Tax-exempt does not mean no taxes
Editori's note: South Central Regional Medical Center is tax-exempt and county-owned, but does that mean it doesn’t pay any taxes? We reached out to the leaders at SCRMC to find out the truth, and we got that — and documentation to support it.
“The hospital is owned by the county and operates tax-free, and now it’s bought up all those properties around it and taken them off the tax rolls, too” … That’s a statement that has been heard in coffee shops from time to time and candidate forums every four years.
But is it true?
“We are tax-exempt,” said Doug Higginbotham, longtime president and CEO of South Central Regional Medical Center, “but that doesn’t mean we don’t pay taxes.”
This year alone, SCRMC has paid $145,541.77 in property taxes, according to receipts from the Jones County Tax Collector’s office. Most of that amount — more than $113,000 — is paid for the former Jefferson Medical properties, which were acquired by SCRMC in 2017.
SCRMC key facts
• Total economic impact: $227,269,708
• Total salaries/benefits paid: $124,859,745
• Property taxes paid in 2019: $145,541.77
• Hospital/nursing home taxes paid 2018-19: $11,052,220.80
• Provided charitable care of $12.6 million in 2018 and $13.9 million in 2017
• 70 percent of patients are Jones Countians
“We didn’t have to pay it,” Higginbotham said, but the hospital’s board of trustees voted to continue making the annual payments to help ease concerns of the Jones County Board of Supervisors about losing that tax revenue.
He also pointed out that Jefferson Medical “came to us” about the acquisition. Another factor to consider, Higginbotham said, is that some facilities SCRMC has purchased over the years “may have been lost,” which would have meant a loss of jobs and services.
Earlier this month, Higginbotham announced to the Board of Supervisors that South Central Place on Highway 15 North is for sale at a cost of $4.25 million, and after it’s purchased by a private company, it will be back on the tax rolls.
“The hospital has never been a burden on the taxpayers,” said Board of Supervisors President Jerome Wyatt, who has been on the board since 1984. “It’s always been self-sufficient. I compliment the operation and credit you. You’ve brought us a long way.”
In many other communities across the state, hospitals have been “devastated,” but “it’s never been a burden here,” Wyatt said.
Higginbotham, who has been president/CEO of SCRMC since 1993, said he is proud of the hospital’s self-sufficiency in an industry where that is increasingly rare. “We don’t get a single dime from the county, other than for services rendered,” he said.
Medical facilities are also responsible for taxes that no other industry pays, Higginbotham said. For example, SCRMC has paid more than $11 million in state hospital provider and nursing home taxes over the past two fiscal years, records show.
Locally, the impact of Jones County’s second-largest employer is impossible to calculate, but an economic-impact study by the Mississippi Hospital Association shows that it is significant.
The 1,286 people SCRMC employs earned almost $125 million in salaries and benefits last year. The majority of those employees live in Jones County, where they add to the local economy by paying tens of thousands of dollars in property taxes, banking, buying insurance, shopping, eating, etc.
Indirectly, their presence calculates to an additional 1,208 jobs that pay total salaries and benefits of $102.4 million, according to the MHA study. That puts the total economic impact of SCRMC at $227.3 million, according to the study.
SCRMC is also part of a unique industry in that it “provides service to people regardless of their ability to pay,” Higginbotham said. “We’re still going to see you … even if you owe us.”
SCRMC “gives away” $1 million a month in free care, Higginbotham said, and “70 percent of our patients are Jones Countians.”
No other business or industry operates like that, he said
“If you’re hungry, try going over to McDonald’s and asking for a free hamburger … and then go back and ask for another free hamburger every time you’re hungry,” he said.
A directory of hospitals in the state shows that 81 percent of them are tax-exempt and 18 of the 20 hospitals that earned the best overall ratings follow that model. Only one hospital, statewide, was ranked higher than SCRMC for cost and efficiency and SCRMC is in the top 10 percent nationally, according to a Medicare analysis.
“We are good stewards of our resources,” Higginbotham said.
A recent rural hospital sustainability study showed that 31 hospitals in Mississippi are at “high financial risk.”
In 2005, SCRMC took over the Jones County Rest Home, which belongs to the county, and it was in dire need of a new building, he said. So the county built a new $11 million facility, but SCRMC makes its monthly payments of $14,640 — a total of $468,480 since November 2016 — and made bond payments totaling $2.2 million since that time.
SCRMC also showed payments of $93,338.29 to the county for the fence and beautification project that goes around the property.
Bonds and grants helped fund those projects, but they go through the “government authority,” Higginbotham said, and any matching funds that are required are repaid by SCRMC.
Even a $37 million expansion at SCRMC has resulted in a net reduction in payments, with the terms of a $66.5 million USDA loan. That paid off the current debt and financed the construction plus the equipment and furniture to fill the new emergency department, medical office tower, and wellness and rehabilitation center, all of which are scheduled to open next year.
“Our debt service will be about half what it was,” Higginbotham said.
The county-owned hospital opened with 100 beds and 58 employees on Feb. 1, 1952. There were six hospitals operating in the county around that time, and residents wanted a change, which is why bonds were issued to pay for its construction.
SCRMC works with other county entities, such as the Jones County Sheriff’s Department, to reduce costs for the county. Since October 2017, doctors have gone to the jail on a regular basis to give medical care to inmates for a savings of $36,822.49, records show. That cuts down on costs and potential problems associated with transporting prisoners to the medical facilities, Higginbotham said.
Supervisors have appointed a board of trustees made up of people who are “interested in the success of the hospital and the community” and they “don’t mettle,” he said. “They’re engaged to make it work.”
Trustees are Lewis Goins, George Walters, Michael Lowe, Arthur Siggers, Becky Brewer, Frank Therrell and Victor Jones.
The best reason for taking care of the business part of the hospital is so caregivers can focus on what’s most important, Higginbotham said. On a typical day, 1,700 patients go to SCRMC facilities, and it costs about $500,000 daily to operate it all, he said.
“The only reason we’re here is for the patients and to serve the community,” Higginbotham said. “We have nurses, doctors, people in emergency services who are hometown folks who make that their mission, too.”
“We change lives,” he said, “because, on the front lines, we have people with a lot of passion working here.”