Cost of doing business; Not-for-profits hasten to leave auction-rate securities.(The Week in Healthcare)

Modern Healthcare, March, 2008 by Evans, Melanie

Byline: Melanie Evans

Not-for-profit healthcare's exodus from the formerly popular auction-rate securities market is under way in earnest.

The credit turmoil roiling the banking industry and bond insurers has upended borrowing by hospitals who issued long-term debt to short-term investors through frequent auctions (Feb. 25, p. 6). Nervous investors fled the auction market in mid-February, and as demand plummeted, interest rates skyrocketed. Healthcare borrowers-which frequently turned to the market to diversify their debt portfolio and lower borrowing costs-have been scrambling to exit the market and curb costs in the meantime.

Some major not-for-profit healthcare systems have moved to restructure billions of dollars in auction-rate debt in...

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