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Wishard debt $80M below 'best' scenario

March 17, 2010

Historically low bond rates helped executives at the parent corporation of Wishard Health Services raise the funds to build a new hospital for even less money than they even dreamed.

In late February, Health & Hospital Corp. of Marion County completed sales of $661 million in bonds, which will help finance a new $754 million hospital. It is scheduled to open in December 2013.

With the help of the Indianapolis Bond Bank, law firms and financial advisers, Wishard officials sold the bonds at a combined interest rate of 3.9 percent. Hospital officials thought the best they would get would be 4.5 percent.

The difference will add up to $80 million over the 30-year life of the bonds, said Dan Sellers, chief financial officer of Health & Hospital Corp.

The hospital had assumed it would pay about $50 million a year in debt-service payments. But now, it will have to pay just $36.5 million.

Wishard was helped by the Build America program, part of President Obama’s stimulus bill, which subsidized the interest rate on many of the Wishard bonds.

“It’s a very significant savings to the taxpayers and to us as an organization,” said Matt Gutwein, CEO of the Health & Hospital Corp. “What it means is we’ll be able to provide more care to the community.”

The worst-case scenario, as predicted by Health & Hospital Corp., would have sold bonds at a rate of 6.16 percent. Compared with that scenario, the hospital will save $356 million over the life of the bonds.
 

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