The Internal Revenue Service has removed some legal concerns surrounding the sale of tax-exempt hospital bonds to physicians by approving a process to set bond prices in one proposed transaction.
In a letter to an undisclosed rural hospital, the IRS said the hospital could use bids for bonds sold to independent investors to set rates for similar bonds sold to physicians.
According to the letter, the hospital would sell bonds to physicians to finance part of a construction project.
The status of the project was not disclosed.
So-called "participating bond" transactions were proposed as an alternative to for-profit joint ventures between not-for-profit hospitals and doctors, but the idea fell out of favor last year after Congress enacted an 18-month moratorium on physician investment in new specialty hospitals.
