‘-by Ryan Sprinkle
The month of April typically marks the end of many states’ legislative sessions for the year. Budgets have been decided. Bills have been passed. Legislative accomplishments are heralded. In Georgia, the state legislature concluded its 2017 legislative session by amending the 2016 session’s Georgia Rural Hospital Tax Credit Program (GA RHTC).
The GA RHTC program allows individuals and corporations to make charitable contributions to financially stressed rural hospitals in the State of Georgia, as determined by the State’s Department of Community Health, and to receive a tax credit reflecting a percentage of their contribution. This year’s bill amending the 2016 law increased the tax credit from 70 percent to 90 percent of the actual amount given to an approved hospital, subject to certain individual credit limits for individuals or couples making the contribution and an aggregate limit of $60 million across the state.
Since 2010, 80 rural hospitals across the US have closed, including six rural hospitals in Georgia. The GA RHTC is a policy intended to provide Georgia’s financially stressed hospitals with the resources they need to avoid closing, and those individuals and organizations involved in developing and passing the GA RTHP should be commended.
However, with a statewide cap on the program at $60 million and 49 hospitals qualifying for support in 2016, the GA RHTC’s effectiveness in providing these stressed hospitals with the resources they need reminds me of Clark Griswold’s attempt to plug a hole in the Hoover Dam with a piece of bubblegum in the movie Vegas Vacation. The tax credit money may stem losses temporarily in a given year, but if the underlying structural problems causing the leaks are not addressed, the result is certain disaster.
Increasingly, my colleagues and I find ourselves working with financially distressed hospitals across the country. For many of these client hospitals, a conflux of market and policy changes have eroded operating and financial performance, jeopardizing the organizations’ long-term viability. In such circumstances, appreciating what strategic options are available to your organization and developing an organizational turnaround plan are of paramount importance. If your healthcare organization is experiencing some level of stress or distress, let’s have a conversation while the bubblegum is still holding.
Let me share that Stroudwater is sponsoring the Rural Healthcare Symposium in Athens, Georgia on Friday, April 21. One of my colleagues, Scott Goodspeed will serve as a panelist during the “Distressed Provider Outlook” session, which should provide excellent commentary on the operational and legal strategies available to distressed hospital organizations. I hope to see you there.
Past Healthcare Hunger Games Blogs
Ryan Sprinkle is a consultant at Stroudwater and a licensed (but recovering) attorney. He invites you to send him questions or topics related to federal and state health care policy to be discussed in this ongoing blog series. He can be reached via email at firstname.lastname@example.org or by phone at (770) 913-9046.