Related Experiment Video
Updated: Sep 20, 2026
Surgical Swine Model of Chronic Cardiac Ischemia Treated by Off-Pump Coronary Artery Bypass Graft Surgery
Published on: March 27, 2018
The hospital bond market and the AHERF bankruptcy
Caryl E Carpenter1, Michael J McCue, Sun Moon
1Program in Health & Medical Services Administration, School of Business Administration, Widener University, Chester, PA, USA.
Insights
Following the Allegheny Health bankruptcy, hospital bonds became riskier, leading to higher interest rates and fewer insured issues. This impacts hospitals needing funds for infrastructure and technology upgrades.
Area of Science:
- Health economics
- Financial analysis
- Healthcare management
Background:
- The Allegheny Health, Education, and Research Foundation (AHERF) bankruptcy significantly impacted the financial landscape for hospital bonds.
- Pre-bankruptcy and post-bankruptcy financial data for tax-exempt hospital bonds were analyzed.
Purpose of the Study:
- To assess the impact of the AHERF bankruptcy on the creditworthiness and market perception of hospital bonds.
- To examine changes in coupon rates and insurance prevalence for hospital bonds post-bankruptcy.
Main Methods:
- Comparative analysis of hospital and health system bonds issued before and after the AHERF bankruptcy.
- Evaluation of coupon rates and insurance status for tax-exempt securities.
Main Results:
- Hospital bonds exhibited higher coupon rates in the post-bankruptcy period despite a general decline in tax-exempt market rates.
- A significant decrease in the proportion of insured hospital bonds was observed post-bankruptcy.
- Bond insurers tightened credit criteria, contributing to the decline in insured bond issues.
Conclusions:
- Hospital bonds are perceived as riskier investments following the AHERF bankruptcy.
- Increased borrowing costs and reduced insurance availability pose challenges for hospitals requiring capital for asset replacement and technological advancement.
Abstract:
An analysis of hospital, tax-exempt bonds issued before and after the Allegheny Health, Education, and Research Foundation (AHERF) bankruptcy demonstrated that despite the decline in market rates for tax-exempt securities in the post period, bonds issued by hospitals and systems carried higher coupon rates than they did in the pre period. There was a significant decline in the proportion of hospital/system bonds that were insured from the pre to the post period. Bond insurance firms tightened their credit criteria after the bankruptcy, which may explain, in part, why the proportion of insured bonds declined. We conclude that hospital bonds are now viewed as riskier instruments than they were prior to the AHERF bankruptcy. This is reflected in higher coupon rates for both insured and uninsured bonds and fewer insured bond issues. This decline in hospital creditworthiness comes at a time when many hospitals need to replace aging assets and acquire new technologies in response to increased inpatient utilization.
More Related Videos
06:15A Hydrogel Construct and Fibrin-based Glue Approach to Deliver Therapeutics in a Murine Myocardial Infarction Model.
Published on: June 14, 2015
04:19Minimally Invasive Treatment for Thoracolumbar Burst Fracture Using Sagittal Alignment Screws and A Trauma Reduction Device
Published on: November 8, 2024
Related Concept Videos
01:28Hospitals-I
00:59Hospitals-II
Nurses that work in hospitals have...
01:30Health Information Technology and Healthcare Information System
Health Information Technology, commonly called HIT, integrates advanced information systems and technology in healthcare settings. Its primary functions include:
01:22Standards of Care I
01:19Standards of Care II
01:17Healthcare Agencies II
Parish nursing is a growing specialty nursing profession that focuses on holistic healthcare, health promotion, and illness prevention. It blends professional nursing practice with a health ministry, focusing on health and healing within the context of a Christian community. Parish nurses serve as health educators, referral sources, and lay...