2016 Capital Needs Survey - Healthcare Georgia Foundation · Healthcare (FQHCs), the Georgia Rural Health Association (RHCs, others), the Georgia Association of Community Service

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2016Capital Needs Survey

Presented by

EXECUTIVE SUMMARYThe 2016 Capital Needs Survey of health providers in Georgia was conducted to inform Healthcare Georgia Foundation of the financial status and borrowing capacity and needs of health providers affected by the problem of the “Two Georgias.”

The Foundation’s Two Georgias Initiative is designed to improve rural healthcare in Georgia and reduce health disparities between urban and rural settings. Along with the Foundation’s traditional grantmaking function, The Two Georgias Initiative will explore alternative funding mechanisms to support the continuous and demanding capital needs of qualifying health providers.

In addition to quantifying the needs of eligible providers, this survey also aimed to identify how such providers would deploy additional funding. The Foundation recognizes the need not just to subsidize rural providers but also to collaboratively develop a roadmap for sustained financial success in a changing environment.

Methodology

Boling & Company Healthcare Consultants distributed the electronic survey to recipients comprising five categories: rural hospitals in counties with 35,000 people or fewer; Federally Qualified Health Centers (“FQHCs”) in counties outside of the Atlanta Regional Commission; Rural Health Clinics (“RHCs”), community service boards (“CSBs”) in counties outside of the Atlanta Regional Commission; and charitable clinics (“CCs”) in counties outside of the Atlanta Regional Commission.

The target sample extended evenly throughout Georgia’s 11 non-Atlanta “Regional Commissions” as defined by the Georgia Association of Regional Commissions. This even distribution was accomplished through direct, targeted outreach a long with recurring association-wide notices through organizations and advocacy groups: the Georgia Hospital Association Center for Rural Health (rural hospitals), the Georgia Association of Primary Healthcare (FQHCs), the Georgia Rural Health Association (RHCs and others), the Georgia Association of Community Service Boards (CSBs), and the Georgia Charitable Care Netowrk (CCs).

The final sample included 49 respondents representing over 135 physical locations throughout Georgia.

For purposes of the survey, the Foundation and the survey authors defined “capital,” as used in “capital needs” or “capital projects,” as follows: “long-term investments that aim to generate revenue and often require financing.”

Findings: Financial status

The survey findings confirmed many common perceptions about the dire state of rural healthcare in Georgia. This bleak picture underscores the urgent need for financial support among the state’s rural health providers.

Overall, roughly a third of all participants pegged their current “days cash on hand” at fewer than 25 days, a manageable but extremely vulnerable position. (Q7) For hospitals, that number is nearly half. Charitable clinics, FQHCs, and CSBs, which reported a relatively high percentage of non-paying patients but also a unanimous receipt of grants and donations, (Q4, Q5) fare comparatively well in terms of cash on hand, with all three boasting more than 75 days cash on hand among at least 31 percent of respondents. Twenty-nine percent (29%) of charitable clinics indicated having more than 150 days cash on hand.

2016 Capital Needs Survey 2

The average debt among all respondents was $4.9 million, but this amount is heavily weighted toward indebted hospitals, with Critical Access Hospitals reporting the highest average debt of $11 million. (Q10) FQHCs reported an average debt of $89,278, while CCs had an average debt of just $19,429 with 86 percent reporting no debt at all.

Findings: Capital needs and capacity

Naturally, the capital needs of providers will vary based on size and scope of services offered. That is, a charitable clinic offering lower-acuity services in a stripped-down environment of care relative to hospitals will have vastly different capital requirements than do hospitals. However, through the survey findings one can glean certain commonalities and trends for purposes of shaping across-the-board grants and financing opportunities.

For example, the enormous value to respondents of between $250,000 and $1 million appears throughout the survey findings. This range constituted a plurality (35%) of responses regarding additional financing needed to fulfill capital plans (Q32); it was the amount needed by a third (33%) of respondents who said their facilities were at risk of closure and could use “X” dollars to stabilize operations (Q33); almost half (47%) of those with existing lines of credit for capital reported LOCs between $250,000 and $1 million (Q21); and $250,000 was the median reported cost of recent capital projects (past three years) (Q14).

Fifty-five percent (55%) of respondents indicated their greatest barrier to capital financing was the “risk of additional debt,” while only 23 percent said such barrier was their failure to meet solvency requirements (Q31). This suggests creative loan structures and arrangements with third-party guarantors may alleviate the sense of caution among rural providers seeking financing.

As for uses of capital financing, the most commonly reported recent and planned capital projects were traditional in-frastructure improvements such as construction and physical expansions. (Q14, Q16, Q23) However, respondents also showed a willingness to explore non-traditional capital projects such as the service-expanding potential of telemedicine (Q23, Q36), and forward-looking population health management (Q35, Q36), both of which received majority support in multiple instances. Overall, 56 percent of respondents characterized population health as a high priority.

These results open the door for grantmakers and financiers to rethink the role of rural providers over the coming years while supporting the longstanding and essential services they provide. Without outside backing it appears likely the avail-ability of rural healthcare will continue to decline, but there is room for reasonably inexpensive and secure financing, with the potential for increased government involvement, to begin reversing this trend.

EXECUTIVE SUMMARY CONT’D


INTRODUCTIONHealthcare Georgia Foundation’s 2016 Capital Needs Survey was conducted to determine the capital needs and plans of health providers in Georgia, specifically those in underserved areas. As part of the Foundation’s Two Georgias Initiative, the survey explores how providers outside of the Atlanta Regional Commission are grappling with financial constraints in an economic and regulatory climate that many believe has left rural healthcare behind.

The Foundation has established The Two Georgias Initiative as a “place-based grantmaking program designed to achieve greater health equity among rural Georgians through the elimination of health disparities.” The goals of the initiative are:

• Achieve greater health equity among rural populations; • Improve health and healthcare for rural Georgians; • Build healthier rural communities; • Improve social conditions that impact health of rural population; • Build community, organizational, and individual leadership capacity in rural Georgia.1

The Foundation is a private, independent, non-profit organization whose mission is to “advance the health of all Georgians and to expand access to affordable, quality healthcare for underserved individuals and communities.” Through its grants, investments, and other funding mechanisms, the Foundation has and will continue to support providers and advocacy groups as they address and combat health disparities in Georgia.

“Capital” Defined

For purposes of identifying the funding needs of eligible providers, the Foundation and the survey authors defined “capital,” as used in “capital needs” or “capital projects,” as follows:

1 The Two Georgias Initiative Phase I: Community Health Partnership (CHP) & Community Health Improvement Plan (“CHIP”), Request for Proposals, http://www.healthcaregeorgia.org/uploads/files/downloads/The%20Two%20Georgias%20Initiative%20RFP%20FINAL.pdf.


long-term investments that aim to generate revenue and often require financing

INTRODUCTION CONT’D

49 respondents representing over 135 locations

5

Source: Georgia Association of Regional Commissions

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Outreach partnersGa. Hospital Association Center for Rural Health Georgia Association of Primary Healthcare

Georgia Rural Health Association Ga. Association of Community Service Boards

Georgia Charitable Care Network

*

INTRODUCTION CONT’D

This definition had the effect of including traditional capital projects such as infrastructure improvements, bricks-and-mortar renovations and the like, while also encompassing newer financial demands of health providers, such as overhauling their computer systems or maintaining state-of-the-art equipment.

Methodology

The survey authors, Boling & Company Healthcare Consultants, conducted the survey primarily through electronic means. The survey itself was available to respondents through an online portal. The following classes of entities were asked to participate:

Entities marked with a (*) were eligible to participate in the survey as long as they were outside of the Atlanta Regional Commission, regardless of county size. Note: eligibility for survey participation does not guarantee a provider’s eligibility for grants through The Two Georgias Initiative.

The target sample extended evenly throughout Georgia’s 11 non-Atlanta “Regional Commissions” as defined by the Georgia Association of Regional Commissions. This even distribution was accomplished through personal outreach along with recurring association-wide notices through the respondents’ respective organizations: the Georgia Hospital Association Center for Rural Health (rural hospitals), the Georgia Association of Primary Healthcare (FQHCs), the Georgia Rural Health Association (RHCs, others), the Georgia Association of Community Service Boards (CSBs), and the Georgia Charitable Care Network (CCs).


Special thanks are owed to the following people for helping with the distribution of the survey: Kay Floyd, Charles Owens, Chuck Adams, Duane “D.A.” Kavka, Donna Looper, Oliver “O.J.” Booker, Robin Rau, Mark Lynn, Sherrie Williams, and others whom we may have inadvertently omitted here.

• Rural hospitals (hospitals in counties with 35,000 people or fewer)• Federally Qualified Health Centers (“FQHCs”)*• Rural Health Clinics (“RHCs”)• Community Service Boards (“CSBs”)*• Charitable clinics (“CCs”)*

Table of Contents

Basic Descriptive Information about Facility................................................8

Financial Profile..........................................................................................11

History of Capital Projects.........................................................................20

Capital Plans...............................................................................................23

Sources of Financing..................................................................................25

Purposes of Capital Financing...................................................................28

Characteristics of a Capital Plan...............................................................31

Perception of Need and Capacity...............................................................35

Capital Plans Related to Population Health...............................................41


Q1: What type of facility is yours?

2+8+14+22+29+25

2016 Capital Needs Survey

Figure 1

I. Basic Descriptive Information about Facility

8

Charitable Clinics 14%

FQHCs 29%

PPS Hospitals 25%

Critical Access Hospitals 22%

Rural Health Clinics 2%Community Service Boards 8%

What Do These Terms Mean?

*Critical Access Hospitals (CAHs) are designated by the Center for Medicare and Medicaid Services (CMS) based on their distance from the next closest hospital and their bed size (25 beds and under), among other conditions.

*PPS Hospitals are not eligible for CAH status; like most hospitals they are reimbursed through CMS’s “Prospective Payment System,” where payment is based on a predetermined, fixed amount.

*FQHCs, sometimes also known as Community Health Centers, are a special class of clinics designated by CMS, offering lower-acuity services relative to hospitals and serving exclusively medically underserved areas.

*RHCs are a different class of clinics defined by CMS with geographic restrictions; RHCs are reimbursed differently than are FQHCs.

*CSBs are created under Georgia state law as safety net treatment centers for patients with behavioral health and developmental disabilities.

*Charitable clinics are non-profit clinics offering free and discounted services, often in connection with faith-based ministries. CCs are not specially designated by CMS.

Q2: What is the legal status of your facility?

25+12+59+4Figure 2

9

Not-for-Profit Corporation 59%

Hospital Authority 25%

Converted Hospital Authority to Not-for-Profit Corporation 4%

Other 12%

• C Corporation• Created by state statute • Tied to churches


HOSPITAL AUTHORITIES are quasi-governmental entities created under Georgia state law to serve the indigent sick in their respective counties and cities. Hospital authorities are allowed to “convert” into corporations (often not-for-profit); however, even such converted entities remain subject to some of the statutory requirements of hospital authorities.

Q3: Describe the governance structure of your facility.

As expected, the different types of survey respondents yielded widely differing entries regarding board structure.

Across all entity types, 39 percent of eligible respondents indicated that local governing bodies had a direct role in selecting their boards. This subset is entirely comprised of hospitals and Community Service Boards.

The board structure of Hospital Authorities is prescribed in part by Georgia statutory law,3 though there is room for flexibility in certain scenarios. Among the self-described “Hospital Authorities” that provided information as to their board selection processes, 75 percent affirmatively indicated their local governing bodies (counties or cities) had a primary role in board member selection. However, the role of local government varied within this grouping: 66.7 percent of Hospital Authorities described the city or county as “appointing” or “electing” the board members, while 33.3 percent described the city or county as simply “nominating” board members, the latter of which is often followed by confirmation by the Authority board. Only two self-described hospital authorities described the Authority board, rather than the local government, having the lead role in selecting board members.

As shown in Figure 3, when a hospital authority converts into a non-profit corporation or otherwise comes under the control of a third-party entity, the local governing body is less likely to have direct control over the board selection process. Of the rural hospitals not identified as “hospital authorities” that provided information as to their board selection processes, just 22 percent affirmatively reported local government involvement in their board selection. These hospitals provided alternative board selection arrangements such as “self perpetuating,” “self appointed,” and “consisting of [the successor entity’s] CEO, who shall in turn appoint 3 additional members (two of which are from the community) and the Chief of Staff.”

3 See, e.g., O.C.G.A. § 31-7-72.


Figure 3: Local Government - Primary Role in Board Selection

75%

22%

Hospital Authorities Converted Hospital Authorities/ Non-profit Corp.

Q4: Please identify all revenue/funding sources that apply to your facility.

Q3 cont’d: Describe the governance structure of your facility.

FQHC board governance is governed by federal law, which requires that a majority of each FQHC board be comprised of individuals who are or will be served by the health center and who represent the demographics (race, ethnicity, sex) served by the health center.4 However, these laws do not specify a method of selecting members. In this area, there is variability among FQHC respondents to the survey. Of FQHCs providing board selection information, 21 percent indicated having “nominating committees” that present candidates to be elected or appointed to the board. Two FQHC respondents noted having application / “submittal of interest” processes where members can essentially nominate themselves. One FQHC reported that “community members” nominate board members and local hospitals appoint two “hospital representatives.” In most cases the board members are ultimately approved by the existing board.

CSB board governance is largely governed by state law, and every eligible CSB respondent reported significant local government involvement in their board appointments. Charitable clinics reported a wide variety of board selection procedures, including multiple instances of local church involvement in the board selection, and one board consisting of “54 pastors.”

4 42 C.F.R. § 51c.304

Patient Services/Operating Income

Other Income Not Derived from Patient Care

Grants: local, state, federal, private philanthropy

Charitable Donations/In-kind Gifts and Services

Loans/Debt

Government Subsidies: local, state, federal 43%

51%

80%

78%

63%

86%

Figure 4

II. Financial Profile


Q5: Describe the payer mix of gross patient services revenue by percentage.

Figure 5.1: CAHs Figure 5.2: PPS Hospitals

Figure 5.3: FQHCs Figure 5.4: CSBs

Figure 5.5: Charitable Clinics

Average % of payments by each entity type

12

% of Payments out of 100% % of Payments out of 100%

% of Payments out of 100% % of Payments out of 100%

42%

26%

19%

12%

1%

51%

25%

10%

8%

6%

56%

22%

11%

10%

1%

100%

45%

24%

18%

9%

4%

9+63+16+12Q6: Does your facility have financial reserves set aside to cover operating and capital development needs for

at least a year?

13

Q5 cont’d: Payer mix

It is noteworthy that FQHCs and Charitable Clinics, which perform relatively well with regard to financial status (see, e.g., Q7), deliver high percentages of charity or indigent/uninsured care. While this may seem counterintuitive, it does speak the importance of grants and charitable donations to these types of entities. FQHCs, for example, received increased grant funding via the Affordable Care Act from 2010-2015, and that funding has been extended to this point. Nationally, federal grant funding made up 20 percent of FQHC revenues in 2015.5 This additional funding is at risk of expiring if further legislative action is not taken.

No 63%

Yes 9%

Reserves available, though not enough for a year 16%

Other 12%

Figure 6

5 Community Health Centers: Recent Growth and the Role of the ACA, Kaiser Family Foundation, January 2017, http://files.kff.org/attachment/Issue-Brief-Community-Health-Centers-Recent-Growth-and-the-Role-of-the-ACA.

Q7: How many days cash on hand does your facility currently have?

6+28+25+30+11These results present an alarming picture of the current fragility of rural healthcare in Georgia. “Days cash on hand” is a good measure of an institution’s financial stability, indicating the amount of free cash that may be spent as needed (e.g. in the case of an emergency) after accounting for a facility’s costs and expenses.

Roughly a third of all participants who responded to this question pegged their current days cash on hand at fewer than 25 days, an operable but extremely vulnerable position. For hospitals, that number is nearly half. Charitable clinics, which are funded primarily by grants and donations, perform best by this metric with 86 reporting at least 75 days cash on hand, and some reporting more than 150.

See next page for facility-type breakdown of days cash on hand...


More than 150 days 6%

75 - 150 days 28%

25 - 75 days 25%

Fewer than 25 days 30%

I’d rather not say 11%

Figure 7

Q7 cont’d: Current days cash on hand

31+31+31+730+20+5029+57+14

33+679+9+27+37+18


FQHCs

PPS Hospitals


25 - 75 days 20%

75 to 150 days 30%



75 to 150 days 31%

25 - 75 days 31%

Critical Access Hospitals


25 - 75 days 27%

75 to 150 days 9%



Charitable Clincs


75 to 150 days 57%

25 - 75 days 14%

Community Service Boards

75 to 150 days 33%


Figure 7.1

Figure 7.2 Figure 7.3

Figure 7.4 Figure 7.5

Q8: Please indicate your facility’s operating gain or loss for the last

completed business year.

0 5 10 15 20 25

$0-$100,000

$100,000-$500,000

$500,000-$2million

$2million-$5million

$0-$100,000

$100,000-$500,000

$500,000-$2million

$2million-$5million

16

18%

11%

23%

13%

GAIN

LOSS

6%

6%

21%

AVERAGE GAIN/LOSS AMONG ALL RESPONDENTS: $(1,163)

Figure 8.1

Figure 8.2

$0 - $100,000

$100,000 - $500,000

$500,000 - $2 million

$2 million - $5 million

$0 - $100,000

$100,000 - $500,000

$500,000 - $2 million


Q9: Please identify the types of debt that apply to your facility.


Q10: Please indicate your facility’s total amount of current debt, long-term and short-term combined

(excluding wages and accounts payable).

None

$250,000orless

$250,001-$500,000

$500,001-$1million

$1million-$2million

$2million-$5million

$5million-$10million






17

Long-termdebtinstrumentstofinanceopera4ons

Long-termdebtinstrumentstofiancecapitalprojects

Short-termloanstofinanceopera4on

Short-termloanstofinancecapitalprojects

Debtinvolvingbondsorgovernmentguarantees

Vendor-assistedfinancing

56%

22%

22%

22%

13%

25%

29%

17%

7%

2%

2%

10%

12%

12%

5%

5%

Figure 9

Figure 10

AVERAGE DEBT AMONG ALL RESPONDENTS: $4.88 million

Long-term debt instruments to finance operations

Long-term debt instruments to finance capital projects

Short-term loans to finance operation

Short-term loans to finance capital projects

Debt involving bonds or government guarantees

Vendor-assisted financing

None

$250,000 or less

$250,001 - $500,000

$500,001 - $1million









Q10 cont’d: Facility’s total amount of current debt


None

$500,000orless

$500,001-$1million

$1million-$5million

$5millionormore

None

$500,000orless

$500,001-$1million

$1million-$5million

$5millionormore

None

$500,000orless

$500,001-$1million

$1million-$5million

$5millionormore

None

$500,000orless

$500,001-$1million

$1million-$5million

$5millionormore

None

$500,000orless

$500,001-$1million

$1million-$5million

$5millionormore

None

$500,000 or less

$500,001 - $1 million


$5 million or more

Critical Access HospitalsFigure 10.1

PPS HospitalsFigure 10.2

FQHC’sFigure 10.3

Community Service BoardsFigure 10.4

Charitable ClinicsFigure 10.5

AVERAGE DEBT:$11.58 million


AVERAGE DEBT:$890,278


AVERAGE DEBT:$19,429

11%

44%

44%

20%

40%

40%

25%

25%

25%

25%

86%

14%

20%

10%

10%

60%

None

$500,000 or less

$500,001 - $1 million


$5 million or more

None

$500,000 or less

$500,001 - $1 million


$5 million or more

None

$500,000 or less

$500,001 - $1 million


$5 million or more

None

$500,000 or less

$500,001 - $1 million


$5 million or more

Q11: Is your facility currently able to borrow from traditional lenders without the security of a third party? If not, what entities are securing/

guaranteeing your facility’s borrowing?

Encouragingly, 64 percent of respondents indicated they are able to borrow from traditional lenders without the security of a third party. In cases where such borrowing was not available, guarantors listed included parent companies, affiliated hospitals, and local governments.


64+19+1719

Yes 64%

No 19%

Not applicable 17%

Figure 11

6+33+61Q12: What relationship does your local city and/or county

government have to your facility’s finances?

Q13: In the last three years, how many capital projects has your facility undertaken?

Fewer than 5 5-10 More than 10 I don’t know

84%

12%

4%

III. History of Capital Projects

20

Heavily relying on local government 6%

No involvement of local government 61%

Receiving local government support as one of many payment types 33%

Figure 12

Figure 13

Q14: What types of capital projects were these (see Q13), and what was the

approximate investment?

As shown in Figure 14.1, the leading reported types of past capital projects involved traditional infrastructure improvements, such as renovations and new construction. Repairs and renovations occupied 21 percent of the entries, including renovated operating rooms, roofs, and nursing homes. Construction and expansion at the re-spondents’ new or satellite facilities made up 15 percent of responses, covering such projects as new adult day care facilities, school-based health centers, new urgent care centers, and a CSB refitting a former hospital for a new services facility. Construction and expansion at primary facilities had the third-most responses at 14 percent; this distinction includes projects like added hospital beds, geriatric psychiatry units, expansion of an ED, and nursing stations.

Other common capital projects included miscellaneous equipment at 12 percent, Information Technology/Elec-tronic Health Records software at 9 percent (e.g. computer systems, servers, hardware/software), imaging equip-ment at 9 percent (e.g. CT, ultrasound, x-ray) and strategic acquisitions and real estate at 8 percent (e.g. acquisition of SNF, purchase of pediatric practice, purchase of medical office building).

One notable trend in the area of past capital projects is the prevalence of new dental services. A full 10 percent of responses to Question 17 involved dental service expansions, all by FQHCs and charitable clinics.

Figure 14.1: Types of Projects - Last 3 Years

IT / EHR

Imaging

Repairs / Renovation

Construction / Expansion - Primary Facility

Construction / Expansion - New or Satellite Location

Miscellaneous Equipment

New Service Line

Utility Maintenance

Vehicles

Staffing

Strategic Acquisitions / Real Estate

21

9% 9%

21%

14%

15%

12%

4%

5%

3%

1%

8%

IT / EHR

Imaging

Renovations / Repairs

Construction / Expansion - Primary FacilityConstruction / Expansion - New or Satellite Location


New Service Line

Utility Maintenance

Vehicles

Staffing

Strategic Acquistions / Real Estate

Figure 14.1: Types of Projects - Last 3 Years

Q14 cont’d: Past capital projects

Q15: Identify the sources of financing used for these capital projects (check all that apply).

Commerc

ialba

nk

Goverm

ent-fi

nanc

edlo

an

Commun

ityde

velop

mentle

nder

Grant:p

rivate

,non

-profi

t,phil

anthr

opic,

etc.

Interg

overn

mental

tran

sfer

Subs

idyfro

mloca

lgov

ernmen

t

State

orfed

eralg

overn

mentg

rant

Fund

raisin

g/cap

italca

mpaign

s

OtherL

ineof

Cred

it

Otherlo

an

22

NOTE: The mean reported cost of recently past projects was approximately $1.29 million; the median reported cost was $250,000.

Upto$50,000

$50,001-$100,000

$100,001-$200,000

$200,001-$500,000

$500,001-$1million

$1million-$2million

$2million-$5million


Over$10million

53%

3%

18%

12%

24%

26%

9%

18%

Figure 14.2: Cost of Past Capital Projects

Figure 15

19%

19%

15%

13%

7%

7%

11%

6%

2%

Up to $50,000

$50,001 - $100,000

$100,001 - $200,000

$200,001 - $500,000

$500,001 - $1 million




Over $10 million

Comm

ercial

bank

Gover

nmen

t-fina

nced

loan

Commun

ity de

velop

men

t lend

er

Grant

: priv

ate, n

on-p

rofit

, phil

an-

thro

ptic,

etc.

Inter

gove

rnm

ental

tran

sfer

Subs

idy fr

om lo

cal g

over

nmen

tSt

ate or

fede

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over

nmen

t gra

ntFu

ndra

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/Cap

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ampa

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Oth

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redit

Oth

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an

Q16: Do you have any capital projects currently under way or planned for the near future (e.g. in the next 3 years)?

Please describe each such project including estimated costs.

As with past capital projects (Q14), current and future capital projects largely involve traditional infrastructure renovations and improvements. Construction and expansions at the respondents’ primary facilities occupied 23 percent of entries, including inpatient psychiatry units, ED expansions, and a women’s health wing. Construction and expansions at new and satellite facilities made up 19 percent of responses, including medical office buildings, new outpatient clinics, and a home health project. Repairs and renovations also comprised 19 percent of respons-es.

IT projects were less commonly reported as current or future projects than as past projects, comprising just 2 per-cent of responses to Q16 (versus 9 percent of past projects).

IV. Capital Plans

23

Figure 16.2: Cost of Current / Planned Capital Projects

Figure 16.1: Current or Planned Capital Projects

IT

Imaging


Construction / Expansion - Primary Facility

Construction / Expansion - New or Satellite Location


Acquisitions / Real Estate

Utility Maintenance

New Service Line

Payroll / HR

The mean reported cost of current or planned capital projects was $224,486.

14%

32%

30%

16%

8%

Lessthan$100,000

$100,000-$500,000

$500,000-$2million

$2million-$5million

Over$5million

2% 2% 2% 2%

8%

19%

23%

19%

11%

6% 6%

Figure 16.1: Current or Planned Capital Projects

IT

Imaging


Construction / Expansion - Primary FacilityConstruction / Expansion - Newor Satellite Location


Utility Maintenance

Acquisitions / Real Estate

New Service Line

Payroll / HR

Less than $100,000

$100,000 - $500,000

$500,000 - $2 million


Over $5 million

14%

32%

30%

16%

8%

Q17: Please identify any capital projects, current or in your facility’s near future, that are required

for regulatory compliance.

The answer to this question was overwhelmingly, “no.” Seventy-two percent (72%) of all responses were “none” or “not applicable.” No type of capital project received more than one entry.

Examples of capital projects required for regulatory compliance, each receiving one entry, were: “HR system to comply with ACA”; “Upgrade HVAC system”; “Psych unit”; “Construction of crisis center”; and “Room additions.”

Q18: Please give brief history of failed financing relevant for your capital needs over the last 3

years, or as far back as you are aware?

Most responses to this question indicated the respondents had not had a history of failed financing. Eighty percent (80%) of respondents responded “none” or “not applicable.”

Examples of failed financing, each receiving one entry, were: “Unable to receive commercial line of credit”; “denied financing for surgical scopes”; “Operations would not support capital needs [before county support]”; and “New Market Tax Credits.”


Q19: What are your current sources of capital financing? (check all that apply)

Comm

ercialloanorloc:long-term

Comm

ercialloanorloc:short-term

Governm

ent-financedloan:long-term

Governm

ent-financedloan:short-term

Comm

unitydevelopmentlender

Localgovernmentgrantorsubsidy

Stateorfederalgovernmentgrantorsubsidy

Notapplicable

Q20: If your financing involves SPLOST funds, please identify the start and end date of such SPLOST funding and whether renewed/replacement SPLOST funding is

anticipated upon completion?

This question was inapplicable to the large majority of respondents, as only eight (8) surveys reported financing via SPLOST funds. Among these responses, three reported that the SPLOST funding has ended or will end in 2017. However, others reported SPLOST funds extending into 2019, 2021, 2022, and 2023, respectively.

V. Sources of Financing


35% 37%

11%13%

26%

34%

Figure 19

Comm

ercial

loan

or lo

c: lo

ng-te

rm

Comm

ercial

loan

or lo

c: sh

ort-t

erm

Gover

nmen

t-fina

nced

loan

: lo

ng-te

rm

Gover

nmen

t-fina

nced

loan

: sh

ort-t

erm

Com

munity

deve

lopm

ent

lende

rLo

cal g

over

nmen

t gra

nt or

su

bsidy

State

or fe

dera

l gov

ernm

ent

gran

t or s

ubsid

yNot

appli

cable

Q21: If you have access to a line of credit for capital, how much is it?

22+11+11+56 22+33+4546+31+23 14+86 50+50

26

Lessthan$250,000

Between$250,000and$1million

Between$1millionand$2million

Over$2million

Over$5million

Notapplicable


Between $250,000 and $1 million 22%

Over $2 million 11%

Over $5 million 11%Not applicable 56%



Between $1 million and $2 million 33%

Not applicable 45%

FQHCsFigure 21.3

Less than $250,000 46%


Not applicable 23%


Not applicable 86%


CSBsFigure 21. 5


Not applicable 50%

Figure 21

16%

24%

7%

2%

2%

49%

Less than $250,000

Between $250,000 - $1 million

Between $1 million - $2 million

Over $2 million

Over $5 million

Not applicable

Q22: If you have access to a line of credit, approximately

what portion is being utilized?

None

Lessthan25percent

Lessthanhalf

Morethanhalf

Morethan75percent

Notapplicable


33%

5%

7%

12%

44%

Figure 22

None

Less than 25 percent

Less than half

More than half

More than 75 percent

Not applicable

Q23: Select all uses of capital financing that you would actively pursue over the next five years.

(check all that apply)

Improvephysicalinfrastructure

Newconstruc6onprojects

Replaceequipment

Newequipment

Newins6tu6onalservice

Corporaterestructuring

Regulatorycompliance

Affilia6on/Merger/Acquis6on

Technologyinfrastructure(includingEHR)

Telemedicine

Workforcedevelopment

As

In one of the most central questions to the goal of this survey, the respondents again prioritized traditional capi-tal projects as their best use of financing. Physical infrastructure, new construction, and equipment expenditures were all selected by a large majority of respondents. Investments with more remote or intangible prospects, such as corporate restructuring and affiliations, mergers, and acquisitions, seem to be lesser priorities for respondents. Telemedicine, a currently surging area of focus in rural healthcare, (see Q36) had a strong show of support at 53 percent of responses.


VI. Purposes of Capital Financing

28

73%

67%

73%

64%

27%

20%

16%

44%

53%

49%

Figure 23

Improve physical infrastructure

New construction projects

Replace equipment

New equipment

New institutional service

Corporate restructuring

Regulatory compliance

Affiliation / Merger / Acquisition

Technology infrastructure (including EHR)

Telemedicine

Workforce development

Q23 cont’d: Uses of capital financing to actively pursue



Replaceequipment

Newequipment






Telemedicine




Replaceequipment

Newequipment






Telemedicine





60%

70%

80%

80%

40%

20%

20%

40%

50%

30%

50%

75%

50%

50%

88%

38%

13%

63%

38%

25%



Replace equipment

New equipment






Telemedicine




Replace equipment

New equipment






Telemedicine


Q23 cont’d: All uses of capital financing to actively pursue




Replaceequipment

Newequipment





Technologyinfrastructure(including

Telemedicine




Replaceequipment

Newequipment






Telemedicine




Replaceequipment

Newequipment






Telemedicine


FQHC’sFigure 23.3



100%

86%

71%

79%

21%

7%

14%

36%

71%

71%

50%

50%75%

75%

75%

25%

25%

25%

25%

25%

50%

50%

50%

67%

67%

33%33%



Replace equipment

New equipment



Regulatory complianceAffiliation / Merger / Acquisition


Telemedicine




Replace equipment

New equipment





Telemedicine




Replace equipment

New equipment





Telemedicine


Q24: Does your facility have a strategic plan that has been updated in the last:

1year 2years 5years 10years Nostrategicplan


VII. Characteristics of Capital Plan

31

46%

26%

17%

11%

Figure 24

1 Year 2 Years 5 Years 10 Years No Strategic Plan

Q25: Does your strategic plan reflect your Community Health Needs

Assessment?

72+4+11+13Q26: Does your strategic plan include a

capital development plan?

58+29+132016 Capital Needs Survey 32

Yes 72%

No 4%

No strategic plan 11%

No CHNA 13%

Yes 58%

No strategic plan 13%

No 29%

Figure 25

Figure 26

Q27: Does your capital plan include input from your governing board?

77+2+21Q28: Does your capital plan include

input from stakeholders such as community members?

44+562016 Capital Needs Survey 33

Yes 77%

No 2%

Not applicable 21%

No 56%

Yes 44%

Figure 27

Figure 28

Q29: How are potential capital projects ranked or ordered?

Revenuepoten*al

Time-sensi*vedeadlines

Availabilityoffinancing

Q30: How often does your Board of Directors or like governing body discuss/explore capital needs?

34

Requirements for proper facility standards or

proper standards of care

29%

34%

37%

Weekly

Monthly

Quarterly

Annually

Noneoftheabove

NoGoverningBoard

50%

17%

26%

7%

Figure 29

Figure 30

Availability of financing

Time-sensitive deadlines

Revenue potential

Weekly

Monthly

Quarterly

Annually

None of the above

No Governing Board

Q31: What are your greatest barriers to capital financing?

Failuretomeetsolvencyrequirements

Failuretomeettechnicalrequirements

Unworkabletermsproposedbylenders

Administra:veburdensofseeking/applying

Riskofaddi:onaldebt

Inabilitytoprovidecollateral

Noguarantortooffsetperceivednon-creditworthiness


VIII. Perception of Need and Capacity

35

This response is noteworthy in that it indicates perhaps a more qualitative than quantitative barrier to capital financing among rural providers. While “risk of additional debt” is no doubt grounded in financial data, it also reflects a subjective cautiousness that might be addressable through favorable lending terms or less risky grant programs. When combined with “administrative burdens of seeking/applying,” another qualitative issue, these non-technical, possibly surmountable barriers made up 68 percent of responses.

23%

6%3%

13%

55%

16%13%

Figure 31

Failu

re to

mee

t solv

ency

requir

emen

tsFa

ilure

to m

eet t

echn

ical

requir

emen

tsUnw

orka

ble te

rms p

ropo

sed

by le

nder

sAdm

inistr

ation

burd

ens o

f

seekin

g / ap

plying

Risk of

addit

ional

debt

Inab

ility t

o pro

vide c

ollate

ral

No gua

rant

or to

offset

perce

ived

non-

credit

worth

iness





Riskofaddi:onaldebt








Riskofaddi:onaldebt







Riskofaddi:onaldebt



Q31 cont’d: Barriers to capial financing





Riskofaddi:onaldebt



36

FQHCsFigure 31.3



18%

9%

18%

64%

18%

25%

25%

75%

25%

25%

25%

50%





Riskofaddi:onaldebt




25%

50%

50%


29%

29%

57%

14%

14%

Failure to meet solvency requirements

Failure to meet technical requirements

Unworkable terms proposed by lenders

Administration burden of seeking/applying

Risk of additional debt

Inability to provide collateral

No guarantor to offset perceived non-creditworthiness





























Q32: How much additional financing would be needed to fulfill your current

capital plans?

18+35+21+18+82016 Capital Needs Survey 37

As in Q33, where we learn that less than $1 million would stabilize the operations of 40 percent of facilities that are at a risk of closure (16 percent of all responses), here less than $1 million would go a long way for rural providers, allowing 53 percent to fulfill their current capital plans. These are significant results, as they portray financial support of rural healthcare not as an infinite drain on resources but rather as an acutely solvable problem.



Less than $250,000 18%

Over $2 million18%

Over $5 million 8%

Figure 32

Lessthan$250,000



Over$2million

Over$5million

Lessthan$250,000



Over$2million

Over$5million

Lessthan$250,000



Over$2million

Over$5million

Q32 cont’d: Financing to fulfill current capital plans



14%

29%

43%

14%

Lessthan$250,000



Over$2million

Over$5million


17%

17%

33%

33%

FQHCsFigure 32.3

23%

46%

15%

15%


17%

33%

50%

Lessthan$250,000



Over$2million

Over$5million


50%

25%

25%

25%

Less than $250,000

Between $250,000 and $1 million

Between $1 million and $2 million

Over $2 million

Over $5 million

Less than $250,000



Over $2 million

Over $5 million

Less than $250,000



Over $2 million

Over $5 million

Less than $250,000



Over $2 million

Over $5 million

Less than $250,000



Over $2 million

Over $5 million

Q33: If your current finances put your facility at risk of closure, how much additional financing

would stabilize your operations? (numbers reflect total versus annualized amounts)

3+13+8+8+8+602016 Capital Needs Survey

Q34: Regarding Q33, would you prefer such financing as annualized

increments or in one lump sum? 16+26+58

39

Not applicable 60%(not at risk of closure)

Less than $250,000 3%Between $250,000 and $1 million 13%


Over 2 million 8%

Over 5 million 8%

Figure 33

Annualized 16%

Lump sum 26%

Not applicable 58%

Figure 34

See next page for facility breakdown

Lessthan$250,000



Over$2million

Over$5million

Notapplicable

Lessthan$250,000



Over$2million

Over$5million

Notapplicable

Lessthan$250,000



Over$2million

Over$5million

Notapplicable

Lessthan$250,000



Over$2million

Over$5million

Notapplicable

Q33 cont’d: Financing to stabilize operations




16%

24%

7%

2%

2%

49%

11%

22%

67%

9%

9%

9%

9%

64%

FQHC’sFigure 33.3

Lessthan$250,000



Over$2million

Over$5million

Notapplicable


25%

75%


40%

60%

Less than $250,000



Over $2 million

Over $5 million

Not applicable

Less than $250,000



Over $2 million

Over $5 million

Not applicable

Less than $250,000



Over $2 million

Over $5 million

Not applicable

Less than $250,000



Over $2 million

Over $5 million

Not applicable

Less than $250,000



Over $2 million

Over $5 million

Not applicable

Q35: Does your facility have any current long-term investments directly addressing any of the

following social determinants of health?(check all that apply)

Popula'onhealthmanagement/dataanaly'cs

Jobssupport/careercounseling

Povertyreduc'on

Transporta'on

Housing

Healthyfoods

Pa'enteduca'on

In-homeoutreach

Telehealth

Nonclinicalcommunityservices/socialservices

Elderservices

Pharmacy


IX. Capital Projects Related to Population Health

41

55%

16%

23%

19%

16%

29%

52%

16%

42%

39%

16%

52%

Figure 35

Population health management/data analytics

Job support/career counseling

Poverty reduction

Transportation

Housing

Healthy food

Patient education

In-home outreach

Telehealth

Nonclinical community services/social services

Elder services

Pharmacy

Q36: Does your facility have any anticipated long-term investments directly addressing any of

the social determinants of health?(check all that apply)

Popula'onhealthmanagement/dataanaly'cs

Jobssupport/careercounseling

Povertyreduc'on

Transporta'on

Housing

Healthyfoods

Pa'enteduca'on

In-homeoutreach

Telehealth

Nonclinicalcommunityservices/socialservices

Elderservices

Pharmacy


As noted in the analysis of Q23 (projected uses of capital financing over the next five years), telehealth/telemedicine is shown here to be a common element of prospective strategy among providers. Telehealth allows rural patients to access specialty care and clinical resources not offered on-site by their local facilities, under the supervision and care of their local providers. Telehealth commonly involves two-way audio/video interaction between the patient and remote provider, and is augmented through peripheral devices such as digital stethoscopes. Rural providers that struggle to find the resources to offer certain types of care may look to telehealth as an affordable and sensible way of treating their patients close to home.

60%

7%

13%

27%

7%

23%

47%

23%

60%

20%

20%

50%

Figure 36

Population health management/data analytics

Job support/career counseling

Poverty reduction

Transportation

Housing

Healthy food

Patient education

In-home outreach

Telehealth

Nonclinical community services/social services

Elder services

Pharmacy

Q37: How would you characterize population health in terms of long-term investments of your

facility?

56+23+212016 Capital Needs Survey 43

High priority56%

Similar priority to other projects 23%

Other projects would come first 21%

Figure 37

Documents

2016 Capital Needs Survey - Healthcare Georgia Foundation · Healthcare (FQHCs), the Georgia Rural Health Association (RHCs, others), the Georgia Association of Community Service