Evans Commissioners Mulling Additional Loan to Evans Memorial Hospital

The Evans County Commissioners are weighing whether or not to allow Evans Memorial Hospital the ability to utilize excess funds in the debt service account to pay down the $1.3 million Accounts Payable (AP) balance.

The Problem

The proposition was brought to Commissioners at the June meeting. A letter from Evans Memorial CEO Nikki NeSmith and CFO John Wiggins was provided to the Commissioners, as well as AllOnGeorgia and offers more specific details on the request. An affirmative vote to allow the hospital to pay down the accounts payable would mean the hospital would be borrowing the excess funds to pay down their own debt. Evans Memorial is requesting $700,000 because the 2006 bonds on the hospital require that the reserve fund equal $484,600 on December 31, 2018. Currently, the balance is at $1.3 million with almost $600,000 of the money over 120 outstanding.

The problem is that accounts payable continue to accrue, especially with lacking and mediocre Medicaid reimbursements and patients who never satisfy their financial obligations owed to the hospital. Much of it is outside the control of the hospital itself. As County Administrator said, “One hiccup and they’re back where they were.”

The hospital says they would pay the funds back over a five-year period using money collected from the rural hospital state income tax credit. The hospital estimates a minimum of $150,000 each year in repayments. The bonds held by the county are a secured debt while the accounts payable debt is an ‘unsecured debt,’ and the rural hospital credit does not allow for the usage of funds on unsecured debts.

You can read the letter in its entirety below.

The Details

Time is of the essence on the matter, but Commissioner Irene Burney and County Attorney Jay Swindell were both absent from the meeting Tuesday, and Commissioner Jill Griffin said the full board needs to be present for vote of this magnitude. The hospital cannot take action on the accounts payable until the Commissioners vote. Griffin also said that she and Commissioner Del Beasley met with representatives from the hospital. She said the current administration at the hospital is doing a great job working to be diverse in finding ways to bring in money.

“What they’re asking is to borrow,” Griffin said. “We’re already paying the bond. That’s something that we are doing every month. They are asking to borrow money from this excess so they can pay down the AP.”

County Administrator Casey Burkhalter asked Griffin and Beasley to explain where the excess $700,000 in the bond account originated from, which Beasley answered.

“$700,000 was added to the bond funds when the nursing home was sold in Glennville. That was part of the stipulation for the County Commissioners to agree to upon the sale of the nursing home,” Beasley said.

“We don’t want to be like any of our neighboring counties and continue to build up the debt and be a burden on taxpayers, but we also need to consider the fact that if our hospital closed, what that would mean for us. A lot of people don’t understand that it would cost us a tremendous amount of money even after the hospital closed,” Griffin told fellow Commissioners.

Burkhalter told Commissioners he didn’t feel like the letter provided enough detailed information for an informed decision. He said they needed more information on where exactly and how the money would be paid back. Burkhalter said Commissioners needed time to “be creative” with the options.

A resident spoke out at the meeting Tuesday night saying, “That $700,000, whatever portion they’re wanting to be used to service other debt, if that’s earmarked for debt we already have today, they are already having difficulties paying back debt that they’ve already guaranteed that they’ll pay …then why should the county set money aside that we already have to pay a bond that we have to pay and take a chance on that not being repaid by the hospital? We stand a chance to lose money that we already have to pay. Why can’t we just say ‘I’m sorry that you have this situation, but this money is for servicing this bond payment and that’s where it’s going to go.”

Of the 26 states that have seen at least one rural hospital close since 2010, those with the most closures are located in the South, according to research from the North Carolina Rural Health Research Program. Nationwide, 83 rural hospitals across the country have shuttered their doors since 2010, six of those being in the Peach State. The shuttering of a hospital in a rural community has proven to be grossly detrimental to the overall well being of the community.

The Rural Healthcare Tax Credit & Evans County

In 2016, Georgia passed the rural hospital tax credit, which allows Georgia taxpayers and C-Corporations that donate funds through the Georgia HEART Hospital Program to those rural hospital systems that qualify and receive a 100% tax credit. Each hospital is eligible for up to $4 million in credits, meaning Evans Memorial could receive $4 million worth of donations from people and businesses in the community before donors would no longer be eligible to receive the tax credit. (All on the condition that donors apply for the credit before the $60 million cap is reached each year).

Example: On July 1, 2018 and provided the relevant caps have not been reached, any individual donor that made or makes a donation from January 1, 2018 until June 30, 2018 will be allowed 100% of the donation that was used to arrive at the amount of credit allowed during that period (up to $11,111 for a married filing joint taxpayer and $5,556 for all other individual taxpayers). After June 30 of each year, there will not be maximum credit limits on non-corporate contributions to rural hospitals in the event that the $60 million annual cap on credits is not met.

In December 2017, the Department of Community Health ranked Evans Memorial No. 14 in “financial need” for the rural healthcare tax credit program, in line behind 13 others, mostly south of Macon.

“As you know, this is an ongoing issue. Rural hospitals throughout Georgia are struggling and closing. This is nothing new. Our hospital has been to us before and basically, they’re in a position right now, and said that if it weren’t for the tax credit donations they’d already received, they probably wouldn’t be open. So those donations have certainly made a difference,” Griffin said. She said there needs to a public awareness session about the benefits of the tax credit available. “Perhaps we can have a town hall.”

Evans Memorial was featured in the Atlanta Journal-Constitution last year as the top benefactor of the rural hospital state income tax credit, when other hospitals weren’t receiving much.

No meeting date has been set, but AllOnGeorgia will make available the information for the special-called meeting when it becomes available.