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State leases Hampstead Hospital to Dartmouth Health; lease proceeds reserved for capital improvements
Summary
Committee was briefed on the state’s transfer of Hampstead Hospital operations to Dartmouth-Hitchcock: the facility is now operated under a lease and transition agreements that include a matching capital-investment obligation and a proposed capital fund into which lease revenue would be deposited.
DHHS staff told House Finance Division III that the state transferred operations of Hampstead Hospital to Dartmouth-Hitchcock Medical Center under a set of contracts approved by the governor and executive council in December 2024.
Department counsel and staff said the state purchased the hospital in June 2022 and initially used a sole-source operator. In late 2023 and 2024 the department negotiated a lease, a joint operating-committee agreement, and a transition-services agreement with Dartmouth-Hitchcock. The lease and transition agreements took effect on February 3, 2024, and the transition-services contract was structured to run up to a year while Dartmouth-Hitchcock rolls up operations.
Under the lease the hospital operator agreed to pay the state an annual rent stream (DHHS cited roughly $1.3 million in the early years, subject to modest escalations) and the state agreed to a matching capital-investment obligation: the state will fund up to $3 million in capital investments provided Dartmouth-Hitchcock matches those funds (a roughly 50/50 arrangement up to that cap). DHHS said a draft bill in the Legislature (Senate Bill 118) would create a Hampstead Hospital residential treatment facility capital investment fund and route lease revenue into that account for the next biennium so the matching funds are immediately available without reappropriation delays.
Department staff noted that Hampstead’s operating budget lines were zeroed out in the governor’s proposed budget because Dartmouth-Hitchcock now operates the facility; however the lease provides ongoing revenue to the state and a mechanism to secure capital funding for required upgrades. Committee members asked whether positions that previously showed in the state’s FTE count still appear administratively; DHHS said the positions remain on the state’s position roster but many employees have transferred to Dartmouth-Hitchcock employment under the transition terms.
Ending: The committee was briefed on the contractual transition. DHHS said lease revenue will be directed to the capital fund while the transition is finalized; the department will provide additional details about the lease revenue stream and the timing of capital projects. No appropriation votes were taken by the committee.
