Nonprofit Hospitals Shifting Investment Portfolios

Nonprofit healthcare organizations are gradually shifting traditional investment strategies away from bonds and other fixed income securities toward more highly diverse portfolios that could make them less vulnerable to market swings, multiyear analyses from Commonfund show.

William F. Jarvis, managing director and health of research with the Wilton, CT-based financial advisors, says nonprofit healthcare organizations are taking cues from colleges and universities that have seen generally strong investment returns over the last 20 years using a more diversified "endowment model."

"Healthcare organizations have historically had portfolios that were much more heavily allocated to bonds and fixed income securities than other types of nonprofits, certainly much more allocated to bonds than the typical college or university would have," Jarvis told HealthLeaders Media.
That strategy appears to be changing.

In FY2009, for example, bonds and other fixed income investments averaged 41% of the portfolios of the 86 nonprofit healthcare organizations tracked by the Commonfund Benchmarks Study of Healthcare Organizations. That allocation dropped to 36% in FY2011.