The $20 billion in tax-exempt bonds not-for-profit hospitals sell on average every year can lead to $300 million going to banks and law firms handling debt deals—with those costs potentially encouraging hospitals to raise prices even as they’re exempt from paying taxes to their communities.
Axios looked at 21 debt deals involving not-for-profit hospitals this year. Those deals alone resulted in $70.1 million going to outside companies for managing the debt. More than a third was paid to banks for underwriting fees.
These bonds normally go to funding new construction, buying new equipment or refinancing existing debt. Hospitals can then maximize revenue, increase patient volume and up prices to afford taking on the debt.
"Everyone likes to have the newest and fanciest toys. It might allow hospitals to attract doctors or reputation. Whether you’re getting improved effectiveness is an open question," said Thad Calabrese, a professor at New York University who studies nonprofit finances.
The University of Oklahoma’s health system, OU Medicine, paid the most out of the deals Axios analyzed, owing $30 million to several large firms for projects like a $1.2 billion bond towards building a new inpatient tower.
Some of the deals also included potential conflicts of interest. New York’s Hospital for Special Surgery (HSS) hired Goldman Sachs to underwrite $179 million in debt, even though the co-vice chair of the HSS, Michael Esposito, is an executive at Goldman.
Read more at the link below:
John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.