HealthLeaders Media Finance - November 3, 2008 | Vote, But CDHPs Won't Go Away View as a Webpage | Subscribe for Free
Vote, But CDHPs Won't Go Away

Philip Betbeze, Senior Editor-Finance

Tomorrow's election day. Thank goodness. Maybe we can all get a break from near-constant campaigning—at least for a few months. But I've got bad news for some of you. The focus of the past three years on consumer-directed healthcare likely isn't going away, no matter who gets elected tomorrow. I'm no oddsmaker, but something (the financial bailout) tells me there won't be a lot of money on the table to implement some sort of revolutionary plan for affordable healthcare, regardless of who's running the White House and Congress on Inauguration Day. Whether you like it or not, we're looking at evolutionary fixes for the foreseeable future. [Read More]
  November 3, 2008

 
Editor's Picks
UPMC to lay off 500
Managers and other administrators at the University of Pittsburgh Medical Center got the short end of the stick on layoffs this week as the hospital prepares to do business in a worsening economy. Negative investment returns for the huge nonprofit appear to be an issue in the layoffs, although spokespeople didn't tie the two events together, because although UPMC made a $5 million profit in fiscal 2008, compared with a record $612 million in 2007, investment returns for the system in the 12 months ended June 30 were a negative $128 million. [Read More]
HealthSouth settles with UBS for $100 million
UBS AG agreed to give HealthSouth $100 million this week that it probably would prefer it hang on to in light of the financial crisis. But if it wanted to settle a case stemming from the fraud-laden Richard Scrushy era, it had no choice. Like all of these settlements, the bank admitted no wrongdoing in light of the shareholder lawsuit that claimed the bank was aware of the fraud that former CEO Scrushy was perpetrating, but if there was no wrongdoing, why settle? [Read More]
Why letter of credit structures still work
Borrowers with variable-rate demand bonds enhanced by a letter of credit are lately seeing interest rates and debt service payments increase. Investors may be less willing to buy their bonds, and some borrowers have had their issuances converted to bank bonds as draws are made on their letters of credit. Ideally, bonds would never fail to be remarketed and cause a draw on the letter of credit. But in the current market, and compared with other financial structures, the letter of credit is holding up and performing as it was intended—as a safety net in case of never events. [Read More]
Ascension approves bond deal for struggling Boston system
St. Louis-based Ascension Health came close to buying the struggling Caritas Christi Health System in Boston last year, but never completed the deal after finding out the system was in worse financial condition than it expected. However, the nation's largest Catholic health system might be closer to acquiring the struggling Boston system than ever before after approving a $100 million bond purchase that provided funding that, given the frozen credit markets, the system could probably not have found on its own. [Read More]
Finance Forum
Challenges & Opportunities: Healthcare Transactions in a Challenging Capital Market
Although healthcare transaction activity has slowed during the downturn in the economy—particularly with regard to acquisitions by private equity buyers—investment banks, private equity houses, hedge funds, and lenders continue to aggressively seek healthcare deals. [Read More]
Finance Headlines
Medicare battle looms as costs keep climbing
Wall Street Journal (subscription required) - October 29, 2008
Texas Health Resources lays off 49
Fort Worth Star-Telegram - October 28, 2008
States cut healthcare coverage for the poor
USA Today - October 29, 2008
Nashville's General Hospital expects cash influx from Metro workers
The Tennessean - October 27, 2008
Outlook for managed care companies promising despite declines
Cain Brothers - October 27, 2008
Global health seen as big business for Seattle
Seattle Post-Intelligencer - October 23, 2008
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Money Talk

Medical Center of Central Georgia, Macon, GA
Rating: Aa2
Outlook: NA
Affected Debt: $80 million
Agency: Moody's Investors Service
Remarks: Upgraded rating from A2 based on letter of credit from Branch Banking & Trust Co., which means the bonds would default only in the event of a default by both entities. [Read More]
Audio Feature

Risky Business: Today's audio interview is a conversation I had recently with Karen Gries, a certified public accountant and principal with Larson-Allen, about new accounting rules for hospitals associated with the IRS's Form 990. Karen and I talked about some of the parts of the form that hospitals will want to pay special attention to, as well as the potentially high-risk parts of the form. For those with Dec. 31 filing deadlines, these rules have special significance. [Listen Now]
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