Tax credit intended to lure donations for rural hospitals
Published 6:00 am Sunday, May 15, 2016
ATLANTA — Dozens of rural hospitals — many struggling to keep their doors open — could see millions of dollars in donations if a new tax credit works as hoped.
Rep. Geoff Duncan said the program, which extends tax credits to donors to rural hospitals, taps into “the four Cs” — churches, charities, corporations and citizens.
The program will prompt communities to help solve the healthcare crisis, instead of relying on government to bail out the local hospital, he said.
“You don’t just get their money,” said Duncan, an Atlanta-area Republican who sponsored the measure. “You get their attention.”
As many as 50 hospitals may be eligible. A spokesman for the state Department of Community Health, which will approve a list of those hospitals, said the agency is still reviewing the legislation.
But critics say there are more efficient ways to help rural hospitals, and they question whether rural communities even have the resources to make a difference.
Under the program, non-profit hospitals in the state’s smallest counties will be eligible for up to $4 million in donations annually.
“That’s the difference between make-and-break for most of them,” said Rep. Jason Shaw, R-Lakeland, who leads the legislative rural caucus and whose local hospital, the Lanier campus of South Georgia Medical Center, will likely qualify for the program.
The program gives donors — individuals or businesses — a tax credit as an incentive to contribute.
Many rural hospitals are overwhelmed with large numbers of uninsured patients or those with Medicaid, the government health insurance program for the poor that does not cover all costs.
These hospitals have shed services such as labor and delivery units, or closed over the last few years.
Others still struggle to stay afloat.
Statewide the tax credit could attract $250 million in new funding for rural healthcare over the next three years, Duncan said.
The state, meanwhile, would forego $180 million in tax revenue.
There is a more efficient way to use that money, said Timothy Sweeney, deputy director of policy with the left-leaning Georgia Budget and Policy Institute.
Putting $180 million into a grant program for hospitals with the greatest need would have more impact, he said.
Instead, a tax-credit relies on the whims of donors and doesn’t allow the state to prioritize which hospitals get the money.
Nor will hospitals in dire straits likely have the fundraising capacity to court would-be donors.
“The hospitals that need the most help may be the least able to take advantage of this idea,” he said.
Healthcare systems such as South Georgia Medical Center in Valdosta have active fundraising arms.
The South Georgia system’s foundation can use the tax credit to help raise funds for its campus in Lanier County, which likely will be on the list of eligible hospitals. About 10,000 people live in Lanier County, just northeast of Valdosta.
Other campuses in Clinch and Berrien counties could also qualify, according to a Georgia Hospital Association spokesman.
The South Georgia Medical Center foundation has raised about $3 million over the last five years to build facilities and pay for equipment and services. But needs continue to exceed resources, said system spokesman Johnny Ball in a statement.
It would be “a happy day in South Georgia,” he said, if the tax credit attracted an infusion of donations.
Duncan is so sure this joyous day is ahead that he believes the tax credit will dull the argument for Medicaid expansion.
“This has the potential of taking Medicaid expansion off the table here in Georgia,” he said.
Not so fast, said House Minority Leader Stacey Abrams, an Atlanta Democrat who has championed the program’s expansion.
Abrams said the tax credit, by itself, is the equivalent of “trying to put out a forest fire by borrowing a hose from your neighbor.”
“It will help someone, but it is not nearly sufficient to address the scope of the problem,” she said.
She’s concerned that a “modest impact on someone’s hospital” would allow decision makers to “ignore the larger and much more complicated issue that Medicaid expansion addresses.”
Expanding Medicaid would provide health insurance to hundreds of thousands of low-income Georgians. It also would give Georgia access to billions of dollars in federal funding.
But Republicans including Gov. Nathan Deal have said an expansion is too costly in the long run because the state will gradually assume its costs.
Sweeney said problems that plague rural hospitals will persist without Medicaid expansion, or some other solution for the high rate of uninsured Georgians.
“It’s certainly great if this program helps stem the tide of hospital closures,” he said. “But if the people in those communities who don’t have health insurance still don’t have access to healthcare services, then all this has done is help people who already heave health insurance.”
Shaw acknowledged that the tax credit does not solve the state’s healthcare woes.
Still, he said it is the best thing that has been done for rural hospitals to date.
“The biggest issue, quite simply, has been money, and this is a substantial amount of money that will go to rural hospitals, especially the ones that are barely hanging on,” he said.
Jill Nolin covers the Georgia Statehouse for The Valdosta Daily Times, CNHI’s newspapers and websites. Reach her at jnolin@cnhi.com.
About the Hospital Tax Credit
• Donors must be pre-approved by the Department of Revenue.
• Individuals and married couples are eligible for a maximum tax credit of $2,500 and $5,000, respectively.
• Companies can qualify for a tax credit up to 70 percent of the amount given, or 75 percent of a corporation’s income tax liability, depending on which is less.
• The Department of Community Health will approve a list of eligible hospitals. As many 50 could qualify.