Hospitals to get help from state treasurer
In response to the COVID-19 pandemic, the state treasurer’s office is offering a program to provide financial stability to hospitals facing economic concerns.
The Variable Rate Demand Obligation (VRDO) Stabilization Program “allows up to $900 million to be invested to stabilize hospitals’ short-term debt so they can focus on doing what they do best: caring for us and saving lives,” Treasurer Robert Sprague said. “If we all support one another and work together, I know Ohio will get through this stronger than ever before.”
Among the six hospital systems in the state that have already signed up to participate in the program is Mercy Health, which operates St. Elizabeth Youngstown Hospital, St. Elizabeth Boardman Hospital and St. Joseph Warren Hospital.
“Like all health systems across Ohio, Mercy Health is working tirelessly to serve our patients and communities during this unprecedented and critical time,” Deborah Bloomfield, its chief financial officer, said.
She added: “We applaud Treasurer Sprague for identifying this innovative and necessary solution that helps us continue to direct resources to the bedside so we can work to fulfill our mission and care for all who come through our doors.”
The program allows hospital systems to borrow money at a lower interest rate during the COVID-19 pandemic.
To care for the surge of patients and help prevent the spread of the virus, hospitals are incurring a significant increase in costs, Sprague said. Also, he said the municipal bond market is practically at a standstill and the VRDO market is under duress.
Hospitals typically can borrow money through the VRDO market at low interest rates, but have recently had to pay as much as 8 percent.
The treasurer’s office has committed to buy the debt for each hospital system up to $100 million in VRDOs at an interest rate of 2 percent for the remainder of the declared emergency. To obtain the money, the state is selling $900 million in federal treasury bills.