Hos­pi­tals, sys­tems look to cap­i­tal­ize while they can

Modern Healthcare - - Front Page - Melanie Evans

De­cem­ber dead­line looms for ex­pir­ing credit aid pro­grams

READ Melanie Evans’ “Of In­ter­est” blog at modernhealth­­ter­est

Health­care bor­row­ers are fac­ing the end of pop­u­lar credit mar­ket re­lief that fi­nance of­fi­cials say has made bor­row­ing cheaper and eas­ier to ac­cess, par­tic­u­larly for smaller hos­pi­tals. The end of De­cem­ber also marks the end of pro­grams cre­ated dur­ing the hous­ing melt­down and credit cri­sis to bol­ster tax-ex­empt bor­row­ing. The Amer­i­can Hos­pi­tal As­so­ci­a­tion and state health fi­nance au­thor­i­ties have lob­bied Congress to ex­tend the pro­grams and some hos­pi­tals and health sys­tems have looked to cap­i­tal­ize while they can.

“Why would we want to elim­i­nate” the op­tion, Richard Werkowski, chief fi­nan­cial of­fi­cer for Speare Me­mo­rial Hos­pi­tal, a 25-bed hos­pi­tal in Ply­mouth, N.H., said in ref­er­ence to one of the ex­pir­ing pro­grams that of­fers tem­po­rary bank in­cen­tives to make tax-ex­empt loans.

For health­care bor­row­ers—par­tic­u­larly small hos­pi­tals that fi­nan­cial of­fi­cials say ben­e­fited most from the tem­po­rary bank in­cen- tives to make tax-ex­empt loans—the De­cem­ber dead­line is fast ap­proach­ing.

Two other pro­vi­sions are also set to ex­pire. One al­lows not-for-profit hos­pi­tal bor­row­ers to se­cure the credit back­ing of highly rated Fed­eral Home Loan Banks. The other pro­vided a fed­eral sub­sidy for mu­nic­i­pal bonds is­sued as tax­able debt, or Build Amer­ica Bonds, which proved hugely pop­u­lar and, at the end of Oc­to­ber, ac­counted for about one-fifth of tax­ex­empt bonds. The tax­able bonds, though not avail­able to pri­vate not-for-prof­its, have helped lower in­ter­est rates by re­duc­ing sup­ply in the tax-ex­empt mar­ket.

Michael Rock, AHA se­nior as­so­ci­ate di­rec­tor, said should the pop­u­lar pro­vi­sions lapse as sched­uled in Jan­uary the trade group will lobby the in­com­ing Congress to re­store them.

The Wis­con­sin Health and Ed­u­ca­tional Fa­cil­i­ties Author­ity, which over­sees mu­nic­i­pal debt is­sues, has seen strong de­mand for bank qual­i­fied loans, said Lawrence Nines, ex­ec­u­tive di­rec­tor.

The Water­town (Wis.) Re­gional Med­i­cal Cen­ter ex­pects to close on a $2.5 mil­lion bank qual­i­fied deal be­fore De. 31. Jim Bird, di­rec­tor of fi­nance for the 51-bed hos­pi­tal, de­scribed the deal as a less-costly and faster route to fi­nance the ac­qui­si­tion of a clinic the hos­pi­tal has leased. Bank qual­i­fied in­cen­tives did lit­tle to boost bor­row­ing in New Hamp­shire, but did make fi­nanc­ing eas­ier to come by and cheaper, said Dave Bliss, the ex­ec­u­tive di­rec­tor of the state’s Health and Ed­u­ca­tion Fa­cil­i­ties Author­ity.

Werkowski said the pro­vi­sion cre­ated more com­pe­ti­tion among banks to lend to small bor­row­ers. Speare Me­mo­rial used the bank qual­i­fied op­tion to bor­row $4 mil­lion in May for ren­o­va­tion and con­struc­tion. Hos­pi­tal of­fi­cials have con­tacted state law­mak­ers to urge Congress to con­tinue the op­tion.

Speare Me­mo­rial Hos­pi­tal used the qual­i­fied bank op­tion to bor­row $4 mil­lion for ren­o­va­tions.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.