/ en Mon, 28 Apr 2025 05:56:21 -0500 Mon, 27 Nov 23 14:07:32 -0600 /news/headline/2023-11-27-new-moodys-report-risk-covenant-violations-has-decreased-remains-heightened <p>The risk of not-for-profit hospitals and health systems violating bond covenants has eased for 2024, but remains heightened, according to a <a href="https://www.moodys.com/research/Not-for-Profit-and-Public-Healthcare-US-Risk-of-covenant-violations-has-Sector-In-Depth--PBC_1357940">report</a> from Moody's Investors Service. Moody’s reports 21 providers that they rate violated at least one financial covenant since January 2022, and that most received a waiver or reached forbearance agreements and amendments with lenders. The report predicts a substantial portion of providers will continue to grapple with weak operating cash flow margins and remain at elevated risk of a violation. Proactive management can help avoid deterioration in credit quality or a default, the report says. </p> Mon, 27 Nov 2023 14:07:32 -0600 Hospital Bonds Wed, 26 Oct 2022 08:25:17 -0500 Hospital Bonds /lettercomment/2020-05-15-letter-federal-reserve-system-fdic-and-comptroller-currency <p class="MsoNormal">Dear Mr. Powell, Ms. McWilliams and Mr. Otting:</p> <p class="MsoNormal">On behalf of our nearly 5,000 member hospitals, health systems and other health-care organizations, our clinician partners – including more than 270,000 affiliated physicians, 2 million nurses and other caregivers – and the 43,000 health-care leaders who belong to our professional membership groups,<strong> the ���������� Association (AHA) urges each of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, in their respective capacities as the primary federal regulator for insured depository institutions, to take prompt action to assist health care providers on the front line of the COVID-19 pandemic should the need to do so arise.</strong></p> <p class="MsoNormal">Many hospitals and health systems and other health care providers face unprecedented financial impact as a result of COVID-19. The pandemic’s effects on health care organizations have been devastating. The pandemic has led to drastic decreases in revenues, accompanied by significant increases in expenses and large losses in the investment portfolios so essential to support the income of these providers as they fearlessly care for patients and communities. The financial impact of these events may significantly reduce hospitals’ liquidity and limit their access to capital markets and bank debt. Yet the substantial and necessary support already provided by the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Federal Reserve still falls short of what our nation’s hospitals and health systems will eventually need.</p> <p class="MsoNormal"></p> <p class="MsoNormal"><strong>As a result of the COVID-19 crisis, the AHA estimates a four-month financial impact of $202.6 billion in total losses for America’s hospitals and health systems, or an average of $50.7 billion per month. This impact is detailed in the attached report. </strong>Hospitals in many states are just now beginning to re-open for non-urgent medical and surgical procedures and other patient care appointments. Up until then those procedures and appointments were deferred, at the request or command of federal and state authorities. And, many individuals avoided medical treatment unrelated to COVID-19. All of this disruption resulted in significantly reduced patient volumes and operating revenues. Our hospitals and health systems also are incurring additional costs for staffing during an outbreak, including for overtime wages, premium pay, and wages paid to employees who are unable to work due to quarantine. The COVID-19 pandemic also disrupted the production and availability in some locations of medical supplies and equipment, such as personal protective equipment, necessary to safely treat affected patients, and has materially increased the cost to obtain these items when available.</p> <p class="MsoNormal">Further, the COVID-19 pandemic has resulted in substantial volatility in the global financial markets, and the value of hospitals’ and health systems’ investment portfolios has fluctuated along with this general market volatility, resulting in significant realized and unrealized losses in those investment portfolios. Just at the time the support of these investments is most needed, health care providers may no longer be able to rely on their portfolios to sustain operations.</p> <p class="MsoNormal">The AHA acknowledges the April 7, 2020, Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised). A similar Interagency Statement targeted to financial institutions working with health care providers would be a useful first step in assuring that hospitals and health systems can maintain essential operations. It is in the best interests of the nation and the health of our citizens to signal the importance of the continued viability of our front-line providers and health care organizations. Such an Interagency Statement could recommend easing the burden of various financial covenants, forbearance on timing of payments of principal and interest, and extending or expanding borrowing facilities notwithstanding the financial stresses these borrowers are facing should that become necessary.</p> <p class="MsoNormal">We appreciate your leadership and look forward to continuing to work with you during this critical time to protect the health of our nation.</p> <p class="MsoNormal">Sincerely,<br /> <br /> Richard J. Pollack<br /> President and Chief Executive Officer</p> Fri, 15 May 2020 12:57:15 -0500 Hospital Bonds /letter/2018-05-01-aha-office-tax-policy-re-request-guidance-questions-raised-new-tax-law Tue, 01 May 2018 11:40:04 -0500 Hospital Bonds /news/headline/2018-02-14-bipartisan-bill-would-restore-tax-exempt-advance-refunding-bonds <p>Reps. Randy Hultgren (R-IL) and C.A. Dutch Ruppersberger (D-MD) yesterday introduced <a href="https://www.congress.gov/bill/115th-congress/house-bill/5003">legislation</a> that would restore tax exemption for advance refunding bonds. The Tax Cuts and Jobs Act recently repealed tax-exemption for these bonds, which lower borrowing costs for hospitals and other tax-exempt entities. “Tax-exempt advance refunding bonds were an important financing tool that allowed 501(c)(3) hospitals to respond to credit market conditions to reduce the cost of capital,” said AHA Executive Vice President Tom Nickels in a letter of <a href="/letter/2018-02-14-aha-rep-randy-hultgren-supporting-bill-restoring-tax-exempt-advance-refunding">support</a> for the bill. “They have resulted in billions of dollars of savings for hospitals and the health care system. Loss of the ability to restructure debt with tax-exempt advance refundings will divert resources from patient care and could diminish access to needed health care services.” Other co-sponsors on the bill include Luke Messer (R-IN), Ed Royce (R-CA), Dan Kildee (D-MI) and Michael Capuano (D-MA).</p> Wed, 14 Feb 2018 15:43:20 -0600 Hospital Bonds /letter/2018-02-14-aha-rep-randy-hultgren-supporting-bill-restoring-tax-exempt-advance-refunding <p>The ���������� Association (AHA) commends Rep. Hultgren for introducing legislation to restore the tax exemption for advance refunding bonds that was repealed in the Tax Cuts and Jobs Act.</p> <p>Tax-exempt advance refunding bonds were an important financing tool that allowed 501(c)(3) hospitals to respond to credit market conditions to reduce the cost of capital. They have resulted in billions of dollars of savings for hospitals and the health care system. Loss of the ability to restructure debt with tax-exempt advance refundings will divert resources from patient care and could diminish access to needed health care services.</p> Wed, 14 Feb 2018 13:51:32 -0600 Hospital Bonds /news/headline/2017-12-19-house-approves-tax-reform-bill <p>The House of Representatives today voted 227-203 to approve the <a href="http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf" target="_blank">conference report</a> for the Tax Cuts and Jobs Act, sending the legislation to the Senate for a vote as early as tonight. The conference report maintains tax-exemption for private-activity bonds and medical expense deductions, as <a href="http://news.aha.org/article/171208-aha-shares-tax-reform-concerns-with-house-senate-conferees" target="_blank">advocated</a> by the AHA. It also repeals the Affordable Care Act’s individual mandate to purchase health insurance; changes the way organizations can deduct interest expense on their debt; repeals the exclusion from gross income for interest on advance refunding bonds; and creates a 21% excise tax on certain executive compensation, among other provisions. The president is expected to sign the bill.</p> Tue, 19 Dec 2017 09:44:00 -0600 Hospital Bonds Tue, 19 Dec 2017 00:00:00 -0600 Hospital Bonds /news/headline/2017-12-18-tax-bill-conference-report-released-house-could-vote-tomorrow <p>House and Senate Republican conferees Friday released the <a href="http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf" target="_blank">conference report</a> for legislation to overhaul the nation's tax code, which would maintain tax-exemption for private-activity bonds, as <a href="http://news.aha.org/article/171208-aha-shares-tax-reform-concerns-with-house-senate-conferees" target="_blank">advocated</a> by the AHA. “We are also pleased that the conference agreement’s definition of taxable income for purposes of calculating interest expense deductions follows the House bill and will be preserved in the near term,” <a href="/presscenter/pressrel/2017/121517-pr-taxbill.shtml" target="_blank">said</a> AHA President and CEO Rick Pollack. “This will facilitate assistance for certain hospitals to ensure access to care. Together with the preservation of medical expense deductions for patients with high medical costs – utilized by nearly 10 million Americans annually – we are encouraged by the inclusion of these important provisions in the Tax Cuts and Jobs Act. However, we are concerned about the inclusion of the individual mandate repeal and the consequences that this would pose to our patients. It is unfortunate that the important task of overhauling the tax code will erode health coverage for many.” The House could vote on the conference report as early as tomorrow, with a Senate vote to follow shortly afterward.</p> Mon, 18 Dec 2017 10:02:00 -0600 Hospital Bonds Sun, 17 Dec 2017 00:00:00 -0600 Hospital Bonds