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Bipartisan Senate Bill Seeks to Assist Rural Hospitals

Press Release

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Location: Washington, DC

U.S. Senators Herb Kohl, Kent Conrad and Tim Johnson are among the legislators who today introduced bipartisan legislation to extend a rural hospital mortgage insurance program that has already helped hospitals in 10 states.

The legislation, which is also cosponsored by Senators John Thune, Mike Johanns, and Jon Tester, would provide a five-year extension of an exemption in the Rural Health Care Capital Access Act that allows many rural hospitals that provide significant levels of non-acute or long-term care to apply for mortgage insurance under a Federal Housing Administration program. Without the exemption, many rural hospitals would not qualify for the low-cost loan insurance based on patients' average length of stay or because the hospital operates a nursing home, and as a result, many rural hospitals would face higher financing costs on construction and renovation loans.

"For many of our country's rural communities, this is one of the only affordable options available for improving their aging hospitals," Kohl said. "As a program that has succeeded in providing a higher standard of care, it needs to be continued."

"This program has helped preserve and improve access to healthcare in rural communities in South Dakota and across the nation," said Johnson. "Continuing this program will lower costs for rural hospitals as they work to update their aging facilities and provide better care."

In 2006, Congress recognized the challenges and importance of these hospitals and passed the Rural Health Care Capital Access Act. This act provided many rural hospitals with an exemption to the acute care provision in Section 242 of the National Housing Act. The exemption expires on July 31, 2011.

To date, 10 rural hospitals in 10 states have received mortgage insurance through the program as a result of the exemption in Edgerton, Wis., Columbus Mont., Springfield, Ga., Monticello, Ill., L'Anse, Mich., Cambridge, Neb., Hot Springs, S.D., Grand Coulee, Wash., Moab, Utah and Holyoke Colo. The program has provided mortgage insurance for these hospitals on loans ranging from $14 to $31 million and totaling more than $241 million.

In 2006, the Congressional Budget Office (CBO) estimated that the Rural Health Care Capital Access Act would not increase spending. In fact, CBO estimated that the provision would increase revenues up to $3 million dollars over five years. And, while CBO has yet to estimate the cost or revenues related to the extension, the Office of Management and Budget does not believe there would be any associated costs.

It is expected that the legislation would be considered by the Senate Banking and House Financial Services Committees. In 2006, the initial exemption passed by unanimous consent and the bill was signed into law.


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