Stop me if you’ve heard this before−the Fed has signaled that an interest rate rise is imminent. Yes, that’s been the case for what has seemed like several years, but most would agree the conversation has shifted from “if” to “when and how aggressively” rates will rise. In this edition’s feature article, we examine how nonprofit organizations can evaluate debt and investment policies to ensure better integration, mitigate interest rate risk and improve the long-term stability of the organization.
Additionally, our hospital article explores the increasing prevalence of high deductible health plans and what that means for hospitals’ collections efforts. Both our senior living and housing articles explore the active acquisition market: the senior living piece offers several recent examples that prove for-profits are not the only organizations making acquisition headlines and the housing article details how to use the Fannie Mae Multifamily Affordable Housing (MAH) loans for a timely and flexible execution. Lastly, our Fiduciary Focus article provides an update on recent regulations that will redefine “fiduciary” and examines what that means for retirement plans.
Enjoy the start of spring and don’t hesitate to reach out to one of our authors for more information on any of the topics discussed in this edition of The Capital Issue.
Tom Green, CEO
The Capital Issue: April-May 2015
Since late 2007, the Federal Reserve (Fed) has used aggressive measures to keep interest rates low, inflate asset prices and stimulate the economy. Even though the Great Recession officially ended in September 2009, these monetary policies effectively remain in place today. Recently, however, the narrative has shifted from “if” to “when and how aggressively” rates will rise. Nonprofit organizations with investible assets and long-term debt should view this as an opportunity to manage interest rate risk.
To date, the Affordable Care Act (ACA) has resulted in an estimated 32 million newly-insured Americans since 2010; nearly one-third of which purchased coverage through exchanges. On the surface, it appears that this would be nothing but positive news for health care providers, as their ability to collect for billed services should be enhanced with more insured consumers seeking care. However, taking a closer look at the plans the newly insured are choosing reveals a growing issue in collections for providers: the increasing popularity of high deductible health plans (HDHPs).
For-profit senior living acquisitions have dominated headlines over the past few years, riding a robust wave of private capital and low borrowing costs. Recent activity, however, indicates that nonprofit organizations have not been merely sitting on the sidelines.
For those receiving an abundance of real estate brokerage packages lately, one aspect is likely to stand out—the high prices sellers are asking for in today’s frothy acquisition market. Due to those high prices, as well as factors such as fewer closing contingencies, quicker closings and all-cash offers, now can be an ideal time to consider selling well-performing affordable apartment buildings.
Since the passage of the Employee Retirement Income Security Act (ERISA) of 1974, the definition of “fiduciary” has largely remained unchanged. That definition, however, will remain static no longer as recently proposed regulations will redefine the term in the coming months. As such, plan sponsors should begin considering a revised compliance process using the new expanded definition.
The Fiduciary Focus