Virginia Law

Article 3. Medical Center.

A. The ability of the University to provide medical and health sciences education and related research is dependent upon the maintenance of high-quality teaching hospitals and related health care and health maintenance facilities, collectively referred to in this article as the Medical Center, and the maintenance of a Medical Center serving such purposes requires specialized management and operation that permit the Medical Center to remain economically viable and participate in cooperative arrangements reflective of changes in health care delivery.

B. Notwithstanding the provisions of § 32.1-124 exempting hospitals and nursing homes owned or operated by an agency of the Commonwealth from state licensure, the Medical Center shall be, for so long as the Medical Center maintains its accreditation by a national accrediting organization granted authority by the Centers for Medicare and Medicaid Services to ensure compliance with Medicare conditions of participation pursuant to § 1865 of Title XVIII of the Social Security Act (42 U.S.C. § 1395bb), deemed to be licensed as a hospital for purposes of other law relating to the operation of hospitals licensed by the Board of Health. The Medical Center shall not, however, be deemed to be a licensed hospital to the extent that any law relating to licensure of hospitals specifically excludes the Commonwealth or its agencies. As an agency of the Commonwealth, the Medical Center shall remain (i) exempt from licensure by the Board of Health pursuant to § 32.1-124 and (ii) subject to the Virginia Tort Claims Act (§ 8.01-195.1 et seq.). This subsection shall not be construed as a waiver of the Commonwealth's sovereign immunity.

C. The University may create, own in whole or in part, or otherwise control corporations, partnerships, insurers, or other entities whose activities promote the operations of the Medical Center and its mission; cooperate or enter into joint ventures with such entities and with government bodies; and enter into contracts in connection with its operations. Without limiting the power of the University to issue bonds, notes, guarantees, or other evidence of indebtedness pursuant to subsection D in connection with such activities, no such creation, ownership, or control shall create any responsibility of the University, the Commonwealth, or any agency of the Commonwealth for the operations or obligations of any such entity or in any way make the University, the Commonwealth, or any agency of the Commonwealth responsible for the payment of debt or other obligations of such entity. All such interests shall be reflected on the financial statements of the Medical Center.

D. Notwithstanding the provisions of Chapter 11 (§ 23.1-1100 et seq.), the University may issue bonds, notes, guarantees, or other evidence of indebtedness without the approval of any other governmental body subject to the following provisions:

1. Such debt is used solely for the purpose of paying not more than 50 percent of the cost of capital improvements in connection with the operation of the Medical Center or related issuance costs, reserve funds, and other financing expenses, including interest during construction and acquisitions and for up to one year thereafter.

2. The only revenues of the University pledged to the payment of such debt are those derived from the operation of the Medical Center and related health care and educational activities, and no general fund appropriation and special Medicaid disproportionate share payments for indigent and medically indigent patients who are not eligible for the Virginia Medicaid Program is pledged for the payment of such debt.

3. Such debt states that it does not constitute a debt of the Commonwealth or a pledge of the faith and credit of the Commonwealth.

4. Such debt is not sold to the public.

5. The total principal amount of such debt outstanding at any one time does not exceed $25 million.

6. The Treasury Board approves the terms and structure of such debt.

7. The purpose, terms, and structure of such debt are promptly communicated to the Governor and the Chairmen of the House Appropriations and Senate Finance Committees.

8. All such indebtedness is reflected on the financial statements of the Medical Center.

E. Subject to meeting the conditions set forth in subsection D, such debt may be in such form and have such terms as the board may provide and shall be in all respects debt of the University for the purposes of §§ 23.1-1110, 23.1-1115, and 23.1-1116.

1994, c. 621, § 23-77.3; 2003, c. 701; 2014, c. 320; 2016, c. 588.

A. The economic viability of the Medical Center, the requirement for its specialized management and operation, and the need of the Medical Center to participate in cooperative arrangements reflective of changes in health care delivery, as set forth in § 23.1-2212, depend upon the ability of the management of the Medical Center to make and promptly implement decisions necessary to conduct the affairs of the Medical Center in an efficient, competitive manner. It is critical to and in the best interests of the Commonwealth that the University continues to fulfill its mission of providing quality medical and health sciences education and related research and, through the presence of its Medical Center, continues to provide for the care, treatment, health-related services, and education activities associated with Virginia patients, including indigent and medically indigent patients. Because the ability of the University to fulfill this mission is highly dependent upon revenues derived from providing health care through its Medical Center, and because the ability of the Medical Center to continue to be a reliable source of such revenues is heavily dependent upon its ability to compete with other providers of health care that are not subject to the requirements of law applicable to agencies of the Commonwealth, the University may implement the following modifications to the management and operation of the affairs of the Medical Center in order to enhance its economic viability:

1. a. For any Medical Center capital project entirely funded by a nongeneral fund appropriation made by the General Assembly, all post-appropriation review, approval, administrative, and policy and procedure functions performed by the Department of General Services, the Division of Engineering and Buildings, the Department of Planning and Budget, and any other agency that supports the functions performed by these departments are delegated to the University, subject to the following stipulations and conditions: (i) the board shall develop and implement an appropriate system of policies, procedures, reviews, and approvals for Medical Center capital projects to which this subsection applies; (ii) the system so adopted shall provide for the review and approval of any Medical Center capital project to which this subsection applies to ensure that, except as provided in clause (iii), the cost of any such capital project does not exceed the sum appropriated for the project and the project otherwise complies with all requirements of the Code of Virginia regarding capital projects, excluding only the post-appropriation review, approval, administrative, and policy and procedure functions performed by the Department of General Services, the Division of Engineering and Buildings, the Department of Planning and Budget, and any other agency that supports the functions performed by these departments; (iii) the board may, during any fiscal year, approve a transfer of up to 15 percent of the total nongeneral fund appropriation for the Medical Center to supplement funds appropriated for a capital project of the Medical Center, provided that the board finds that the transfer is necessary to effectuate the original intention of the General Assembly in making the appropriation for the capital project in question; (iv) the University shall report to the Department of General Services on the status of any such capital project prior to commencement of construction of, and at the time of acceptance of, any such capital project; and (v) the University shall ensure that Building Officials and Code Administrators (BOCA) Code and fire safety inspections of any such project are conducted and such projects are inspected by the State Fire Marshal or his designee prior to certification for building occupancy by the University's assistant state building official to whom such inspection responsibility has been delegated pursuant to § 36-98.1. Nothing in this section shall be deemed to relieve the University of any reporting requirement pursuant to § 2.2-1513. Notwithstanding the provisions of this subsection, the terms and structure of any financing of any capital project to which this subsection applies shall be approved pursuant to § 2.2-2416.

b. No capital project to which this subsection applies shall be materially increased in size or materially changed in scope beyond the plans and justifications that were the basis for the project's appropriation unless (i) the Governor determines that such increase in size or change in scope is necessary due to an emergency or (ii) the General Assembly approves the increase or change in a subsequent appropriation for the project. After construction of any such capital project has commenced, no such increase or change shall be made during construction unless the conditions in clause (i) or (ii) have been satisfied.

2. a. The University is exempt from the provisions of § 2.2-1149 and any rules, regulations, and guidelines of the Division of Engineering and Buildings regarding leases of real property that it enters into on behalf of the Medical Center and, pursuant to policies and procedures adopted by the board, may enter into such leases subject to the following conditions: (i) the lease shall be an operating lease and not a capital lease as defined in guidelines established by the Secretary of Finance and generally accepted accounting principles; (ii) the University's decision to enter into such a lease shall be based upon cost, demonstrated need, and compliance with guidelines adopted by the board that direct that (a) competition be sought to the maximum practical degree, (b) all costs of occupancy be considered, and (c) the use of the space to be leased is necessary and efficiently planned; (iii) the form of the lease is approved by the Special Assistant Attorney General representing the University; (iv) the lease otherwise meets all requirements of law; (v) the leased property is certified for occupancy by the building official of the political subdivision in which the leased property is located; and (vi) upon entering such leases and upon any subsequent amendment of such leases, the University provides copies of all lease documents and any attachments to such lease documents to the Department of General Services.

b. Notwithstanding the provisions of § 2.2-1155 and subdivision B 1 of § 23.1-1301, but subject to policies and procedures adopted by the board, the University may lease, for a purpose consistent with the mission of the Medical Center and for a term not to exceed 50 years, property in the possession or control of the Medical Center.

c. Notwithstanding the provisions of this subdivision, the terms and structure of any financing arrangements secured by capital leases or other similar lease financing agreements shall be approved pursuant to § 2.2-2416.

3. a. Contracts awarded by the University on behalf of the Medical Center for the procurement of goods, services, including professional services, construction, or information technology and telecommunications in compliance with this subdivision are exempt from (i) the Virginia Public Procurement Act (§ 2.2-4300 et seq.), except as provided in this section; (ii) the requirements of the Division of Purchases and Supply of the Department of General Services as set forth in Article 3 (§ 2.2-1109 et seq.) of Chapter 11 of Title 2.2; (iii) the requirements of the Division of Engineering and Buildings as set forth in Article 4 (§ 2.2-1129 et seq.) of Chapter 11 of Title 2.2; and (iv) the authority of the Chief Information Officer and the Virginia Information Technologies Agency as set forth in Chapter 20.1 (§ 2.2-2005 et seq.) of Title 2.2 regarding the review and approval of contracts for (a) the construction of Medical Center capital projects and (b) information technology and telecommunications projects.

b. The University shall adopt and at all times maintain guidelines generally applicable to the procurement of goods, services, construction, and information technology and telecommunications projects by the Medical Center or by the University on behalf of the Medical Center. Such guidelines shall be based upon competitive principles and in each instance seek competition to the maximum practical degree. The guidelines shall (i) implement a system of competitive negotiation for professional services; (ii) prohibit discrimination against the bidder or offeror in the solicitation or award of contracts on the basis of the race, religion, color, sex, sexual orientation, gender identity, or national origin of the bidder or offeror; and (iii) incorporate the prompt payment principles of §§ 2.2-4350 and 2.2-4354 and may (a) take into account the dollar amount of the intended procurement, the term of the anticipated contract, and the likely extent of competition; (b) implement a prequalification procedure for contractors or products; (c) include provisions for cooperative procurement arrangements with private health or educational institutions or public agencies or institutions of the states or territories of the United States or the District of Columbia; and (d) implement provisions of law.

c. Sections 2.2-4311, 2.2-4315, 2.2-4342 (which shall not be construed to require compliance with the prequalification application procedures of subsection B of § 2.2-4317), and 2.2-4330 and §§ 2.2-4333 through 2.2-4341 and 2.2-4367 through 2.2-4377 shall continue to apply to procurements by the Medical Center and the University on behalf of the Medical Center.

B. Subject to conditions that are prescribed in the budget bill pursuant to § 2.2-1509, the State Comptroller shall credit, on a monthly basis, to the nongeneral fund operating cash balances of the Medical Center the imputed interest earned by the investment of such nongeneral fund operating cash balances, including those balances derived from patient care revenues, on deposit with the State Treasurer.

1996, cc. 933, 995, § 23-77.4; 2002, cc. 574, 602; 2004, c. 145; 2010, cc. 136, 145; 2016, c. 588; 2020, c. 1137.