Municipal Bonds and Nonprofit Hospitals
By Tara Fugate
MNA Strategic Researcher
A common misconception about nonprofit hospital finance is that, unlike publicly traded corporations, they are not responsible to shareholders or investors. In fact, many hospital expansion and construction projects are funded by investors through the use of municipal bonds. Municipal bonds are not unlike loans from the public. Hospitals work through municipal entities such as cities and counties to issue bonds for public purchase.
A bond is a type of debt investment. This means that an investor or bondholder loans money to an entity (typically corporate or governmental) for a defined period of time at a variable or fixed interest rate.
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