Modern Healthcare - Congress
New Markets Tax Credits: A Timely and Effective Capital Source for Healthcare Providers
The New Markets Tax Credit (NMTC) program, created to spark investment in disadvantaged communities, has become a valuable alternative source of flexible capital for healthcare providers and health systems to address the immediate needs of their organizations and affect positive change in their communities. NMTC projects have included new construction or renovation of facilities such as emergency rooms, mental health departments and crisis centers, primary care and community clinics, testing facilities, community health & wellness centers and working capital. NMTCs have also been used to fund a host of collaborative partnerships that deliver healthcare, educational and workforce development opportunities, access to healthy food, childcare, and additional private, public, and philanthropic resources tailored for communities.
Healthcare businesses and community facilities have represented an increasing percentage of NMTC investments over the previous years. Since its inception in 2005, the NMTC program has largely been capped at $3.5 billion annually, but thanks to Congress, the program has been increased to $5 billion beginning in 2021. As a result of these two factors, NMTC investments into healthcare-based businesses and projects are expected to increase markedly in the coming years.
The NMTC Program had an auspicious start as a bipartisan effort designed by the Clinton Administration and implemented by the George W. Bush Administration. The program is overseen by the Community Development Financial Institutions Fund, which is a part of the U.S. Department of the Treasury. It was designed to spur investment in businesses in underserved and low-income communities by providing a tax credit equal to 39 percent of qualified investments made via Community Development Entities (CDEs).
Now more than ever, as COVID-19 challenges community and healthcare resources, it is critical that lawmakers and healthcare executives alike are thinking about innovative ways that they can improve qualityof-life in low-income and rural and urban communities, many of which have been disproportionately impacted by the pandemic and the economic downturn.
With the increasing awareness of the significance of social determinants of health and health equality on population (or a community’s) health, and the need for healthcare systems and providers to consider valuebased care delivery, the NMTC Program allows leading healthcare organizations, community planners and stakeholders to be bold, creative, and collaborative in how they invest in infrastructure to meet broader social and economic needs of their communities, while improving population health outcomes, efficiency and delivery of care. Together we can improve health access, literacy, better manage chronic conditions and address socioeconomic conditions in a holistic, thoughtful and efficient way to allow our communities to flourish and better prepare for the public health crises of the future.
Community Hospitality Healthcare Services (CHHS), is a nationally recognized CDE specializing in investing in healthcare businesses and healthcare infrastructure in America’s most severely distressed communities. CHHS has invested in over $1 billion of healthcare businesses and community facilities serving lowincome populations in rural and urban neighborhoods across the country. We have seen firsthand the power and efficacy of the NMTC program to create a host of positive community impacts, dramatically improve access and quality of healthcare delivery, create efficiencies and lower costs, and address specific community issues including education, food access and stability, workforce development, and mental and physical health & wellness resources, among others.
As we reimagine our healthcare infrastructure in our communities and build for the future, the time for bringing flexible capital to implement creative solutions could not be more opportune. We thank members of Congress for their past and ongoing support for this critical program that is expanding access to healthcare and social services in areas where they are needed most, and truly look forward to meeting the challenges ahead of us, and to the great transformation for which our country is known and capable.
If you’d like to learn more about the NMTC program and how it has supported meaningful capital projects in U.S. health systems, download our white paper, “Alternative Capital Sources as a Change Agent,” at ModernHealthcare.com/NewMarkets