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Finance & Accounting
Pages 3 (753 words)
Tax exempt health care organizations rely upon bond issues to finance large scale capital projects. Describe the process in which the board and senior leadership take the organization to the capital market.
Access to capital is critical to keep facilities current, add major information technology systems and strengthen quality initiatives .Debt financing is a major source of capital for health care organizations. Cost of capital is a major determinant of the type of debt financing. Bond issuing is one option of debt finance that health care organization can use to finance their projects. For financial and capital planning to be effective, hospital leaders, including chief executive officers, chief financial officers and board members, must be aware of the changing conditions of the capital markets and the types of capital available. The types of debt financing include tax-exempt and taxable bond offerings and such nontraditional debt offering as off-balance sheet options and participating bond transactions. A sound financial plan should include maintaining a strong equity portfolio and managing debt to minimize cost and maximize access to capital. The following steps allow hospitals to effectively incorporate debt financing as a component of their strategic and financial planning process. 1. Building a financing team: Building a knowledgeable financing team is the primary responsibility of the CFO. The team should be responsive to variations in the financial market including changes in interest rates, regulatory requirements and ratings activity, among other things. ...
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