From the Chair

Catherine Jacobson, FHFMA, CPA

When I became CFO at Rush University Medical Center in Chicago in 2002, I inherited a balance sheet with 48 days cash on hand, and leverage ratios that threatened our debt covenants.

We were losing money and had not carried a bond rating in more than a decade, relying on bond insurance to carry our debt. And we had an aging facility that would cost more than $100 million to bring up to code. In the face of all of this, our management team decided that the only way we could remain a viable asset for our community was to build a replacement facility.

So we painstakingly improved operations and rebuilt the balance sheet. We sold off noncore assets to raise needed cash. My team and I educated our management team, board, and physicians on what it would take to get back into the debt market. We built an investor relations plan and enhanced our external disclosures to a best-practice level. We built a long-term financial plan around the metrics we needed to achieve-and we achieved them. Four years later, we re-entered the debt market with an A3/A-/A- rating to refinance current debt and provide a base for new debt. In fall 2008, we were on track with our plan for two more years of rebuilding the balance sheet and our credibility to issue more than $300 million of additional debt.

Then Lehman Brothers collapsed. Suddenly, we were locked out of the market for new debt, and scrambling to put out the fires on current debt. And the hole was being dug for that replacement hospital building. We had to find a way to pay for it.

Our commercial and investment banking teams met the challenge and came through for us. Our investor relations program paid off in terms of market communication. We raised our first debt in December 2008 and completed bond issues in July 2009. We never had to put a hold on our replacement hospital, which is fully funded with the debt we raised. It's scheduled to open in 2012.

I wish I could say it's all behind us, and everything is smooth sailing-but in health care, it never is. There is never enough capital. We've developed a capital planning process that integrates with our long-term financial plan so we know which projects will be funded over the next three years. And we allocate funds every year to strategic growth projects that are evaluated for ROI. But we're always looking for new sources of capital and assets to monetize. For us, that has meant everything from selling interests in noncore joint ventures to commercializing research patents and developing a leasing policy and plan. It's never enough, but we never stop looking.

My finance team has been integrally involved in every phase of securing capital, from planning to execution. Every morning, when I walk around our campus and get my coffee, I see the replacement hospital, which is now completely shelled out. The walls are up, and the exterior skin is going on. And I tell my team every day, that it wouldn't be there without them and the work they did to get us here. What a great way to know that you made it count. 

Publication Date: Thursday, April 01, 2010

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