1. (1) No person, partnership, association, corporation, or state, county or local government unit, or any division, department, board or agency thereof, shall establish, conduct, operate, or maintain in the State of Tennessee any hospital or any of the following optional services; Burn Unit, MRI Unit, NICU, or PET Unit without having a license. A license shall be issued only to the applicant named and only for the premises listed in the application for licensure. Licenses are not transferable or assignable and shall expire and become invalid annually on the anniversary date of their original issuance. The license shall be conspicuously posted in the hospital.

2. (2) In order to make application for a license:

   1. (a) The applicant shall submit an application on a form prepared by the Commission.
   2. (b) Each applicant for a license shall pay an annual license fee based on the number of hospital beds. The fee must be submitted with the application and is not refundable.
   3. (c) The issuance of an application form is in no way a guarantee that the completed application will be accepted or that a license will be issued by the Commission. Patients shall not be admitted to the hospital until a license has been issued. Applicants shall not hold themselves out to the public as being a hospital until the license has been issued. A license shall not be issued until the facility is in substantial compliance with these rules and regulations including submission of all information required by T.C.A. § 68-11-206(1), or as later amended, and of all information required by the Commission.
   4. (d) The applicant must prove the ability to meet the financial needs of the facility.
   5. (e) The applicant shall not use subterfuge or other evasive means to obtain a license, such as filing for a license through a second party when an individual has been denied a license or has had a license disciplined or has attempted to avoid inspection and review process.
   6. (f) The applicant shall allow the hospital to be inspected by a Commission surveyor. In the event that deficiencies are noted, the applicant shall submit a plan of corrective action to the Commission that must be accepted by the Commission. Once the deficiencies have been corrected, then the Commission shall consider the application for licensure.

3. (3) A proposed change of ownership, including a change in a controlling interest, must be reported to the Commission a minimum of thirty (30) days prior to the change. A new application and fee must be received by the Commission before the license may be issued.

   1. (a) For the purposes of licensing, the licensee of a hospital has the ultimate responsibility for the operation of the facility, including the final authority to make or control operational decisions and legal responsibility for the business management. A change of ownership occurs whenever this ultimate legal authority for the responsibility of the hospital’s operation is transferred.
   2. (b) A change of ownership occurs whenever there is a change in the legal structure by which the hospital is owned and operated.

   3. (c) Transactions constituting a change of ownership include, but are not limited to, the following:

      1. 1. Transfer of the facility’s legal title;
      2. 2. Lease of the facility’s operations;
      3. 3. Dissolution of any partnership that owns, or owns a controlling interest in, the facility;
      4. 4. One partnership is replaced by another through the removal, addition or substitution of a partner;
      5. 5. Removal of the general partner or general partners, if the facility is owned by a limited partnership;
      6. 6. Merger of a facility owner (a corporation) into another corporation where, after the merger, the owner’s shares of capital stock are cancelled;
      7. 7. The consolidation of a corporate facility owner with one or more corporations;
      8. 8. Transfers between levels of government; or,
      9. 9. Temporary management where ultimate authority and operational control is surrendered and transferred from the owner to a new manager.

   4. (d) Transactions which do not constitute a change of ownership include, but are not limited to, the following:

      1. 1. Changes in the membership of a corporate board of directors or board of trustees;
      2. 2. Two (2) or more corporations merge and the originally licensed corporation survives;
      3. 3. Changes in the membership of a non-profit corporation;
      4. 4. Transfers between departments of the same level of government;
      5. 5. Corporate stock transfers or sales, even when a controlling interest;
      6. 6. For a member-managed or manager-managed Limited Liability Company (LLC), an equity transfer or sale, even when a controlling interest; or,
      7. 7. Management agreements where the owner continues to retain ultimate authority for the operation of the facility.
   5. (e) Sale/lease-back agreements shall not be treated as changes in ownership if the lease involves the facility’s entire real and personal property and if the identity of the leasee, who shall continue the operation, retains the exact same legal form as the former owner.

4. (4) Each hospital, except those operated by the U.S. Government or the State of Tennessee, making application for license under this chapter shall pay annually to the Commission a fee based on the number of hospital beds, as follows:

   1. (a) Less than 25 beds $1,040.00
   2. (b) 25 to 49 beds, inclusive $1,300.00
   3. (c) 50 to 74 beds, inclusive $1,560.00
   4. (d) 75 to 99 beds, inclusive $1,820.00
   5. (e) 100 to 124 beds, inclusive $2,080.00
   6. (f) 125 to 149 beds, inclusive $2,340.00
   7. (g) 150 to 174 beds, inclusive $2,600.00
   8. (h) 175 to 199 beds, inclusive $2,860.00 For hospitals of two hundred (200) beds or more the fee shall be two thousand eight hundred and sixty dollars ($2,860.00) plus two hundred dollars ($200.00) for each twenty-five (25) beds or fraction thereof in excess of one hundred ninety-nine (199) beds. The fee shall be submitted with the application or renewal and is not refundable.

5. (5) Each hospital choosing to operate one of the following optional services shall pay annually to the Commission a per unit non-refundable fee, as follows:

   1. (a) Burn Unit $1,040.00
   2. (b) NICU $1,040.00
   3. (c) MRI Unit $500.00
   4. (d) PET Unit $500.00

6. (6) Renewal.

   1. (a) In order to renew a license, each hospital shall submit to periodic inspections by Commission surveyors for compliance with these rules. If deficiencies are noted, the licensee shall submit an acceptable plan of corrective action and shall remedy the deficiencies. In addition, each licensee shall submit a renewal form approved by the Commission and applicable renewal fee prior to the expiration date of the license.
   2. (b) If a licensee fails to renew its license prior to the date of its expiration but submits the renewal form and fee within sixty (60) days thereafter, the licensee may renew late by paying, in addition to the renewal fee, a late penalty of one hundred dollars ($100) per month for each month or fraction of a month that renewal is late, provided that the late penalty shall not exceed twice the renewal fee.

   3. (c) In the event that a licensee fails to renew its license within the sixty (60) day grace period following the license expiration date, then the licensee shall reapply for a license by submitting the following to the Commission:

      1. 1. A completed application for licensure;
      2. 2. The license fee provided in Rule 0720-14-.02(4); and
      3. 3. Any other information required by the Commission.
   4. (d) Upon reapplication, the licensee shall submit to an inspection of the hospital by Commission surveyors.

Authority: T.C.A. §§ 4-5-201, 4-5-202, 4-5-204, 68-11-201, 68-11-202, 68-11-204, 68-11-206, 68-11- 206(a)(5), 68-11-209, 68-11-210, and 68-11-216. Administrative History: Original rule certified June 7, 1974. Repeal and new rule filed May 22, 1986; effective June 21, 1986. Amendment filed January 16, 1992; effective March 2, 1992. Repeal and new rule filed March 18, 2000; effective May 30, 2000. Amendment filed December 2, 2003; effective February 15, 2004. Amendment filed January 19, 2007; effective April 4, 2007. Public necessity rules filed April 29, 2009; effective through October 11, 2009. Emergency rules filed October 9, 2009; effective through April 7, 2010. Amendments filed September 24, 2009; effective December 23, 2009. Amendment filed December 16, 2013; effective March 16, 2014. Amendments filed March 21, 2018; to have been effective June 19, 2018. However, on May 24, 2018, the Government Operations Committee filed a 5-day stay; new effective date June 24, 2018. Transferred from chapter 1200-08-01 pursuant to Public Chapter 1119 of 2022 effective July 1, 2022. Amendments filed January 8, 2026; effective April 8, 2026.