A Hospital Faces Tough Financial Choices About Its Future

Stevens Hospital treats about 42,000 patients a year - about twice the number the space was built for. Now the hospital is faced with a critical financial decision: Should they invest in a major upgrade or invest in constructing a new hospital altogether?

Hospital board members are faced with the challenge of how to acquire enough capital for either decision they make. The cost of a new emergency department is estimated at $20 million to $30 million. The cost of building an entirely new hospital will likely cost about 10 times as much.

The hospital's recent lack of financial stability is also causing problems. Their low levels of cash on hand has caused a downgrade in bond ratings, which would make borrowing for improvement projects, equipment or construction more costly.

By using Medical Accounts Receivable (MAR) funding, this hospital would be able to protect and maintain a favorable bond rating. MAR funding does not add debt to the balance sheet, and therefore can provide significant savings on interest costs.

By including MAR funding to their financial strategy, Stevens hospital will also have a method of increasing cash flow for necessary upgrades and/or new equipment purchases.