Could relief be on the horizon for hospitals squeezed by a lack of access to the bond market? Some help could be if one provision in the huge economic stimulus package cleared by the House survives Senate scrutiny--though critics note that the incentives for banks would be modest.
The $819 billion bill includes provisions designed to encourage banks to buy tax-exempt debt, something they haven't been prepared to do since at least last fall when the bond market saw a catastrophic collapse. Since that time, bond financing has been all but unavailable for any but the strongest institutions, forcing not-for-profit hospitals to postpone or cancel capital investments.
The provisions would give banks limited financial incentives to buy tax-exempt debt issued in 2009 and 2010, including access to interest deductions permitted to corporations investing in municipal bonds and interest deductions on debt used to buy up to $30 million in municipal bonds per year. (Right now the limit is $10 million per bond issuer.)
To learn more about the incentives:
- read this Modern Healthcare article (reg. req.)