Welcome to the Summer 2011 edition of The Capital Issue. It's been a tumultuous couple of weeks in the capital markets, and many providers are wondering how their existing debt structures and future access to capital might be impacted. Lancaster Pollard has been monitoring these changes closely and keeping in touch with our clients, particularly those who have federally-insured debt.
We are hopeful S&P’s action has already been partially priced into the market. Even with the market’s recent uncertainty, fixed interest rates remain at near all-time lows, and short-term rates and indices continue to hover below historic averages.
For additional context on the downgrade and its possible repercussions, we invite our readers to review The Research Note, written by our Adam Smith, CFA, CAIA, investment strategist for Lancaster Pollard Investment Advisory Group.
If you have any questions on market issues or the other topics covered in this quarter's newsletter, or would like us to visit in person to explain them, please don't hesitate to contact us.
Thomas R. Green, CEO
As an old Chinese proverb says, “Crisis can be used as an opportunity by some.” While the U.S. debt drama played out amid a sharp economic slowdown resulting in market turmoil, short-term interest rates have been at an all-time low and may continue to be so through mid-2013, according to a recent release by the Federal Open Market Committee.
Before Watauga Medical Center merged with two other hospitals to form the Appalachian Regional Healthcare System, the 117-bed rural North Carolina facility had historically maintained a strong 5% operating margin and a comfortable amount of cash on hand.
When it comes to health-care reform, most providers within the senior care industry have adopted a wait-and-see attitude. But savvy senior care organizations will already be focusing on three key considerations to remain competitive in the future: game-changers, collaborating with hospitals and other competitors, and identifying and measuring new goals for care coordination.
Federal budget recommendations and legislative proposals are raising questions about the future of federal financial support for rural affordable rental housing projects and about how these much-needed developments will be funded in coming years.
One of the major challenges that nonprofit boards face is turnover among investment committee members. Finding qualified, volunteer fiduciaries to oversee the investment portfolio can be difficult, posing a significant problem for the organization. Moreover, board turnover could lead to frequent changes in investment policy strategy and management tactics.