Dive Brief:
- According to a report from HFA Partners, hospital and health system bond issues fell 50% for the first quarter of this year. The health care facilities issued $3.2 billion in bonds during the first quarter of 2014.
- The sluggish first quarter for 2014 follows a slow 2013, which, according to HFA, was the second slowest bond issuance year in the past decade for health care organizations.
- The slow issuance of bonds is surprising given that this quarter saw historically low interest rates of about 3.5% in the tax-exempt market.
Dive Insight:
According to Becker's Hospital Review, HFA Partners said hospitals are avoiding large-scale capital projects that would ordinarily be financed by bonds, as the hospital sector moves away from inpatient care to the outpatient setting. And while it's hard to predict the future, this shift to outpatient care has been long in coming and seems established. Nonetheless, like any other business, hospitals need capital to keep on top of the market. There appears to be opportunity for the bond market to recover with a shift in focus to outpatient expansion.