Revolving loan fund for rural hospitals pitched in Senate

June 26, 2019 GMT

RALEIGH, N.C. (AP) — North Carolina Senate leaders want the state to offer taxpayer-funded loans to rural hospitals in peril of closing due to economic and health care trends that have left them bleeding red ink.

The new loan program pitched Wednesday by the chamber’s top leader would be run by the University of North Carolina health care system and assist hospitals whose leaders believe they could go out of business in three years without a cash infusion. The state budget that the House and Senate will vote on this week gives $20 million for the program over the next two years. The program itself has yet to be approved, and faces a Senate committee vote Thursday.


Senate leader Phil Berger says the money could provide a financial bridge to these hospitals while they attempt to make changes that could improve their financial outlook, such as downsizing facilities. That could make the hospital attractive to a larger health care network for purchase or take over operation, Berger said.

“The big picture request would be to pass this bill so that we have a tool that can be utilized to help deal with these problems with some of these hospitals in rural areas,” Berger said. The only known hospital facing such an immediate problem is Randolph Health, a 145-bed hospital in Asheboro, according to legislators. The hospital has been recording losses and its leaders looking for a suitor.

A potential loan is “going to leave them with a debt that’s much more manageable,” said Sen. Jerry Tillman, a Randolph County Republican.

Bill supporters say more hospital loan requests could come as patients increasingly go to large urban hospitals for treatments, leaving rural hospitals to care for a disproportionate share of Medicaid recipients.

Five rural hospitals have closed in North Carolina since 2010, according to a document generated by the legislature’s nonpartisan staff. There were 18 rural hospital mergers from 2005-2016.

The Rural Health Care Stabilization Fund would offer loans at below-market interest rates and favorable terms to hospitals or local governments that operate the hospitals or other partnerships. UNC Health Care would make recommendations on loan applications to the Local Government Commission, which would have the final say.

UNC Health Care, which itself has a hospital network, wouldn’t be permitted to apply for a loan or be a partner with a struggling hospital that seeks one.

While Democrats didn’t speak against the proposal, they said it’s an example of rural health care needs that could be addressed by expanding Medicaid under the 2010 federal health care law. Democratic Gov. Roy Cooper has called for that expansion in budget negotiations with Republican lawmakers, who are opposed to it.


The bill “ignores perhaps a greater problem in terms of (hospital) patient population,” said Democratic Sen. Floyd McKissick of Durham County, “and really, in my mind, it leads to that next conversation about Medicaid expansion.”

Berger, a Republican from Rockingham County — where the local hospital filed for bankruptcy before being bought recently by UNC Health Care — said expansion had nothing to do with the measure.

“The problem with rural hospitals exists in North Carolina, but it exists in every state that has rural hospitals, whether they’ve expanded Medicaid or haven’t expanded Medicaid,” Berger said.