health Care System, effective November 1, 1998, which shall be an affiliated enterprise of The University of North Carolina governed by the Board of Governors and administered by the board of directors created in subsection (b) of this section. Consistent with State statutes and policy and without unduly competing with non‑State-owned health care systems, the purpose of the University of North Carolina Health Care System is to  meet the goals of education, research, patient care, and community service. 
(2)	As of November 1, 1998, all of the rights, privileges, liabilities, and obligations of the board of directors of the University of North Carolina Hospitals at Chapel Hill, not inconsistent with the provisions of this section, shall be transferred to and assumed by the board of directors of the University of North Carolina Health Care System.
(3)	The University of North Carolina Hospitals at Chapel Hill and the clinical patient care programs established or maintained by the School of Medicine of the University of North Carolina at Chapel Hill shall be governed by the Board of Governors and administered by the board of directors of the University of North Carolina Health Care System.
(4)	With respect to the provisions of subsections (d), (e), (f), and (k) of this section, the Board of Governors may adopt or may delegate to the board of directors the authority to adopt  policies that make the authorities and responsibilities established by one or more of said subsections applicable to the University of North Carolina Hospitals at Chapel Hill, to the clinical patient care programs of the School of Medicine of the University of North Carolina at Chapel Hill, to both, or to other persons or entities affiliated with or under the control of the University of North Carolina Health Care System.
(5)	To effect an orderly transition, the policies and procedures of the clinical patient care programs of the School of Medicine of the University of North Carolina at Chapel Hill and of the University of North Carolina Hospitals at Chapel Hill effective as of October 31, 1998, shall remain effective in accordance with their terms until changed by the Board of Directors of the University of North Carolina Health Care System.
(b)	Board of Directors. The Board of Governors of The University of North Carolina is directed to reconstitute the board of directors for the University of North Carolina Health Care System, effective November 1, 2012.
(1)	The reconstituted board of directors shall be composed of 12 members as follows:
a.	Three members ex officio of said board shall be the State Treasurer or the Treasurer's designee; the Chief Executive Officer of the University of North Carolina Health Care System;  and the Dean of the School of Medicine of the University of North Carolina at Chapel  Hill; provided, that if the Dean is already a member ex officio by virtue of holding one or more of the offices aforementioned, the faculty member responsible for leading the clinical patient care programs of the School of  Medicine shall serve as the third member ex officio.
b.	Nine members at large who shall be appointed by the Board of Governors for four‑year terms, commencing on November 1 of the year of  appointment. In order to effectuate staggered terms and to provide continuity of board membership, a minimum of five members of the initial class of at‑large members of the reconstituted board shall be selected by the Board of Governors from the persons who hold the appointed memberships on the board of directors of the University of North Carolina Health Care System incumbent as of October 31, 2012, whose terms shall expire on October 31, 2014.The Board of Governors shall appoint individuals to the remaining at‑large positions of the reconstituted board whose terms shall expire on October 31, 2016. As the terms of the initial at-large members of the reconstituted  board expire, the Board of Governors shall appoint individuals to fill the vacant at‑large positions from the business and professional public at large who have special competence in business management, hospital administration, health care delivery, or medical practice or who otherwise have demonstrated dedication to the improvement of health care in North Carolina, and who are neither members of the Board of Governors, members of the board of trustees of a constituent institution of The University of North Carolina, nor officers or employees of the State. No member may be appointed to more than two full four‑year terms in succession; provided, that persons holding appointed memberships on November 1, 2012, by virtue of their previous membership on the board of directors of the University of North Carolina  Health Care System on October 31, 2012, shall not be eligible to be reappointed to the board of directors of the University of North Carolina Health Care System. Any vacancy in an unexpired term shall be filled by an appointment made by the Board of Governors for the balance of the term remaining.
(2)	The board of directors, with each ex officio and at‑large member having a vote, shall elect a chairman only from among the at‑large members, for a term of two years. No person shall be eligible to serve as chairman for more than three terms in succession.
(3)	The board of directors of the University of North Carolina Health Care System shall meet at least every 60 days and may hold special meetings at any time and place within the State at the call of the chairman. Board members, other than ex officio members, shall receive the same per diem and reimbursement for travel expenses as members of the State boards and commissions generally.
(4)	In meeting the patient‑care, educational, research, and public‑service goals of the University of North Carolina Health Care System, the Board of Governors is authorized or may delegate to the board of directors the authority to adopt policies, rules, and regulations that are necessary and appropriate, not inconsistent with the provisions of this section or the policies of the Board of Governors or, to the extent the actions affect employees of the University of North Carolina at Chapel Hill, not inconsistent with the policies of the University of North Carolina at Chapel Hill. The Board of Governors may authorize or may delegate to the board of directors the authority to authorize any component of the University of North Carolina Health Care System, including the University of North Carolina Hospitals at Chapel Hill, to contract in its individual capacity, subject to such policies and procedures as the board of directors may direct. The board of directors may enter into formal agreements with the University of North Carolina at Chapel Hill with respect to the provision of clinical experience for students and for the provision of maintenance and supporting services. The board's action on matters within its jurisdiction is final, except that appeals may be made, in writing, to the Board of Governors with a copy of the appeal to the Chancellor of the University of North Carolina at Chapel Hill. The board of directors shall keep the Board of Governors and the board of trustees of the University of North Carolina at Chapel Hill fully informed about health care policy and recommend changes necessary to maintain adequate health care delivery, education, and research for improvement of the health of the citizens of North Carolina.
(c)	Officers. –
(1)	The executive and administrative head of the University of North Carolina Health Care System shall have the title of "Chief Executive Officer." The board of directors, the board of trustees, and the Chancellor of the University of North Carolina at Chapel Hill, following such search process as the boards and the Chancellor deem appropriate, shall identify two or more persons as candidates for the office, who, pursuant to criteria agreed upon by the boards and the Chancellor, have the qualifications for both the positions of Chief Executive Officer of the University of North Carolina Health Care System and Vice‑Chancellor for Medical Affairs of the University of North Carolina at Chapel Hill. The names of the candidates so identified, once approved by the board of directors and the board of trustees, shall be forwarded by the Chancellor to the President of The University of North Carolina, who if satisfied with the quality of one or more of the candidates, will nominate one as Chief Executive Officer, subject to selection by the Board of Governors. The individual serving as Chief Executive Officer shall have complete executive and administrative authority to formulate proposals for, recommend the adoption of, and implement policies governing the programs and activities of the University of North Carolina Health Care System, subject to all requirements of the board of directors. That same individual, when serving as Vice‑Chancellor for Medical Affairs, shall have all authorities, rights, and responsibilities of a vice‑chancellor of the University of North Carolina at Chapel Hill.
(2)	The executive and administrative head of the University of North Carolina Hospitals at Chapel Hill shall have the title of "President of the University of North Carolina Hospitals at Chapel Hill."
(3)	The board of directors shall elect, on nomination of the Chief Executive Officer, the President of the University of North Carolina Hospitals at Chapel Hill, and such additional administrative and professional staff employees of the University of North Carolina Health Care System as may be deemed necessary to assist in fulfilling the duties of the office of the Chief Executive Officer, all of whom shall serve at the pleasure of the Chief Executive Officer.
(d)	Personnel. – Employees of the University of North Carolina Health Care System shall be deemed to be employees of the State and shall be subject to all provisions of State law relevant thereto; provided, however, that except as to the provisions of Articles 5, 6, 7, and 14 of Chapter 126 of the General Statutes, the provisions of Chapter 126 shall not apply to employees of the University of North Carolina Health Care System, and the policies and procedures governing the terms and conditions of employment of such employees shall be adopted by the board of directors; provided, that with respect to such employees as may be members of the faculty of the University of North Carolina at Chapel Hill, no such policies and procedures may be inconsistent with policies established by, or adopted pursuant to delegation from, the Board of Governors of The University of North Carolina.
(1)	The Board of Governors shall fix or approve or may delegate to the board of directors the authority to fix or approve the schedules of pay, expense allowances, and other compensation and adopt position classification plans for employees of the University of North Carolina Health Care System.
(2)	The Board of Governors may adopt or provide or may delegate to the board of directors the authority to adopt or provide for rules and regulations concerning, but not limited to, annual leave, sick leave, special leave with full pay or with partial pay supplementing workers' compensation payments for employees injured in accidents arising out of and in the course of employment, working conditions, service awards and incentive award programs, grounds for dismissal, demotion, or discipline, other personnel policies, and any other measures that promote the hiring and retention of capable, diligent, and effective career employees. However, an employee who has achieved career State employee status as defined by G.S. 126‑1.1 by October 31, 1998, shall not have his or her compensation reduced as a result of this subdivision. Further, an employee who has achieved career State employee status as defined by G.S. 126‑1.1 by October 31, 1998, shall be subject to the rules regarding discipline or discharge that were effective on October 31, 1998, and shall not be subject to the rules regarding discipline or discharge adopted after October 31, 1998.
(3)	The Board of Governors  may prescribe or may delegate to the board of directors the authority to prescribe the office hours, workdays, and holidays to be observed by the various offices and departments of the University of North Carolina Health Care System.
(4)	The Board of Governors  may establish or may delegate to the board of directors the authority to establish boards, committees, or councils to conduct hearings upon the appeal of employees who have been suspended, demoted, otherwise disciplined, or discharged, to hear employee grievances, or to undertake any other duties relating to personnel administration that the board of directors may direct.
The board of directors shall submit all initial classification and pay plans and other rules and regulations adopted pursuant to subdivisions (1) through (4) of this subsection to the Office of State Personnel for review upon adoption by the board. Any subsequent changes to these plans, rules, and policies shall be submitted to the Office of State Personnel for review. Any comments by the Office of State Personnel shall be submitted to the Chief Executive Officer and to the President of The University of North Carolina.
(e)	Finances. – The University of North Carolina Health Care System shall be subject to the provisions of the State Budget Act. The Chief Executive Officer, subject to the  Board of Governors, shall be responsible for all aspects of budget preparation, budget execution, and expenditure reporting. All operating funds of the University of North Carolina Health Care System may be budgeted and disbursed through special fund codes, maintaining separate auditable accounts for the University of North Carolina Hospitals at Chapel Hill and the clinical patient care programs of the School of Medicine of the University of North Carolina at Chapel Hill. All receipts of the University of North Carolina Health Care System may be deposited directly to the special fund codes, and except for General Fund appropriations, all receipts of the University of North Carolina Hospitals at Chapel Hill may be invested pursuant to G.S. 116‑37.2(h). General Fund appropriations for support of the University of North Carolina Hospitals at Chapel Hill shall be budgeted in a General Fund code under a single purpose, "Contribution to University of North Carolina Hospitals at Chapel Hill Operations" and be transferable to a special fund operating code as receipts.
(f)	Finances – Patient/Health Care System Benefit. – The Chief Executive Officer of the University of North Carolina Health Care System, or the Chief Executive Officer's designee, may expend operating budget funds, including State funds, of the University of North Carolina Health Care System for the direct benefit of a patient, when, in the judgment of the Chief Executive Officer or the Chief Executive Officer's designee, the expenditure of these funds would result in a financial benefit to the University of North Carolina Health Care System. Any such expenditures are declared to result in the provision of medical services and create charges of the University of North Carolina Health Care System for which the health care system may bill and pursue recovery in the same way as allowed by law for recovery of other health care systems' charges for services that are unpaid.
These expenditures shall be restricted (i) to situations in which a patient is financially unable to afford ambulance or other transportation for discharge; (ii) to afford placement in an after‑care facility; (iii) to assure availability of a bed in an after‑care facility after discharge from the hospitals; (iv) to secure equipment or other medically appropriate services after discharge; or (v) to pay health insurance premiums. The Chief Executive Officer or the Chief Executive Officer's designee shall reevaluate at least once a month the cost‑effectiveness of any continuing payment on behalf of a patient.
To the extent that the University of North Carolina Health Care System advances anticipated government entitlement benefits for a patient's benefit, for which the patient later receives a lump‑sum "back‑pay" award from an agency of the State, whether for the current admission or subsequent admission, the State agency shall withhold from this back pay an amount equal to the sum advanced on the patient's behalf by the University of North Carolina Health Care System, if, prior to the disbursement of the back pay, the applicable State program has received notice from the University of North Carolina Health Care System of the advancement.
(f1)	Provision of Indigent Care. – The University of North Carolina Health Care System shall provide a proportionate share of the indigent care, as compared with non‑State-owned health care systems, in each county where it provides medical services. By July 1, 2013, the Board of Governors, in conjunction with the North Carolina Hospital Association, shall develop methods to measure the provision of indigent care services that allow for direct and accurate comparison between health care systems. 
(g)	Reports. – The Chief Executive Officer shall report by September 30 of each year on the operations and financial affairs of the University of North Carolina Health Care System to the Board of Governors. The Board of Governors shall report by November 30 of each year on the operations and financial affairs of the University of North Carolina Health Care System to the Joint Legislative Commission on Governmental Operations. The report shall include the actions taken by the Board of Governors or the board of directors under the authority granted in  subsection (d) of this section.
All nonprofit corporations that are part of the University of North Carolina Health Care System must complete an Internal Revenue Service Form 990 annually and submit a copy to the Board of Governors.
								(k)	Patient Information. – The University of North Carolina Health Care System shall, at the earliest possible opportunity, specifically make a verbal and written request to each patient to disclose the patient's social security number, if any. If the patient does not disclose that number, the University of North Carolina Health Care System shall deny benefits, rights, and privileges of the University of North Carolina Health Care System to the patient as soon as practical, to the maximum extent permitted by federal law or federal regulations. The University of North Carolina Health Care System shall make the disclosure to the patient required by Section 7(b) of P.L. 93‑579. This subsection is supplementary to G.S. 105A‑3(c).
(l)	Expansion. – The University of North Carolina Health Care System shall not use any funds available to it, whether fees for provision of services, reserves, or assessments of entities affiliated with the system, to expand the geographic areas where it provides services without the specific authorization of the General Assembly. "
SECTION 2.  G.S. 116‑37.2(b) reads as written:
"(b)	The Board of Governors is responsible or may delegate the responsibility to the board of directors of the University of North Carolina Health Care System, as established in G.S. 116‑37(b), for the custody and management of the funds of the University of North Carolina Hospitals at Chapel Hill. The Board of Governors shall adopt or may delegate the authority to the board of directors to adopt uniform policies and procedures applicable to the deposit, investment, and administration of these funds, which shall assure that the receipt and expenditure of such funds is properly authorized and that the funds are appropriately accounted for. The Board of Governors may delegate authority, through the Chief Executive Officer of the University of North Carolina Health Care System to the President of the University of North Carolina Hospitals at Chapel Hill, when such delegation is necessary or prudent to enable the University of North Carolina Hospitals at Chapel Hill to function in a proper and expeditious manner."
SECTION 3.  G.S. 116‑37.2(h) reads as rewritten:
"(h)	The Board of Governors may deposit or invest, or may delegate to the board of directors the authority to deposit or invest, the funds under this section in interest‑bearing accounts and other investments in the exercise of its sound discretion, without regard to any statute or rule of law relating to the investment of funds by fiduciaries."
SECTION 4.  G.S. 143‑56 reads as rewritten:
"§ 143‑56.  Certain purchases excepted from provisions of Article.
Unless as may otherwise be ordered by the Secretary of Administration, the purchase of supplies, materials and equipment through the Secretary of Administration shall be mandatory in the following cases:
(1)	Published books, manuscripts, maps, pamphlets and periodicals.
(2)	Perishable articles such as fresh vegetables, fresh fish, fresh meat, eggs, and others as may be classified by the Secretary of Administration.
Purchase through the Secretary of Administration shall not be mandatory for information technology purchased in accordance with Article 3D of Chapter 147 of the General Statutes, for a purchase of supplies, materials or equipment for the General Assembly if the total expenditures is less than the expenditure benchmark established under the provisions of G.S. 143‑53.1, for group purchases made by hospitals, developmental centers, neuromedical treatment centers, and alcohol and drug abuse treatment centers through a competitive bidding purchasing program, as defined in G.S. 143‑129, or by East Carolina University on behalf of the Medical Faculty Practice Plan pursuant to G.S. 116‑40.6(c).
All purchases of the above articles made directly by the departments, institutions and agencies of the State government shall, whenever possible, be based on competitive bids. Whenever an order is placed or contract awarded for such articles by any of the departments, institutions and agencies of the State government, a copy of such order or contract shall be forwarded to the Secretary of Administration and a record of the competitive bids upon which it was based shall be retained for inspection and review."
SECTION 5.  G.S. 146‑22(c) reads as rewritten:
"(c)	Acquisitions on behalf of  the Medical Faculty Practice Plan of the East Carolina University School of Medicine shall be made in accordance with G.S. 116‑40.6(d)."
SECTION 6.  This act becomes effective October 1, 2012.