2017-11-09 / Front Page

Wills Memorial Hospital considers referendum for guidance in deciding tax increase question

editor and publisher

Wills Memorial Hospital may soon ask the Wilkes County Board of Commissioners to call for a referendum which would ask voters whether they would support an additional three mills of tax to provide an annual subsidy of about $1 million for the hospital.

The move comes as budget constraints and cash flow are becoming more and more critical at Wills Memorial primarily due to a serious drop in in-patient census rates, government and insurance restrictions, and unfunded mandates dating back as much as 30 years. And while there seems to be no imminent threat that the hospital will have to close, that possibility does exist in the future if the financial position of the hospital does not improve.

Representatives of Wills Memorial pleaded their case to members of the Board of Commissioners in a series of three nearly identical presentations held last Friday at the hospital. Less than a quorum of both the Board of Commissioners and the Wills Memorial Hospital Authority was present at each of the meetings in order that none could be considered an “official” meeting requiring public notification. The meetings were held “just for the exchange of information” and not for any action to be taken.

Hospital representatives are of the opinion that such a referendum would serve as an indicator of public opinion for the commissioners, allowing them to make an informed decision. Nothing would be binding and the final decision would have to be handled by legislative representatives in the Georgia General Assembly. Commission Chairman Sam Moore pointed out that those representatives would not consider taking action unless the local board is 100 percent in favor.

Further, it would still be more than a year before the hospital would see any monetary relief.

Commissioners question whether property owners in the county could bear the additional tax and Moore pointed out that three mills would be a 25 percent increase in the county’s portion of the total millage rate. Hospital estimates in the presentation said that for a $100,000 home, the increase in tax would amount to about $120.

Moore suggested that a better solution would be the institution of a special sales tax for rural hospitals, but that would also take action by the General Assembly. “I really wish they could get some help from the state,” he said, “maybe some help with that loan.” He was referring to the loan which paid for the recent Reconstruction Project. It carries a relatively high interest rate and its gross payment is some $118,000 per month.

Since 2008, according to the presentation, Wills Memorial Hospital’s net income was $740,000. That has declined and is now a loss in 2017 of $1.1 million.

Also since 2008, the average daily census has been cut more than in half partly because of government regulations and restrictions making it harder for physicians to admit patients and also harder to keep patients in the hospital. Another reason for the drop is that Dr. Kuppaswamy stopped admitting patients due to his own health issues prior to his death. That daily census reached a high point of 19 in 2011 but has now plummeted to 8.4 since May of this year.

However, net operating expenses have increased only slightly in the last 10 years thanks to the efforts of hospital administrators who have found ways to manage those expenses.

The lease-back transaction with the Payroll Development Authority in 2016 added about $500,000 to the hospital’s cash reserves, according to CEO Tracie Haughey. “However, in June of this year our in-patient census started plummeting again and with accounts payable so high at that time, we began having significant cash flow problems,” she said.

Additionally, Wills Memorial provides a tremendous amount of uncompensated care which has grown to a total of almost $1.8 million for this year. But at the same time, state and federal subsidies from the Indigent Care Trust Fund have been cut more and more each year. “The net amount the hospital had to absorb in 2008 was under $500,000,” Haughey explained.

“Compare that to 2017 when we had to absorb over $1.6 million. Unfortunately the state and federal subsidies will more than likely continue to be cut. So, is this a black hole? As long as we have to continue giving free care, which we are mandated to do, yes,” she continued, answering her own question. “The question then becomes, can we get some help to offset the cost in order to keep the hospital in the county?”

Later in the meeting Moore bemoaned that fact that rural counties and rural hospitals are shortchanged by the state in many ways and for many years. “Urban areas don’t face the same problems that we face,” he said. “Everything is against rural areas. Columbia is going to get a new hospital that the state is going to fund. And we’re talking about the state cutting funds to rural hospitals – they’ve done it for the last 15 years – but they turn around and build a new hospital and it doesn’t matter what it costs. And then we’ve got to compete, in a rural area, against something like that.”

Moore further suggested that it should not be the burden of property owners but that the state should come up with a way to help fix these rural hospitals. (And as it turns out, Rep. Tom McCall, who represents part of Wilkes County, attended a meeting on that subject Tuesday of this week.)

“I am 100 percent for the hospital and I would hate to see it close,” Commissioner Clem Slaton said. “At the same time, as commissioners, we are pulled both ways. We have taxpayers who would want to lynch us if we go up on taxes.”

“We’re asking for you to let the people speak,” Director of Nursing Angie Radford said, “because truly, if the people of Wilkes County don’t want this hospital here, or if they don’t care if it’s here enough that they would have to have their taxes raised, that’s what we need to know. It’s a constant battle dealing with this day to day.”

“A one percent sales tax is the way to go,” Slaton interjected. “Everybody pays that.”

Moore suggested that the County Commission might not be 100 percent in favor of a referendum to consider an addition to property taxes, but that he thought everyone would be in favor of a new sales tax. He also indicated that the time frame for receiving funds could, possibly, be about the same.

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