Georgia Rural Hospital Tax Credit: Perspectives of Rural Health Executives

Abstract

Purpose In 2016, Georgia implemented a rural hospital tax credit program through a legislative mandate that allows individuals and corporations to donate to qualifying rural hospitals in exchange for state income tax credit. The study examines the importance, success, and challenges of the program, and opportunities for improvement, from the perspective of Georgia rural hospital executives. Methods The study was a qualitative study using data from key informant telephone interviews with 21 hospital executives and administrators of eligible rural hospitals. Findings Hospital executives described the program as a valuable lifeline for struggling rural hospitals and an instrument for community engagement. They provided recommendations for legislative and programmatic modifications to ensure stability, transparency, and accountability. Conclusion Results highlight the popularity of the program among rural hospital leaders, but they also identify potential areas for improvement. The findings of the study can inform policy‐making efforts targeted at improving the nation's rural health infrastructure.

Assessment of the Financial Health of Rural Hospitals After Implementation of the Georgia Rural Hospital Tax Credit Program

“…A previous study of Georgia rural hospital executives 8 noted decreases in donations in program (calendar) year 2019 compared with 2018 levels as the federal tax credit reform went into effect. 8 Donations decreased by approximately $10 million ($59.5 million in 2018 vs $49.4 million in 2019). 20 Because of the misalignment between the Rural Hospital Tax Credit Program year and most hospitals’ fiscal years, these declines will most likely be reflected in fiscal year 2020 hospital cost-report data.…”

“…7 Recent evidence suggests that Georgia's Rural Hospital Tax Credit Program may help struggling rural hospitals in the state. A previous qualitative study of the program 8 reported favorable perceptions about the program among Georgia rural hospital executives, who described the program as an important lifeline, especially for severely struggling hospitals. They reported investing donations from the program directly into hospital operations and growth efforts, including servicing debt, supporting service expansion efforts, and investing in technology and capital infrastructure.…”

“…They reported investing donations from the program directly into hospital operations and growth efforts, including servicing debt, supporting service expansion efforts, and investing in technology and capital infrastructure. 8 While this qualitative study represented an initial attempt to assess how the tax credit program has affected rural hospital viability, empirical evidence is needed. As we advance discussions on how to improve the financial health of rural hospitals, especially after the potentially adverse financial impact of the COVID-19 pandemic, 9 evaluations of state programs geared toward building sustainable rural health infrastructure, such as this, may add valuable insights to the ongoing dialogue.…”

“…With the elimination of itemization, charitable donations become less beneficial for some taxpayers. A previous study of Georgia rural hospital executives 8 noted decreases in donations in program (calendar) year 2019 compared with 2018 levels as the federal tax credit reform went into effect 8. Donations decreased by approximately $10 million ($59.5 million in 2018 vs $49.4 million in 2019).…”

“…8 Future studies may be needed to comprehensively assess the impact of the program on rural bypass behavior and hospital operational profitability.Additionally, given that the success of this program may be pivoted on taxpayer donations, future studies may be warranted to assess the sustainability of the program given recent changes in federal tax laws. The ability to claim both state tax credit and federal charitable deductions (what is known as double dipping) made the Rural Hospital Tax Credit Program attractive to taxpayers, especially high-income earners who faced an alternative minimum tax (AMT) 19.…”