AHA to Congress: Include hospital bonds in municipal securities legislation
The American Hospital Association is urging the House Financial Services Committee to include tax-exempt hospital bonds in any legislation to help the municipal securities market.
In a letter to committee chairman Barney Frank (D-Mass.), AHA Executive Vice President Rick Pollack said federal support would enable hospitals to continue to borrow for needed capital projects, including refinancing of existing debt.
"Hospitals are among the largest users, in terms of volume and dollars, of tax-exempt financing," Pollack wrote. "However, their ability to enter the market for new capital or refinancing of existing debts has been severely constrained since the beginning of the current financial crisis."
Pollack noted that sources of guarantees such as bond insurance and bank letters of credit are either no longer available or unaffordable for hospitals.
The AHA letter notes that the global financial crisis has "resulted in an unprecedented drain of operational resources that threatens the stability" of the economy's healthcare sector has increased the cost of healthcare nationwide.
Hospitals' inability to refinance existing debts has forced many institutions to divert patient care resources to pay down current obligations, often at accelerated rates, Pollack wrote.
