All Featured Insights

Explore Kaufman Hall’s Capital Playbook for health systems, a guide to prioritizing investments, optimizing funding strategies, and strengthening financial resilience in a shifting healthcare environment.

Hospitals seeking funds for capital needs are facing several challenges, which is driving interest in non-traditional financing structures, often involving real estate. Synthetic leases are one alternative, but they require a careful assessment of both their benefits and considerations that may make them a less attractive option.

Of the long list of possible federal budget cuts released on January 17, the suggestion to eliminate the tax-exempt status for interest payments on municipal bonds is an item of particular concern. While it is too early to wager on any of the items on the list, the implications of this move for not-for-profit hospitals would be severe.

Despite overall industry improvements for not-for-profit health systems, the divide between stronger and weaker performers continues to increase. Other challenges to the sector include the still-challenged labor market, the continued difficult payer environment and potential policy changes from the new Trump administration.

Health systems with substantial energy infrastructure may derive significant value from an energy-as-a-service (EaaS) partnership. Knowing what your health system wants from the partnership will help you identify the right structure for a successful partnership that aligns with your objectives.

Upgrades and downgrades reflect the realities of what ratings are intended to do, which is to reflect the rating agency’s best assessment of an organization’s performance for investors. Upgrades must be earned and downgrades may happen quickly, but affirmations are most typical.

Watch an engaging discussion with Moody’s, Fitch and S&P on their latest industry outlooks, rating activity through early 2024 and what this means for the sector.

There was a general improvement in operating margins over the course of 2023, and it is possible that we have reached a point of stability. But with margins still well below pre-pandemic levels, will that level of stability provide sustainability?

At the 2023 Kaufman Hall Healthcare Leadership Conference, a panel of investors shared their insights on current market conditions, disclosure considerations, the impact of credit ratings on investment decisions, and ESG and the political environment.

A changing interest rate environment has reopened the opportunity to consider terminating an organization’s swap position. Organizations should take a measured approach in determining whether this is an opportunity they wish to pursue.

Responses to Kaufman Hall’s 2023 “State of Healthcare Performance Improvement” report indicate ongoing concern regarding covenant challenges in 2024. Organizations need to understand the causes of covenant misses and near misses and build a durable financial plan for the future.

Balance sheet strength has buffered consumers and businesses from some of the restrictive shock of higher rates. With a relatively brittle revenue model in healthcare, the focus becomes whether, when, and how to restructure operations as balance sheets are spent down.