Browse by Topic
More than 40,000 members value HFMA's thought leadership and practical strategies. HFMA is where you need to be.
Get acquainted with the
healthcare finance industry's leading professional association. Find out why our
members rely on HFMA as their go-to source for insight and
Members have many
options for helping them advance their careers. Conferences, seminars,
eLearning, certification, and more -- our education and events will keep you
Connect the dots on today's big issues, explore collaborations, get career-boosting tips, and network with colleagues nationwide at the leading finance conference. Save $100 off the full conference rate when you register by May 8.
Real-time presentations with nationally recognized experts, networking opportunities, and industry solutions—no travel required!
Learn about timely healthcare finance topics and earn CPEs. Most live webinars are free for HFMA members and $99 for non-members. View the latest schedule.
If you're a subscriber to any of our three newsletters, you have access to online education. Learn more or subscribe.
Get the perspectives of leading healthcare finance professionals on today's hottest issues.
Information about leading vendors helps your buying decisions.
Forum members can network during live webinars or access a library of past webinars on topics such as bundled payment, charity care, and ICD-10.
An ever-expanding collection of spreadsheets, policies, job
descriptions, checklists, and more that you can adopt and adapt.
Forum members can submit vexing questions to a panel of experts
using our Ask the Expert service.
Your source for employment solutions.
Find new employment opportunities or
reach out to qualified candidates.
Distinguish yourself as a
leader among your peers and advance your career by earning certification in our
healthcare finance programs.
Get an objective third-party evaluation of products and services used in the healthcare finance workplace.
MAP App is a web-based application that helps organizations improve revenue cycle performance based on industry-standard metrics called MAP Keys.
Find suppliers and products in this comprehensive vendor directory for healthcare finance professionals.
Guidance for understanding and communicating about the price of health care.
Transformation toward value-based healthcare is reshaping the delivery of care, patient expectations, and payment structures.
Improve your revenue cycle performance through standard metrics, peer comparison, and successful practices.
The use of alternative financing products such as bank loans and direct-purchase debt has increased among not-for-profit healthcare providers in the United States. Although there are benefits to using some of these alternative financing products, such as low cost of capital and less traditional “put” risk, we believe it is important to highlight the risks of these new products and reiterate the need for greater transparency to rating agencies and debt markets.
With greater use of these direct-purchase obligations and a more diverse group of banks and financial institutions entering into these types of financings, the terms and covenants in the agreements are less clearly defined and less uniform than many of the traditional documents used in fixed- or variable-rate capital market financing. This situation creates, in our view, the potential for considerable credit risk exposure. Of particular concern to us is the frequent absence of disclosure of these agreements’ existence and their terms in a timely manner, notwithstanding whether privately placed debt carries legal disclosure obligations. Although the impact of the Affordable Care Act is increasing financial pressures on healthcare providers, bank loans with attractive terms should be considered carefully by issuers and disclosed in full whether or not they are on parity with outstanding debt issuance.
Private placements or direct-purchase obligations can have substantial implications for the credit quality of an obligor’s capital market debt. Implications can include, among others, acceleration and the potential for cross–default provisions between privately placed debt and capital market debt. Some documents contain events of default provisions or covenants that, in our view, favor the lender over existing capital market bondholders, and as a result may subordinate the claims of an issuer’s capital market lenders relative to those of the private placement lender, thereby increasing the potential for triggering the financing’s remedies. Combined with cross-default provisions and “most favored nations” clauses, breached covenants and default events could accelerate not only privately placed obligations, but also capital market debt. This effect could in turn create a liquidity crisis for the issuer and potentially have multi-notch negative rating implications.
Disclosure of privately placed debt is critical to the ratings process, because where event-driven risk exists, we evaluate the likelihood of the issuer triggering acceleration, termination payment, or collateral posting requirements. We further assess management’s capacity to respond to these types of liquidity demands, whether through available balance sheet liquidity, capital market access, or lines of credit. We also assess the relationship of the current rating to rating triggers in the covenants, cure periods, and the financing’s other specified terms that define default events. If, in our view, the likely demand on liquidity is high and available liquidity is inadequate to cover repayment risk, we could consider a negative rating action or outlook change. The extent to which management both demonstrates an understanding of the risks that direct-purchase bonds and loans could present and has plans or policies to mitigate them plays an important role in our assessments of the credit quality implications of these types of financings.
We believe that delayed disclosure of any financing does not serve the market well, particularly where the financing’s covenants could pressure liquidity and potentially lead to negative rating implications. This is particularly true for healthcare providers facing new and often unpredictable financial burdens—such providers should be erring on the side of full disclosure and assessment now more than ever.
Martin Arrick is a managing director at Standard & Poor’s Ratings Services.
Martin Arrick is a scheduled feature speaker at ANI 2014: The HFMA National Institute in Las Vegas, June 22-27. His presentation, “The Capital Markets and the Health System Sector,” will address how implementation of the Affordable Care Act and recent trends in the private sector have affected the capital markets’ views of the hospital and health system sector.
Publication Date: Friday, March 28, 2014
Tom Myers, chief strategy officer, The SSI Group, discusses the shifting payment environment and how it affects providers' patient access and claims management processes.
Jeff Chester, senior vice president and chief revenue officer at Availity, shares his thoughts on "Revenue Cycle 2.0" and how to best meet its challenges.
Mitch Morris, vice chair and global leader, healthcare, Deloitte, and Michael O'Rourke, senior vice president and chief information officer, Catholic Health Initiatives (CHI), share perspectives on the need for transformational IT in health care today.
Brian Kueppers, founder and CEO, Apex, discusses the importance of a robust patient payment strategy in boosting organization revenue and enhancing patient satisfaction.
Brian Grazzini, CFO, HealthPort, describes the importance of efficient and compliant information exchange and audit management in helping HIM staff spend less time on paperwork and more on mission-critical projects.
Cindy Matthews, executive vice president, Community Hospital Corporation, discusses how rural and community hospitals can use collaborative partnering to position for success through tough market conditions.
Rick Heise, senior vice president, revenue cycle, at Cerner Corporation, discusses the importance of integrating clinical and financial data to excel in health care’s changing payment environment.
Russ Graney, founder and CEO for Aidin, and John Laursen, head of business development for Aidin, share insights on how to improve care transitions between acute and post-acute care settings and incentivize high-quality patient outcomes.
Scott Elston, strategic accounts manager, GE Healthcare Services, describes how substantial cost reduction in health care requires rethinking business strategy and asset use.
Robert Williams, MD, director, Deloitte Consulting LLP, and Arielle Freiberger, product strategist, ConvergeHEALTH by Deloitte, explain how sophisticated retrospective, real-time, and predictive data analytics can inform decision making to reduce costs and improve care.
Stuart Hanson, director of business development (healthcare solutions) at Citi Retail Services, discusses how improving the payment experience can benefit consumers and healthcare providers.
©2015 Copyright Healthcare Financial Management Association
HFMA.org is best viewed using IE9 or the latest versions of Chrome, Firefox, and Safari.
Join HFMA today and enjoy: