Market crash, bailout struggle add to healthcare borrower fears

It was already a pretty hostile environment in which to be a healthcare borrower, even before the recent, spectacular collapse of big financial institutions on Wall Street. Of course, things have only tightened up more since the failure of Lehman and the prolonged, paralyzing discussions--ending in failure--of the controversial $700 billion bailout plan for an ailing Wall Street. 

While the bailout plan is likely to resurface in some form going forward, in the meantime it's a nervous time for the financial markets. That means stressful financial relationships for healthcare borrowers in the near future, including high interest rates and tough-to-obtain capital.

With markets in turmoil, short-term rates have skyrocketed on tax-exempt short-term bonds. The index on which these bond rates are based, the Securities Industry and Financial Markets Association Municipal Swap Index, leapt to 7.96 percent last week, from just 1.79 percent two weeks earlier.

Meanwhile, health plans that rely on interest income continue to get zapped as well. For example, David Parrella, Connecticut's Medicaid chief, notes that with a part of his state's revenue coming from capital gains on Wall Street, losses there could result in a significant impact to his program.

To learn more about the ongoing financial gridlock:
- read this Modern Healthcare piece (reg. req.)

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