With financing tight in the aftermath of the 2008 financial crisis and many hospitals facing declining admissions and revenues, they often turn to more creative ways to raise capital.
For instance, Hackensack University Medical Center in New Jersey is working with for-profit companies such as LHP Hospital Group in Dallas to create joint ventures, according to HealthLeaders Media. It used its alliance with LHP to acquire the assets of Pasack Valley Hospital out of bankruptcy and refurbish and reopen the facility--converting Pasack Valley to a for-profit hospital in which Hackensack owns a 35 percent stake, the article reported.
"We looked at our situation and did an honest assessment of how we could achieve multiple and sometimes competing strategic goals for capital. We decided we needed to find a way to address how we could take on a new hospital without jeopardizing ourselves financially or losing sight of our mission," Hackensack CEO Robert L. Glenning told HealthLeaders.
In West Virginia, Boone Memorial Hospital in Charleston converted from a county-owned to a not-for-profit facility over the summer to qualify for better outside financing, reported the Charleston Gazette. As a result, the hospital was able to secure a $31.8 million rural development loan from the U.S. Department of Agriculture to build a new facility.
"It is so difficult to give to the county for another entity because it goes through the county books. But if you're a nonprofit community hospital, you can contribute directly to the hospital and take it off your taxes with no issues," Boone CEO Tommy Mullins told the Gazette. "This was the driving reason for the new hospital to raise money."