Health systems are starting to return to the municipal bond market to raise money for new projects after a slow start to the year.
The University of Kansas Hospital Authority this week will be the latest to join a small group of hospitals and systems that are still raising funds for major construction and expansion projects. The authority plans to issue $253.5 million in bonds that will be used to build a new hospital campus. The bonds also are expected to price this week.
Hospital borrowing reached its lowest level in more than a decade last year, despite historically low interest rates and pent-up demand from lenders. Spending on construction projects waned as hospitals focused their attention on their health information technology needs. These smaller-scale projects are better funded with bank loans than with long-term bond issuances.
Even when hospitals and health systems went to the municipal bond market, it was typically to refinance older debt, according to an analysis of filings on MuniOS.com.
But the University of Kansas is joining Trinity Health, Livonia, Mich.; Memorial Sloan-Kettering Cancer Center, New York; and Vidant Health, Greenville, N.C., which have all sought new investors this year for large-scale capital projects.
The 623-bed hospital in Kansas City will spend nearly $280 million to build an expansion hospital known as Cambridge North on land north of the main campus. The bonds will cover $150 million of the project's cost, with donations and cash on its balance sheet funding the rest.