Post on 26-Dec-2015
transcript
Why Use Tax-Exempt Bonds?
Options Available to Fund Capital Projects◦ Pay as you go◦ Philanthropy*
Donations Endowment Third party guarantees
◦ Grants◦ Conventional loans and other taxable
financings◦ New Market Tax Credits◦ Tax-Exempt Bonds
Tax-Exempt Bonds
Tax-Exempt Bonds Compared to Taxable Debt◦ Generally Lower Rates◦ Flexibility of Terms◦ Longer Maturity Dates◦ Balance Sheet Leverage
Written Promise To Repay Money◦ Amount Borrowed◦ Interest Rate◦ Maturity Date◦ Redemption Terms
Parties to a Bond Issue?
Issuer (State or Local Government) Borrower – i.e. Hospital Trustee Underwriter
◦ Senior Manager◦ Co-Managers◦ Selling Group
Financial Advisor Investors
Types of Tax-Exempt Bonds
Tax-Exempt Bonds
Private ActivityBonds
Exempt FacilityBonds
(Section 142)
Qualified MortgageBonds
(Section 143)
Small Issueand First Time Farmer Bonds
(Section 144(a))
501(c)(3)Bonds
(Section 145)
GovernmentalBonds
Bond Issue (Simple Fixed Rate)
UnderwriterBondholders
Issuer
Borrower
Trustee
$
$
$
$
$Bond Payments
Bonds/Official StatementBonds/Purchase Contract
Loan/Financing Agreement
Loan Payments
Trust Indenture
501(c)(3) Status
• Qualified 501(c)(3) bonds
– Tax-exempt “private activity bonds”
– issued by a state or local government
– proceeds loaned to and used by a 501(c)(3) organization in furtherance of its exempt purpose
501(c)(3) Status
• 501(c)(3) organizations– Organized and operated exclusively for exempt
purposes (“no private benefit”)– No part of the net earnings may inure to the benefit of
private shareholders or individuals (“no private inurement”)
– Not engaged in substantial lobbying activity– Not engaged in political campaign activity– Evidence of 501(c)(3) status
• IRS Determination Letter• Group Ruling Letter
Basic Requirements of IRC Section 145
Ownership Requirement◦ Property financed by the net proceeds of qualified
501(c)(3) bonds must be owned by a 501(c)(3) organization, a limited liability company whose sole member is a 501(c)(3) organization or a state or local government
Use Requirement◦ At least 95% of net proceeds of bonds must be used
by (i) a 501(c)(3) organization engaged in exempt activities, (ii) a limited liability company whose sole member is a 501(c)(3) organization or (iii) a state or local governmental unit
How Construction Projects are being Financed
47% Existing Cash Reserves
30% Operations
18% Tax-Exempt Bonds
The Focus of this presentation is to identify business initiatives that will assist you in preparing for the future.
The business initiatives suggested will improve your bottom line and offer new financing opportunities.
Market Future
Health care Beyond Reform… It’s about:
More but smarter health care;Earlier health care;Health care Where, When and
What you need.
Read more here: http://www.imaginewhatif.com/
Market Future
Market shifts:Care moving closer to homeReimbursed for OutcomesHigher out of pocket expensesIncreased numbers of un-
insuredFewer Hospitals
Market Future
Market Future
1,329 Critical Access Hospitals as of 2013 providing care to approximately 2.3 million people, mostly Medicare, for approximately $8.3 billion in payments from CMS.
849 CAHs (64%) would not qualify if required to re-enroll in Medicare.
When does 0 = +7% increase?
Market Future
When your Partner budgets.
Baseline budgeting is Previous year + Inflation + % of population growthThen they battle for budget increase
“facility fees are built into the way Medicare and commercial insurance plans pay for health care.”
Read more here: http://www.kansascity.com/news/special-reports/_news_special-reports_doctors-inc_/article334895/Day-2-Facility-fees-add-billions-to-medical-bills.html
Medpac
How Cost Is Determined
Independent Physician $72.50 to see patient under Medicare
Hospital Owned MOB yields a Physician fee of $49.70 and a facility fee of $73.68 for the same patient.
Data Mining for New Revenue
Read more here: http://www.kansascity.com/news/special-reports/_news_special-reports_doctors-inc_/article334895/Day-2-Facility-fees-add-billions-to-medical-bills.html
How Cost Is Determined
Market shifts:Community Care Networks Life Guides Health Coaches Navigators
New ways to involve Volunteers
Business Strategies
Market AwarenessGrowth TrendsDemographicsService Availability
Clinical Business StrategiesFacility Master Plan
Business Strategies
Master Facility Plan
• Long Term Planning adds Value • Capital Needs and Long Term Spending
Plan– Include Replacement Costs– An Understanding of Cost of
Occupancy– Tie to a business plan for service
• Performance Based Decisions– Plan for Change– Benchmark performance
Once you have Facility Master Plan, recognize:
It’s a living documentYou have to WORK the planIt’s time sensitive
Business Strategies
Space Allocation / UtilizationSynergiesRedundant OperationsLocationAdaptability
Staff Reductions of 30% or moreSpace Reductions of 50%Predictive Analytics for Improved Utilization
Business Strategies
You need to look at what you do and build the case for profitability in your outcomes.
Business Strategies
The reality of what we do – Our job can be outsourced!
The reality of Outsourcing – The Company taking your job will make a profit.
Business Strategies
Profit Opportunity Areas:Facility maintenanceHousekeepingGroundsDietary / Café / Food ServiceLaundry
Business Strategies
Profit Opportunity Areas:Facility maintenance Control your utilities Contract Service vs In-house Management fee for off-campus facilities Repurpose / Reduce SF
Business Strategies
PMG controls:Property Management ServicesProperty Group – Space Allocation
and UtilizationDevelopment – capital constructionManagement – lease and 3rd party
operations
Property Management Group
Property Management Group
The Mission Statement drives business
The Property Management Group provides
the physical environment for the business
service to happen
Note the “BLUE BOXES” these are the
the key groups that must have a business
plan. The FM plan brings reality to the
business plans of the patient care
providers
Left side represents Landlord tasks
Right side establishes parameters for
success
Property Management Group
To effectively work the importance of real estate, property development, and facility operations needs to be at the Administration level where the “C’s” are.
We recommend the Chief Financial Officer be the leader of the Property Management Group. Typically this person will understand costs and be more able to relate a cost benefit analysis to an Administrative Group.
In most cases the Facility Manager becomes the person responsible for the implementation of the Property Management Group’s initiatives. The Facility Manager, being the end user, acts as the “Landlord” of the real estate owned and developed by the Organization.
A Clinical Representative should always participate in the PMG. This person acts as the liaison between the PMG and Tenants.
Property Management Group
PMG Specific Results• Reduced 10 Year Master Plan costs by
$25,000,000• Reduced Energy Costs by Approximately
$750,000 Annually• Reduced Annual Work Order from 21,000+ to
14,000+• Maintenance Staff Efficiency from 75 percentile
to No. 1 out of 561 hospitals.• Added $1m annually in MOB reimbursement