Evans Memorial Hospital in Claxton is one of the small-town medical facilities helped by a rural hospital tax credit.

Rural Georgia hospitals to press for expansion of tax credit program

A group representing small-town hospitals will lobby for a big increase in the state’s $60 million rural hospital tax credit program, and they could have some major statehouse backing next session.

HomeTown Health, a coalition of rural hospitals, said it will push for the tax credit program to be increased to $100 million during the 2019 session after this year’s credits were used up almost as soon as they became available in July.

But it will also call on lawmakers to increase transparency so taxpayers know who is benefiting from the program — and who is not.

“We have a very good program, a very good concept,” said Jimmy Lewis, the CEO of HomeTown Health. “But there is no transparency, there are no reports, there is no nothing.”

The program provides tax credits to people and companies that donate to more than 50 rural hospitals, offering an important financial lifeline to small-town facilities that have been closing and struggling to remain open.

A similar case was made about the popularity of such tax credits during the 2018 General Assembly session to win expansion of a program that provides private school scholarships to students. The annual amount of tax credits given to donors to that program was increased from $58 million a year to $100 million.

In its quest to expand the hospital tax credit, HomeTown Health has the backing of former state Rep. Geoff Duncan, the Republican nominee for lieutenant governor and the sponsor of the original hospital tax credit legislation that passed the General Assembly in 2016.

Duncan, who would run the Georgia Senate if elected, said it provides a “free-enterprise” solution to the problems of struggling rural hospitals.

“We have to save rural health care, and the way to do that has to be innovative — the same old, same old is not going to work,” Duncan said. “This program allows rural hospitals to create their own programs to serve their own unique communities and patients. No strings, no government mandates, no bureaucrat telling doctors how to help people.”

Sarah Riggs Amico, the Democratic nominee, said expanding Medicaid — the health care program for the poor and disabled — to more Georgians would do more for rural hospitals. Most of the money for expanding Medicaid would come from the federal government. Republicans have opposed expanding the program, saying it would cost the state too much money and long-term federal funding isn’t a given.

“I applaud the private industry and citizens willing to dedicate resources to save our rural hospitals,” Amico said. “They understand the stakes for our communities and our economy.

“I only wish the state’s GOP leadership would do the same. The program, however well-intentioned, is neither sufficient to fix Georgia’s health care challenges, nor is it the most economically efficient way to do so.”

Lewis has called the program a “silver bullet” that has been immensely helpful to small-town hospitals.

But he has also expressed concern about the lack of transparency in the program. Lewis said his group — and lawmakers for that matter — don’t know who the donors are, what individual hospitals received, how the $60 million was divvied up, and which hospitals wound up getting nothing from the program.

Officials in Georgia’s Department of Community Health — which houses the Office of Rural Health — said they don’t keep a running list of hospitals that have gotten the donations or how much those hospitals have received. By law, the DCH is scheduled to report that information to the General Assembly next spring, they said.

The tax credit cap — $60 million — was hit after the General Assembly this year passed legislation giving donors a dollar-for-dollar credit on their income taxes for money they give to qualified rural hospitals.

When the state launched the program, it offered tax credits worth 70 percent of a donation. It then increased the match to 90 percent. But neither of those rates had corporations or individuals rushing to sign big checks.

In 2017, before the value of the tax credit was increased to 100 percent, less than one-fifth of the cap room was used by donors.

That rural hospitals need a financial shot in the arm is no secret. At least seven have closed in Georgia since 2010. They have faced a squeeze in reimbursements for Medicare and Medicaid patients; too many people using expensive emergency rooms as their personal clinic; and poor, aging and often declining populations.

After the General Assembly approved the program in 2016, it gained some ill will from top lawmakers when a consultant began signing up rural hospitals to help them raise money. That meant a percentage of the donations intended for struggling hospitals would wind up being paid to the consultant, who maintained that the hospitals didn’t have the infrastructure to raise the money. The Georgia Hospital Association and Georgia Chamber of Commerce partnered with the consultant, Jim Kelly, and his Georgia Heart Hospital Program.

Kelly said in 2016 that he would charge hospitals 6 percent of what they receive in donations for soliciting and administering the money, which is about the same amount his student scholarship organization receives for administration.

Most of the more than 50 rural hospitals eligible to receive the donations signed up with Kelly’s group. Kelly founded the largest of the private school scholarship organizations funded by tax credits, so he has experience in such programs.

Kelly said in 2016 that he would charge hospitals 6 percent of what they received in donations for soliciting and administering the money, which is about the same amount his student scholarship organization received for administration. Angered by reports about Kelly signing up hospitals, lawmakers in 2017 cut the maximum amount outside groups could charge to 3 percent.

The private school scholarship tax credits have faced some of the same questions Lewis is raising about the rural hospital tax credit program: mainly that it provides taxpayers with limited information about where the money comes from, where it goes and who benefits.

Still, some rural medical facilities say they have benefited greatly from the hospital program. Officials at Evans Memorial Hospital in Claxton told The Atlanta Journal-Constitution in the fall that they raised $543,000, most of it from a local company that wanted to remain anonymous.

They said much of the donation money went to improving surgical and imaging services.The hospital was able to buy equipment that allowed it to expand highly reimbursed procedures, such as testing that checks ducts that drain the liver, gallbladder and pancreas.

Officials at other hospitals have talked in recent months about the donations helping them keep their doors open.

There have also definitely been winners and losers in the program.

Robin Rau, the CEO of Miller County Hospital, said her small-town southwest Georgia facility received only $2,000 from the tax credit program this year. She didn’t sign a contract with Kelly and his Georgia Heart Hospital Program, promoted by the Georgia Hospital Association. “In the long run, my hospital has paid the price for it,” she said. “I am now at a crossroads where I have to do something.”

Because Kelly and the GHA have done a strong job selling Georgia Heart, most donors associate the tax credit with his organization, she said. Rau said she has talked to donors who told her they contributed to her hospital, but they apparently instead had given to Georgia Heart.

Rau said she planned to sign up with Kelly’s group so she can put more money into patient care.

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