Capital Funding Deals Get Creative
With borrowing, generally, the overall interest rate on direct bank loans is competitive when compared to public debt issuance levels. The interest rate varies with the borrower's creditworthiness and the credit spread. Hospitals have become more strategic about their borrowing approach, Hesselmann says, with more willingness to access lower-cost medium-term financing options, as opposed to longer-term borrowing for short term-needs.
In addition, cost savings from focusing on efficiency gains in the revenue cycle are getting more attention than ever. "Where we are having more conversations is as it relates to counseling clients on creating efficiency through treasury solutions, going end-to-end through the payment mechanism, and accelerating the receipt of cash and optimizing the back end by using the products that do that," Hesselmann says.
To gain savings within their true financial picture, hospitals are focusing on improvement in the revenue cycle, striving to reconcile their claims data with their reimbursement payment dollars to the highest automated degree possible, he adds.
Deciding which capital lending approach to take is individual to the organization and the project, says Glenning.
"There's no system that's grown significantly without a trail of tears in the learning process," says Glenning. "For those who want to avoid that, my best advice is to figure out what's important to your organization's core mission. For us it was our academic and tertiary service. … Investing in a community hospital was a way to ensure that goal, and this joint venture was the way to do it."
This article appears in the October 2012 issue of HealthLeaders magazine.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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