Federal support for hospital construction in overbedded areas

This memorandum established policies and procedures to limit Federal financial support for the construction of hospitals in overbedded areas. The policy for Federal hospitals is that no new or replacement hospitals will be built in an overbedded area unless suitable, existing, non-Federal facilities cannot reasonably be acquired through purchase or lease. The policy for non-Federal facilities is that no Federal grants, loans, loan subsidies, or loan guarantees will be provided for hospital construction or renovation in an overbedded area, unless the proposed project is consistent with an approved local hospital facility plan or the Secretary of Health and Human Services (HHS) determines that it is necessary. In addition, legislation and regulations will be proposed to revise the current Medicare and Medicaid reimbursement policies for costs related to hospital construction or renovation. Finally, legislation will be proposed to revise Federal tax exempt bond financing for hospital construction and renovation in overbedded areas. This memorandum also prescribes agency responsibilities and procedures for implementing these policies.