Rural health centers utilize tax credit program to expand primary care services

Back in the early 2000s, Mid-State Health Center in the small town of Plymouth, N.H., was in dire need. The new CEO, Sharon Beaty, knew something had to be done immediately, but the facility, not yet designated a federally qualified health center, didn’t have access to appropriate funding. So, she got creative.

“At the time, in 2003 and 2004, there wasn’t much funding for healthcare in our area, but there was for economic development,” said Beaty. “We started to go that route because it was completely legitimate – we’d be providing a lot of jobs with an expansion.”

[See also: Lenders coalition launches to help CHCs]

She turned to the New Markets Tax Credit (NMTC) Program, a program established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities.

“The program is not just for medical facilities, but across the country it provides a source of lower-cost capital that helps projects move forward that otherwise might not like Mid-State Health Center,” said Charlie Spies, who works with Portland, Maine-based CEI Capital Management, the nation’s leading firm charged with overseeing transactions for the NMTC Program.

According to Spies, the NMTC Program attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax return in exchange for making equity investments in specialized financial institutions called community development entities (CDEs). The tax credit totals 39 percent of the original investment amount and is claimed over a period of seven years, he said.

By participating in the NMTC Program, Mid-State was able to build a new health center – completed about seven years ago now – but the outcomes of that investment turned out to be even greater than Beaty ever expected.

At the start of the project, Mid-State employed 37 people – now they employ 85. Mid-State also became a regional leader in spurring further community development. Plymouth’s local Speare Memorial Hospital built a satellite facility across the street to accommodate specialty physicians and rehabilitation services, Beaty said. Additionally, since their new facility was built, many other businesses have also popped up in that area of Plymouth, including a CVS Pharmacy and several other businesses providing dozens of jobs to local residents.

Perhaps most importantly of all for Mid-State, residents in the Plymouth area now have “better access to primary care in this region than pretty much anywhere in the state – we are known for it,” said Beaty.

Beaty said prior to the opening of their new facility, many patients looking for primary care could not get in for regular check-ups without a three- to six-month waiting period, and visits for sicknesses had a weeklong waiting period. Clinicians were regularly seeing 10 to 12 patients per day and many patients with easily-treatable illnesses, such as ear infections, ended up going to local emergency departments because they couldn’t wait a week to be seen by a primary care doctor.

“Now if you call in and you are sick, you will get a visit that day no matter what, and for regular check-ups, we can get patients in within three or four days,” she said. “We now provide 85 percent of the primary care for this market.”

Mid-State is not the only healthcare provider catching on to the benefits of the NMTC Program.

The Northern Tier Center for Health (NOTCH), a federally qualified health center in rural Richford, Vt., chose to utilize the NMTC Program around the same time as Mid-State for similar reasons – they needed to expand their primary care services but didn’t know how to go about it due to a lack of funding.

Pam Parsons, the executive director of NOTCH, explained that the health center, a local grocery store and a dental clinic teamed up using the NMTC Program to move into a community center building in town. By teaming up, the three businesses would be providing three services desperately needed in the rural community, along with being able to fill the 44,000 square-foot building, and jointly share the costs of the building and various fees that went along with utilizing the NMTC Program.

“We brought much-needed services to the community and hired a lot of local people, too,” she said.

Both Parsons and Beaty said that by having facilities large enough to accommodate the growing primary care needs in their communities, along with pleasant atmospheres and extra perks, such as on-site childcare, their rural facilities are able to attract physicians when they struggled to before.

“Recruiting professionals to this area was one of the biggest challenges we had, and what we wanted to do was have a practice that people would want to come to, and we succeeded,” said Beaty. “We are always recruiting.”