ECONOMIC DOWNTURN, CONTRACTING CREDIT MARKET PRESENT BIG CHALLENGE
As we move past the initial euphoria of President Obama’s inauguration, it is becoming clear that the audacity of hope is colliding full square with the enormity of our economic difficulties.
The passage of a nearly $800 billion stimulus plan has confirmed that the federal government is prepared to help to improve economic conditions, even though it will take time for the effects to be felt.
While healthcare has been insulated from the economic downturn, it has not been immune. Access to capital is the lifeblood of growth for healthcare providers and the root cause of this recession has been a rapid contraction of the credit markets. In healthcare, this contraction has taken place more slowly and less severely, but it remains a big challenge for most healthcare organizations.
First, some good news. Commercial paper, variable rate demand bonds (VRDBs) and the money market sectors are functioning well. At about this time last year, that market was broken and wreaking havoc on a broad range of companies regardless of credit strength. After much government intervention, the markets are now functioning smoothly – at least for strong credit quality issuers.
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