by Brenée Goforth
Communications Associate, John Locke Foundation
As many as 20 rural hospitals in North Carolina could soon see relief from impending insolvency, according to a recent story written by Carolina Journal’s Dan Way. Way reports:
The Rural Health Care Stabilization Act, the first state program of its kind in the country, would create a revolving loan fund at below-market interest rates with flexible repayment terms.
The program would use state General Fund money to keep small hospitals afloat in Tier 1 and Tier 2 counties, which are the most economically distressed.
…To qualify for a loan, a hospital must show it’s within three years of closure based on revenue and existing sources of funding. Requirements include a detailed plan outlining the types of services to be provided, and sustainability measures to ensure survival. The money could be used to build a smaller hospital, or in some cases upgrade an existing facility.
Interest rates would be decided on a case-by-case basis, as would payment terms. In the most dire circumstances, a hospital might make no initial payments, or pay no interest for several years.
Senate leader Phil Berger, R-Rockingham, and Sen. Jerry Tillman, R-Randolph, introduced the bill June 20. Legislatives staffers estimate between 15 and 20 rural hospitals could benefit from the bill, as those hospitals could be facing insolvency in the next five to seven years. However, not everyone is on board with the bill, Way writes:
Senate Minority Leader Dan Blue, D-Wake, came out swinging against the proposal the day the bill was introduced.
“This bill is a weak fix to a growing problem; and it is little more than an 18 million dollar government bailout for one rural hospital,” Blue said in a news release.
That was a likely reference to Randolph Hospital in Asheboro, which is in Tillman’s district. It has been losing money, and overtures to many larger hospitals to acquire or partner with it have failed. It already has been putting together a package and would be ahead of the curve in applying for a loan under the new program.
The bill was most recently referred to the Senate Rules and Operations Committee.