Wednesday, November 19, 2008
A report from Crane's Chicago Business notes that the economic downturn is forcing nonprofit hospitals to put capital projects on hold as investment portfolio losses mount and interest rates soar on nonprofit bonds. Advocate Health has postponed $150 million in capital spending, and Provena Health has halted building several planned outpatient facilities.
The crunch isn't limited to Chicago. The Sacramento Bee reports that California hospitals are facing the same problems. One recent bond issue required an interest rate of 6.9%, considerably higher than the 4.5% the hospital hoped for. Loma Linda University Medical Center ended up offering investors 8.25% on its bonds, nearly twice the going rate of a few months ago.