Univ. of Kansas Hos­pi­tal joins move back to bond mar­ket

Modern Healthcare - - THE WEEK AHEAD - —Beth Kutscher

Health sys­tems are start­ing to re­turn to the mu­nic­i­pal bond mar­ket to raise money for new projects af­ter a slow start to the year.

The Uni­ver­sity of Kansas Hos­pi­tal Author­ity this week will be the lat­est to join a small group of hos­pi­tals and sys­tems that are still rais­ing funds for ma­jor con­struc­tion and ex­pan­sion projects. The author­ity plans to is­sue $253.5 mil­lion in bonds that will be used to build a new hos­pi­tal cam­pus. The bonds also are ex­pected to price this week.

Hos­pi­tal bor­row­ing reached its low­est level in more than a decade last year, de­spite his­tor­i­cally low in­ter­est rates and pent-up de­mand from lenders. Spend­ing on con­struc­tion projects waned as hos­pi­tals fo­cused their at­ten­tion on their health in­for- ma­tion tech­nol­ogy needs. Th­ese smaller-scale projects are bet­ter funded with bank loans than with long-term bond is­suances.

Even when hos­pi­tals and health sys­tems went to the mu­nic­i­pal bond mar­ket, it was typ­i­cally to re­fi­nance older debt, ac­cord­ing to an anal­y­sis of fil­ings on Mu­niOS.com.

But the Uni­ver­sity of Kansas is join­ing Trinity Health, Livo­nia, Mich.; Me­mo­rial Sloan-Ket­ter­ing Can­cer Cen­ter, New York; and Vi­dant Health, Greenville, N.C., which have all sought new in­vestors this year for large-scale cap­i­tal projects.

The 623-bed hos­pi­tal in Kansas City will spend nearly $280 mil­lion to build an ex­pan­sion hos­pi­tal known as Cam­bridge North on land north of the main cam­pus. The bonds will cover $150 mil­lion of the project’s cost, with dona­tions and cash on its bal­ance sheet fund­ing the rest.

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