(1) The hospital authority is a body corporate with power to sue or be sued in any court of this state and may exercise those powers necessary and incident to the acquisition, construction, improvement, enlargement, extension, ownership, maintenance, and operation of 1 or more community hospitals. The authority may contract with any of the participating cities, villages, and townships, or any other city, village, or township, or with any county family independence agency, for the hospital care of indigent patients and other persons entitled to hospital care at public expense. The authority may contract with any individual, firm, or corporation for the furnishing of hospital care to persons at the private expense of the individual, firm, or corporation. The authority may establish rules providing for a system of civil service for its employees.

  (2) An entity that is unable to document compliance with section 1 and 3 and is acting or purporting to act as a hospital authority under this act is a hospital authority duly organized and existing under this act and fully empowered to exercise any power granted to a hospital authority under this act if the entity satisfies either of the following:

  (a) Continuously owned and operated a hospital for not less than 15 years before February 6, 1978 and filed a written notice with the clerk of each city, village, or township included in the hospital authority within 30 days after February 6, 1978 stating that the entity, being unable to document compliance with section 1 and 3, is recognized as a hospital authority pursuant to this subsection.

  (b) Continuously owned and operated a hospital for not less than 40 years before the effective date of this subdivision and filed a written notice with the clerk of each city, village, or township included in the hospital authority within 30 days after the effective date of this subdivision stating that the entity, being unable to document compliance with section 1 and 3, is recognized as a hospital authority pursuant to this subsection.

  (3) An action or proceeding taken before February 6, 1978 by a hospital authority recognized by subsection (2)(a) or before the effective date of subsection (2)(b) by a hospital authority recognized by subsection (2)(b), which a hospital authority is empowered by this act to take, is validated, ratified, and confirmed. A city, village, or township that appointed a representative to the board of a hospital authority recognized by subsection (2)(a) or (b) or that levied a tax for or made payments to a hospital authority recognized by subsection (2)(a) or (b) pursuant to this act is a member of that hospital authority, and is considered to have been a member of that hospital authority since the date a representative was first appointed, the tax was first levied, or the payment was first made. Any action or proceeding of a city, village, or township taken in regard to a hospital authority recognized by subsection (2)(a) or (b), which the city, village, or township was empowered by this act to take in regard to a duly organized and existing hospital authority, is validated, ratified, and confirmed.