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

Key Points Question Is the Georgia Rural Hospital Tax Credit Program associated with the financial health of participating rural hospitals 2 years after implementation? Findings In this cross-sectional study of 136 hospitals, difference-in-differences analysis found that the tax credit program was associated with increases in program participants’ probability of reporting good or excellent financial strength, which appeared to be driven by an increase in profitability. Meaning These findings suggest that the Georgia Rural Hospital Tax Credit program has improved the financial health of participating rural hospitals.
This cross-sectional study examines the association of Georgia’s Rural Hospital Tax Credit Program with the financial health of participating rural hospitals.
Importance In 2016, Georgia implemented the Rural Hospital Tax Credit Program, which allows taxpayers to receive a tax credit for contributions to qualifying rural hospitals in the state. Empirical evidence of the program’s association with the viability of the state’s rural hospitals is needed. Objective To examine the association of the tax credit program with the financial health of participating rural hospitals. Design, Setting, and Participants This longitudinal cross-sectional study used hospital financial data from the Centers for Medicare & Medicaid Services for 2015 to 2019. A difference-in-differences analytic approach was used to examine the association of the tax credit program with rural hospital financial health. Study participants included Georgia rural hospitals eligible to participate in the program. Comparison hospitals were selected from the southern states of Alabama, Florida, Mississippi, North Carolina, South Carolina, and Tennessee. Exposures Hospital participation in the Georgia Rural Hospital Tax Credit Program. Main Outcomes and Measures The primary outcome of the study was financial health measured with total margin, days cash on hand, debt-asset ratio, and average age of plant as well as a Financial Strength Index (FSI), which combined the previous measures to assess overall financial strength. Results The analytical sample included a balanced panel of 136 hospitals, with 47 Georgia Rural Hospital Tax Credit Program participants (18 [38%] critical access hospitals; 5 [11%] system affiliated; mean [SD] bed count, 60 [47]; mean [SD] Medicare inpatient mix, 52% [16]) and 89 comparison hospitals (43 [48%] critical access hospitals; 24 [27%] system affiliated; mean [SD] bed count, 52 [41]; mean [SD] Medicare inpatient mix, 67% [18]). Two years after implementation, program participation was associated with a 23% increased probability of good or excellent financial health (b = 0.23; 95% CI, 0.10-0.37; P