Kaiser Permanente raised $4.4 billion in three bond offerings this month, which is a record for the health system. It plans to use the funding to expand its capacity, physician offices and technology, reported Modern Healthcare.
Kaiser Permanente has seen membership growth over the past few years, including picking up another 651,000 members in Washington this year after purchasing Group Health Cooperative. The Oakland-based insurer has 11.3 million members, 38 hospitals and 668 medical offices.
- Modern Healthcare reported that a “white-hot” hospital bond market is likely to remain as patient volume increases are expected to offset any future higher interest rates from the Federal Reserve.
The strong hospital bond market comes with a 4.4% unemployment rate and low uninsurance rates. Also, Americans are feeling good about the economy. The combination means there is a greater chance of more people being able to afford care, including profitable elective procedures.
Whether people still feel comfortable about their healthcare situation in the next year will likely depend on what happens with healthcare reform. Major changes to the ACA law, especially cuts to Medicaid and modifications to the individual market, could mean fewer insured patients and more uncompensated care. That would have a negative effect on hospitals and may cause investors to think differently about hospital bonds.
For now, though, hospitals and health systems will continue to reap the benefits of a strong market. Community Health Systems and MetroHealth have also recently put forward debt offerings and Fitch Ratings expects corporate bong activity to remain robust.