A consulting firm criticized over its contracting with rural hospitals on a new state program said Monday it will donate any net income from that work to charitable groups supporting rural health care.
The firm, Portage Charity Advisors, created the Georgia HEART program to help struggling rural hospitals gain donations from individuals and companies under a new state law (originally Senate Bill 258). That law, widely watched in the hospital industry, allows people and businesses to get tax credits for donating to rural Georgia medical facilities.
The consulting arrangement involving Georgia HEART has been criticized by some key state lawmakers, who questioned the need for consultants to help the hospitals attract donations, and who saw a potential for advisers to collect money intended for rural hospitals.
State Sen. Jack Hill (R-Reidsville), chairman of the Senate Appropriations Committee, said in his newsletter Aug. 19 that the process would not be complicated enough to require hospitals to pay consultants to attract donations, and that the hospitals could contact state agencies or his own office if they needed advice.
And state Rep. Terry England (R-Auburn), chairman of the House Appropriations panel, said in September that “our intention [in passing the donations law] was that every dollar raised for the hospitals would go to stabilize them and not set up a program requiring them to hire staff or consultants in order to participate,” GHN reported.
The tax credit program aims to bolster the financial outlook for the state’s rural hospitals. Five rural hospitals have closed in Georgia since the beginning of 2013, and many more are in financial trouble.
Georgia HEART said Monday that it’s working with 32 rural hospitals to help them with marketing and with administering the contributions they receive.
Portage “has agreed to contribute its annual net income to Georgia Community Foundation, Inc., the independent Board of Directors of which is required to use the net income to support rural health care, rural hospitals, and addressing the social determinants of health in rural Georgia,’’ said Jim Kelly, director of Georgia HEART, in a statement Monday.
The net income will be distributed in support of programs operated, supported or recommended by the Georgia Rural Hospital Stabilization Committee, the Rural Healthcare 180 Task Force, the Healthcare Georgia Foundation Two Georgias Initiative, and the Georgia Hospital Association Center for Rural Health, Kelly added.
The foundation board will have final approval over all expenses relating to the Georgia HEART program, including compensation, rent, travel, and other operating and capital expenditures, he said.
The board members also are on a board of the Georgia GOAL Scholarship Program, which was founded by Kelly. That’s a program that uses a similar tax credit program for attracting scholarship funds for private schools in Georgia.
Kelly said in an email Monday to Georgia Health News that “I wanted to assure Georgia HEART participating hospitals and lawmakers that, though Portage Charity Advisors Inc, is a for-profit consulting firm, it intends to operate in a manner that prioritizes addressing the health care needs of the residents of rural communities and the hospitals that serve them.”
When asked about criticism of the consulting set-up, Kelly said that “although it appears that only a few Georgia lawmakers expressed concern about consulting firms helping rural hospitals navigate the SB 258 tax credit program, to the extent possible, it is important to avoid any public criticism that might interfere with the success of this opportunity for rural hospitals.”
He said that, as an estate planning and tax attorney, he created the Georgia Community Foundation in 1991 to promote and support charitable and educational activities throughout Georgia. “In all but two cases, the Board of Directors of GCF and Georgia GOAL Scholarship Program, Inc. are the same,” he told GHN.
Under the rural tax credit program, donations of up to $4 million to an approved hospital will be eligible for the tax credits, which will be awarded on a first-come, first-served basis. The statewide cap of tax credits will be $50 million in 2017, $60 million in 2018, and $70 million in 2019. The program is set to expire after three years.
The proposal to donate net income funds to rural hospitals “is admirable and is to be praised but may fall short of full accountability to the taxpayers of Georgia from which the $180 million tax credit money flows,’’ said Jimmy Lewis of HomeTown Health, an organization of rural hospitals in the state.
He called for the Legislature to require an annual audit of the tax credit monies by the state Department of Audits “to show the justifiable expenses and use of taxpayer money for rural hospitals.”
“For as much as the boards of similar tax credit programs may share same or similar membership,’’ Lewis said, the audit would show taxpayers how their tax credit money was spent.
The Georgia Hospital Association, through its subsidiary Georgia Hospital Health Services, said recently that it is working with Portage to help hospitals take advantage of the new funds.
Kelly told GHN recently that the services provided are similar to those that are offered to private schools that seek donations under the school tax credit program.
Kelly said in September that his organization “appreciates the leadership of Georgia lawmakers in passing such a vitally important piece of legislation. We are working with our participating rural hospitals in a manner that will effectively, efficiently, and ethically promote the tax credit program.”
He said SB 258 creates a similar administrative burden as does the school tax credit program, and that HEART will offer a variety of services to address donor and hospital requirements.
Georgia HEART will start out charging hospitals 6 percent of the contributions collected, he told GHN in August.