Emergency Plan Helps Hospitals with Bond Debt
California hospitals are struggling to pay rising bond interest rates after the subprime mortgage meltdown. A new state program approved yesterday will give relief to some of them.
Wednesday, March 12, 2008
Hospitals sell bonds to investors to finance improvements. But California Treasurer Bill Lockyer says the mortgage crisis is driving up interest rates on those bonds. He says that means the cost of care goes up. Lockyer has come up with an emergency plan to get hospitals lower interest rates and at the same time attract investors.
Lockyer: “It’s an incentive for the borrower to get money that’s less expensive and it’s an incentive for the investor that loans the money because it’s exempt from state and local taxes.”
The California Health Facilities Financing Authority has approved the program for six hospitals so far. Combined they will refinance more than $4.5 billion in debt. Some of the hospitals include Sutter Sacramento, Scripps Health in San Diego and Catholic Healthcare West in San Francisco.