About seven in ten of the hospitals we finance have no public credit rating. Many have never borrowed in the bond market at all. Lending to them on the same terms as a rated health system would be careless; refusing to lend to them would leave much of rural America without modern intensive-care equipment. So we read their credit ourselves.
What we look at
- Days cash on hand, and how it moves through the year, not just at the audit date.
- Payer mix, and how much of the hospital’s revenue depends on a single payer or program.
- The cost report, which tells us more about a small hospital’s operations than its audited statements.
- The community: the distance to the nearest alternative hospital, the county’s population trend, and whether the hospital has local tax support.
- The equipment: how essential it is to the hospital’s licensed services, and how easily it could be redeployed.
Why the equipment matters
Critical-care equipment is unusually essential. A hospital that stops paying for its monitors cannot run its ICU, and a hospital that cannot run its ICU loses its most important service. That gives both sides a strong reason to make the agreement work, which is why our losses have stayed low through two difficult years for rural hospitals.
Continuity Assurance adds to that confidence, and lets us lend to hospitals whose balance sheets alone would not support the terms they need.