Monday, January 7, 2019
Georgia Legislative Committee Recommends Greater Transparency and Minimal Charity Care Requirements for Nonprofit Hospitals
A Georgia House of Representatives Special Committee has recommended a package of legislative changes requiring more transparency and minimal standards of charity care for Georgia nonprofit hospitals. The recommendations were prompted by concerns "about the secrecy and business practices of some nonprofits that operate Georgia hospitals, especially the nonprofits that run hospitals owned by public hospital authorities," according to this Atlanta Journal Constitution article. The AJC article describes a six year legal battle centering around Northside Hospital, Inc. Although the hospital makes its 990s public as required by federal law, it has stubbornly refused to release other documents under Georgia's public records law even though the hospital is a "publicly-owned facility" under Georgia Law. Proponents of the recommended measures are concerned with the higher than average compensation paid to Northside's CEO and its financial interactions with private businesses. After public records request for the CEO's employment contract proved unsuccessful, proponents for more nonprofit transparency went to the legislature in 2017. After two years of meetings and study, the Georgia House of Representatives Rural Development Council issued a report containing the following finding and recommendations:
[T]here is a lack of transparency for financial and community standards of care that must be addressed to promote equitable competition and ensure that tax dollars, tax credits, and tax exemptions are being used appropriately to subsidize care being delivered in non-profit hospitals.
. . .
- Establish an indigent and charity care requirement for non-profit providers based on a rolling two to three year average of the state’s individual hospital average, currently 7.35%. The indigent and charity care requirement for for-profits shall be the rolling two to three year average of the state’s individual hospital average less 3%.
- Establish an indigent and charity care licensing requirement for a single specialty destination hospital of 10% or the state average, whichever is higher.
- Failure of any hospital to meet the indigent requirement will be sanctioned with a 1% fine of net revenue for every .5% of the indigent care requirement not provided. Reporting
- To ensure commensurate and consistent reporting between hospitals, the hospital and the Department of Community Health shall utilize the most recent and already required and audited federal form 990 and federal form 990 Schedule H for each hospital. This shall be readily available and prominently displayed on each local hospital’s main web page as well as the Department’s. From July 1, 2019 forward, these reports shall be posted annually and shall remain posted in subsequent years. The Community Benefit and DSH surveys shall also be posted on the local hospital website annually and hospitals shall notify the local legal organ of newly posted reports. If reports are not posted within 30 days of the report due date, payment of any and all state funds shall be suspended, including participation in the Georgia Rural Hospital Tax Credit Program.
o Use of the hospital provider fee as an offset to indigent care shall be clearly noted.
- Non-profit hospital systems shall also post for the system as a whole, the same reports listed below as required for the individual not-for-profit hospital.
- Non-profit hospital reporting will also include a listing of the properties the hospital owns, the book and estimated fair market value of those properties, and the value of the property tax exemption for each parcel.
o County tax commissioners shall review the assessed value of vacant properties that do not contribute to the core mission of a hospital and ensure that property taxes are being paid until the parcel is developed to support the mission of the hospital.
- Non-profit hospitals will report and post on their main website any ownership or interest in a joint venture, any business venture foundations, operating contracts, partnership(s), subsidiary holding company or companies, or interest in a captive insurance companies, and if so, where that entity is domiciled as well as the value of each of these holdings.
- Non-profit hospitals are expressly prohibited from purchasing, maintaining or holding Medical Use Rights.
- Since county governments are ultimately responsible for any debt incurred by a hospital authority in the event of default, the non-profit hospital shall post on its website any bonded debt or outstanding loans and the terms of such bonds and loans.
- Non-profit hospitals shall post on their main website the total salaries and compensation packages for executive leadership positions.
- Clarify in statute that any and all operating subsidiaries of the hospital authority owned hospitals and foundations are subject to any and all open records requirements.
Darryll K. Jones