Originally published in January 2025, this perspective considers funding decisions after the preceding high-rate period. The framework is relevant across rate cycles, but the effect depends on the organization’s own debt and cash profile.
Start with the debt and cash profile
Hospitals and healthcare systems finance facilities, equipment and technology alongside recurring operating costs. Review which borrowings are fixed or floating, when they reprice, and when principal repayments fall due. Compare those obligations with cash that is actually available for operations, rather than treating every reported cash balance as deployable.
Keep capital plans connected to liquidity
- Map expected capital-project payments alongside payroll, suppliers and debt service.
- Separate unrestricted operating liquidity from balances restricted by their terms or purpose.
- Review account access, deposit returns, banking fees and payment timing together.
- Test the effect of changing funding costs on planned commitments before deciding whether a project or acquisition remains affordable.
Compare options rather than prescribing one
Fixed-rate refinancing can change the timing and certainty of interest expense, but it may also involve fees, restrictions or a different total financing cost. Cash, Treasury securities and money market funds are not interchangeable: access, maturity, credit exposure and policy constraints differ. Decisions should follow the organization’s treasury policy and the specific terms of the instrument.
Use organization-specific evidence
A sector-wide borrowing-cost average does not describe the impact on a particular healthcare system. Use actual debt terms, planned commitments and available cash to assess funding choices. The same discipline applies to an acquisition: affordability depends on the proposed transaction and its financing, not an industry-wide deal-volume headline.