Rural Georgia hospitals see few benefits, so far, from tax credits


State lawmakers thought they’d found a way to help struggling rural hospitals by offering $180 million in tax credits to Georgians willing to donate to them, but the program has gotten off to a slow start.

The state allocated a third of the tax credits for this year and legislators passed a bill increasing incentives to donors, but by mid-September, only a little more than $3 million had been spoken for.

“We are extremely disappointed,” said Jimmy Lewis, the CEO of Hometown Health, a coalition of rural hospitals. “For the value to rural hospitals that are in trouble, this could have been an excellent source of operating revenue. The enthusiasm is just not there.”

Former state Rep. Geoff Duncan, a Cumming Republican now running for lieutenant governor who sponsored the program, said it got off to a “false start” in part because the initial law only gave donors a tax credit worth 70 percent of their donation. That was changed to 90 percent during the 2017 session.

“My assessment is that the program needs a shot of adrenaline,” Duncan said.

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 like their personal clinic, and poor, aging and often declining populations.

In addition, hospital officials are worried about the current debate over federal spending since many of those receiving services in their facilities are on government health care programs for the poor, disabled and senior citizens.

A tax credit directly reduces what someone owes. Under the law, individuals can get a tax credit worth up to 90 percent of what they donate to the hospital of their choice, or $5,000, whichever is less. Corporations can get a tax credit worth 90 percent of their contribution, or up to 75 percent of their income tax liability.

“It was never meant to be a full-scale solution to the problems of rural hospitals,” Duncan said. “It was always meant to be another tool in their toolbox.”

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 meant 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.

Most of the about 50 rural hospitals eligible to receive the donations signed up with the consultant.

One that didn’t was Evans Memorial Hospital, and the Claxton facility in southeast Georgia has been an early success story of the tax-credit program.

Lisa Ryles, the director of business development at the 49-year-old hospital, said it has raised $543,000, most of it from a local company that wanted its donation to remain anonymous.

The county has a population of about 10,000. Studies suggest that is too small to sustain a hospital, but it’s an important part of the community. So officials try to recruit patients from neighboring counties to their hospital.

Nikki NeSmith, the hospital’s CEO, 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 ERCP tests that check ducts that drain the liver, gallbladder and pancreas. That, in turn, has made it easier to attract patients.

Evans Memorial officials went out on their own, beginning last year, to recruit potential donors, and they are continuing to work to find financial help through the program. To local employers, they are emphasizing the importance to their workers of keeping the hospital doors open.

“We are very encouraged,” NeSmith said. “Had we not gotten that $500,000, we might not be here today. It was very important to our survival.”

While the program has gotten off to a slow start statewide, supporters note that it also took time for a similar private school scholarship tax credit — started in 2008 — to become popular. Now private school scholarship tax credits are usually spoken for on the first day they are available.

Ethan James, the executive vice president for external affairs at the Georgia Hospital Association, said his group is optimistic about the program’s future.

“This program is making a difference for rural hospitals,” he said. “Every dollar is important.”

Lewis, too, said he is hoping to see some of the state’s “big boys” — large companies in Georgia — begin donating to rural hospitals.

“They have not stepped out there just yet,” he said, “but we have had some discussions with big donors.”


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