HealthLeaders Media Finance - October 27, 2008 | Dealing With the Credit Conundrum View as a Webpage | Subscribe for Free
Dealing With the Credit Conundrum
Philip Betbeze, Senior Editor-Finance

It's no secret that the credit markets have frozen in the past several weeks, causing huge problems throughout our financial markets. But the implications of what that means for your organization are even more complicated and can be downright frightening. So what do you do about it? [Read More]
  October 27, 2008

Editor's Picks
Health insurers reinvent themselves as money managers
This story earns "story of the week" around these parts (HLM Finance). It details how WellPoint, one of the nation's largest healthcare companies, isn't really a healthcare company at all—or at least that was its recent argument to the Federal Reserve, which initially stood in the way of the company's efforts to establish a bank as part of its business. The company's lawyers argued that it should be classified as financial services firm so that it could accumulate a growing deposit base that resides in health savings accounts. My sources and I have been talking about this transformation for some time now, and I've written stories about the new initiatives like this that health insurers have taken on, but I haven't written a big piece tying it all together, like this one does. I won't go into a long explanation here, but this story details the logical evolution of an industry that has increasingly found itself marginalized as it moved out of the risk business over the past couple of decades (most large employers are self-insured, leaving health plans as mere administrators of their money). You should read it. I wish I had written it. [Read More]
Georgia hospital awaits word on financial bailout
Bailouts aren't just limited to banks anymore. Southern Regional Health System in Clayton County, GA, will have to wait to see if it will survive long-term, as it's asked the county to back a $95 million bond issue that will be used to retire expensive debt and fund infrastructure improvements. The county is waiting on an audit to show whether the investment is likely to achieve its aims. Lots of hospitals are in trouble, and rather than take steps of laying off employees or slashing expenses that have already been cut to the bone, several have closed in the past few weeks. Look for the pace of that consolidation to continue, as in most cases, cash-strapped county and state governments won't be able or willing to step in. [Read More]
Middle-market M&A on the decline
This is a quick and very dirty look at the way the financial meltdown has affected middle-market M&A by Matt Margulies. It's not healthcare-focused, per se, but it shows how much more expensive debt to fund such mergers has become and how few players are left willing to provide funding at any price. It also has a couple of "gamer" stories about recent deals Cain Brothers has tried to complete. Sobering, to say the least. He predicts valuations in healthcare are set to come down, naturally. [Read More]
Finance Forum
Win Federal Contracts With FAR
You can't win a federal healthcare contract without knowing something about the Federal Acquisition Regulation, commonly known as "the FAR." For healthcare providers, the FAR is about as detailed and complex as the Medicare Provider Reimbursement Manual (...and just about as exciting a read, as well). But it's a necessary evil with which any healthcare organization must become reasonably familiar in order to capture a federal contract and perform successfully once that contract is awarded. [Read More]
Finance Headlines
Dallas voters to decide Parkland Hospital proposal's fate
Dallas Morning News - October 20, 2008
The next American crisis is healthcare
The Tennessean - October 19, 2008
In-store health clinics' popularity grows in Pittsburgh
Pittsburgh Post-Gazette - October 21, 2008
South Carolina's Providence hospitals announces layoffs
The State - October 21, 2008
Southern Wake County, N.C., pushes for hospitals
Raleigh News & Observer - October 21, 2008
Vanderbilt buys sites to expand its children's hospital
The Tennessean - October 18, 2008
California hospitals say first bond wasn't enough
Los Angeles Times - October 20, 2008
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From HealthLeaders Magazine
Model for Success
Running a medical group has never been more complex. But many practices have found ways to not only survive—but thrive. [Read More]
Money Talk

Floyd Memorial Hospital & Health Services, New Albany, IN
Rating: A-
Outlook: Negative
Affected Debt: $45.4 million
Agency: Standard & Poor's
Remarks: Outlook revised from stable because of concern about two new hospitals opening in the market by the end of 2008. [Read More]
Audio Feature

Risky Business: Today's audio interview is a conversation I had recently with Karen Gries, a certified public accountant and principal with Larson-Allen, about new accounting rules for hospitals associated with the IRS's Form 990. Karen and I talked about some of the parts of the form that hospitals will want to pay special attention to, as well as the potentially high-risk parts of the form. For those with December 31st filing deadlines, these rules have special significance. [Listen Now]

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