When is a nonprofit not a nonprofit? How about when it recruits, and wins over, investors?
That's what is happening increasingly in the health care field, reports the Wall Street Journal. Nonprofit hospitals (about 60 percent are nonprofits) are actively courting investors in order to prepare for the market share battles that have erupted among hospital systems in recent years.
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The Journal notes that some nonprofit hospitals have long tapped the municipal bond market for funds; reporting and other requirements for bonds aren't as stringent as those for publicly traded companies.
As mergers and acquisitions sweep through the industry, alarmed hospital systems are increasingly turning to bond sellers to bolster their bottom lines.
According to the Journal reports that many are creating traditional public company investor relations dog and pony shows, jetting about the country to meet with key investors. There, they wine and dine them as they lay out their strategies for return on investment.
While some bondholders are still irritated that the multi-billion dollar enterprises must only meet basic reporting requirements, others are jumping on board to take advantage of the booming health care environment.
Why don't these hospitals simply shed their nonprofit status and do an IPO, where they could rake in far more investor dough? Lots of reasons, actually.
Nonprofit status offers many benefits from a tax standpoint, and the public reporting requirements, as noted, represent a key consideration. As the Journal reports, in this era of hospitals fighting for patients and for turf, they don't necessarily want their competitors to know the details of their finances.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
