The state Public Health and Health Planning Council unanimously approved Clifton-Fine Hospitals application in its certificate of need to become a nonprofit organization rather than a municipal public benefit corporation.
The transfer of assets will allow the hospital to leave the state retirement system and set up a different type of pension for employees.
Clifton-Fine, a 20-bed critical access hospital in Star Lake, sought the change because it feared increasing pension costs would make its future unsustainable.
The hospital tried for two years to have the change handled legislatively but faced opposition from the Civil Service Employees Association because of its potential impact on other public benefit corporations in the state.
The conversion probably will not take place before spring because of legal work, establishment of a retirement system and approval by the Internal Revenue Service of the nonprofit, Administrator Robert P. Kimmes said.