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AHA to Congress: Extend hospital financing programs

The American Hospital Association is encouraging Congress to extend several tax provisions necessary to hospital capital financing.

In a December 14 letter to the current chairman of the House Ways and Means Committee, Rep. Sander Levin (D-Mich.), AHA Executive Vice President Rick Pollack urged the House to extend the authority for the Build America Bonds Program, the $30 million Bank Qualified Debt Limit and Federal Home Loan Bank letters of credit.

“It’s essential that America’s hospitals can access needed capital in order to improve community healthcare and increase jobs and support the local economy,” Pollack wrote. He said the programs should be extended via year-end tax legislation that Congress is now working on.

The AHA has argued that operating cash flow alone will not support the higher level of required capital spending for hospitals to restructure and modernize. Pollack said cash flow would continue to be limited by spending restraints.

“Hospitals will need to borrow capital,” Pollack wrote. “Success will depend on having reliable access to debt at reasonable cost, terms and risk.”

Build America Bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or bondholder. They were created under the American Recovery and Reinvestment Act.

The $30 million Bank Qualified Debt Limit is also an ARRA program that allows banks to deduct 80 percent of the costs of buying and carrying tax-exempt debt sold by borrowers whose annual issuance is no greater than $30 million, an increase above the previous limit of $10 million.

In addition, the law allows for the $30 million limit to be applied to individual borrowers participating in conduit deals, rather than the conduit issuer.

The AHA sent similar letters urging an extension of the provisions to Ways and Means Committee Ranking Member Dave Camp (R-Mich.) and Rep. Chris Van Hollen (D-Md.).