(1) Upon periodic review of a hospitalized minor under section 498 l, or at any other time, if it is determined that the minor is no longer suitable for hospitalization, the director of the hospital shall discharge the minor from the hospital.

    (2) If a minor discharged under subsection (1) has been hospitalized under a court order, or if court proceedings are pending, the court shall be notified of the minor’s discharge from the hospital.

    (3) The director of a hospital shall notify the appropriate executive director of the pending discharge of a minor not less than 7 days before the minor is discharged from the hospital.

    (4) Before a minor is discharged from a hospital under subsection (1), the executive director, with the assistance of the hospital, shall develop an individualized prerelease plan for the minor in accordance with section 209a.

    (5) If the parent or guardian of a minor admitted to a hospital under this chapter refuses to assume custody of the minor upon discharge of the minor from the hospital, the hospital director shall file or cause to be filed a petition in the juvenile division of the probate court alleging that the minor is within the provisions of section 2(b) of chapter XIIA of Act No. 288 of the Public Acts of 1939, being section 712A.2 of the Michigan Compiled Laws, to ensure that the minor is provided with appropriate management, care, and residence. Arrangements considered suitable by the hospital director and agreed to by the parent or guardian for care of the minor outside the home of the parent or guardian do not constitute refusal to assume custody of the minor.