3 Reasons Why Small Hospitals Can Obtain Low-Cost Financing Today

Small and midsized community hospitals traditionally have a more difficult time obtaining cheap financing to fund renovations, but today's economic environment has allowed those organizations to access capital more easily, according to an article from financing firm Lancaster Pollard.

Critical access hospitals and smaller independent hospitals do not have the clout or scope of larger organizations to borrow money at low interest rates. However, financial analysts have said three factors have made it possible for those types of hospitals to fund their projects or refinance existing debt.

1. Low interest rate environment. The Federal Reserve has artificially kept interest rates low to spur borrowing and spending, and consequently, that has made capital projects more palatable. Low fixed rates usually lead to more predictable cash flows, which gives small hospitals more wiggle room to go after larger capital projects.

2. Investor appetite for hospital bonds. Hospitals bonds, especially those for low investment grade hospitals, have high yields for investors, meaning investors are turning to hospital bonds to make a large profit. In the current market, there is no shortage of prospective hospital bond purchasers, according to the article.

3. Government-sponsored financing options. Small rural hospitals are at an inherent disadvantage when it comes to funding capital projects. However, the federal government has ramped up ways those hospitals can obtain cheap financing. These include the U.S. Department of Housing and Urban Development and Federal Housing Administration's Section 242 program, as well as community facility financing programs through the United States Department of Agriculture.

More Articles on Hospital Financing:

Healthcare Industry Advocates Defend Tax-Exempt Bonds
39 Statistics on Moody's Baa-Rated Hospitals
Kaiser Foundation Hospitals Secures Record Bond Deal to Build 6 New Hospitals

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