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Structuring for Long Term Debt Barry J. Flynn, M.S., CPA HFMA Dixie Institute 27 Feb 2014 – Mobile, AL

Structuring for Long Term Debt Barry J. Flynn, M.S., CPA HFMA Dixie Institute 27 Feb 2014 – Mobile, AL. Structuring for Long Term Debt. Enterprise Risk Operational Risk Financial Risk Financial Performance & Forecasts. Structuring for Long Term Debt. Enterprise Risk Industry Risk

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Structuring for Long Term Debt Barry J. Flynn, M.S., CPA HFMA Dixie Institute 27 Feb 2014 – Mobile, AL

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  1. Structuring for Long Term DebtBarry J. Flynn, M.S., CPAHFMA Dixie Institute27 Feb 2014 – Mobile, AL

  2. Structuring for Long Term Debt • Enterprise Risk • Operational Risk • Financial Risk • Financial Performance & Forecasts

  3. Structuring for Long Term Debt • Enterprise Risk • Industry Risk • Facility and services • Reform and regulation • Uncertainties of future • Economics • Service area characteristics – population, employment, per capita income • State & local economic environment

  4. Structuring for Long Term Debt • Enterprise risk (cont.) • Market Position • Market share • Competition and demand • Payer mix • Management & governance • Tone at the top

  5. Structuring for Long Term Debt • Operational Risk • Management team • Expertise, effectiveness • Organizational structure • Strategic and tactical thinking/experience • Readiness to address ACA ramifications • Medical staff • Staff characteristics and participation • Independent, referring, employed

  6. Structuring for Long Term Debt • Operational Risk (cont.) • Clinical care • Documentation of quality/outcome • Community health status • Information technology • Robust EMR • Tracking capacity – admission, discharge, outcome, readmission • Strategic long-range planning • Capitation and pay for performance • Independent financial advisor

  7. Structuring for Long Term Debt • Financial Risk – Internal & External • Financial policies – risk tolerance • Variable vs. fixed rate debt • Current, long-term & contingent • Total debt portfolio – terms, duration, collateral • Expected return on incurred debt • Legal Structure • Ability to incur debt/mortgage assets • Parent – subsidiarity rights • Partnerships • Public • Debt covenants

  8. Structuring for Long Term Debt • Financial Performance & Forecasts • Recent and projected earnings and cash flows • Net patient service revenue • Margin – EBIDA, operating, excess (non-operating) • Maximum annual debt service coverage and lease adjusted debt service coverage • Liquidity & flexibility • Cash on hand; age of plant; reserves; planned capital improvements; contingent liabilities (SWAPS); unfunded liabilities • Reserves, tax-support, Foundation support • of current debt – bonds, mortgages, tax secured • Reporting and oversight

  9. Barry J. Flynn, M.S., CPAP.O. Box 460 – Tullahoma, TN 37388901.289.3831bjfmem@bellsouth.net

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