Hospitals and lenders now see favorable conditions to seek financing
And even though many hospital systems are considering more flexible no-ownership agreements, perennial negotiators are still buying. HFG owns a significant portion of debt issued by Prime Healthcare Services, an investor-owned hospital chain based in Ontario, California, whose strategy has focused on turning around struggling community hospitals. In December, HFG closed a five-year, $ 475 million financing for Prime, consisting of a $ 225 million revolving line of credit and a $ 250 million term loan, which will be used for acquisitions. “We have great confidence in the management team and have seen their operations grow very quickly,” said Chapa.
Tenet Healthcare Corp., Dallas, this month announced the issuance of $ 600 million five-year notes at an interest rate of 5%. With interest rates as low as they have been, Tenet is pre-financing an acquisition and paying off debt on its revolving credit facility, Tenet CEO Trevor Fetter said. “I think this is a unique time to access capital markets,” he said.
HCA, the Nashville-based hospital chain, also undertook a debt refinancing this month, issuing $ 1.5 billion in 3.75% notes due 2019 and
$ 2 billion in 5% notes due 2024. The company will use the proceeds to refinance $ 1.5 billion in 8.5% debt due 2019 and $ 1.25 billion in 7.875% notes due in 2020. Analysts expect HCA to use the funds for share buybacks or possibly acquisitions.
If lenders have reservations about loans, those scruples focus on small hospitals that have struggled to stay in the dark. “I think what you’ve seen in the industry is there’s a continuing differential between the haves and have-nots,” Hammond said. Some smaller establishments, especially in rural areas, have been able to tap into government programs to fund their projects.
Avera’s Floyd Valley Hospital, a 25-bed critical access facility in Le Mars, Iowa, will kick off a $ 27 million expansion and renovation project next month. It is currently operating with infrastructure from the 1970s, including outdated operating rooms, a medical clinic that is not connected to the main hospital, and MRI departments housed in a trailer, said Daryl Friedenbach, director. tax services.