PNC Healthcare Matters

ACA is Alive and Breathing
Despite worries about an impending “death spiral” the ACA’s health insurance exchanges have survived. Five years in, participating insurers are generally profitable, rates are stabilizing and “bare counties” – those with zero insurers – are practically non-existent. Learn about the potential scenarios going forward.

PNC’s Healthcare Capital Markets Update
Since the Tax Cuts and Jobs Act of 2017 took effect, banks have begun exercising the protective provisions triggered by the drop in the corporate tax rate. As a result, borrowers have seen rising interest costs associated with bank direct purchase loans and are seeking lower-cost alternatives.

Eight Healthcare Trends
Healthcare systems are faced with an ever changing landscape of investment, operational, and regulatory challenges. Explore eight themes, challenges, and opportunities you can act on to help position your healthcare system well for the future.

Survival of the Fittest: Payers Reimagined
Detailed research finds that payers are betting on the future: taking advantage of their relationships and strength in analytics, with the hope of improving outcomes, reducing costs and ultimately, being at the center of the eventual solution. View the results of our quantitative study of payer executives, supplemented by insights and verbatim comments from the qualitative research.

Healthcare Symposium Spotlights Leading-edge Change
Healthcare Symposium Spotlights Leading-edge Change PNC’s 2018 Healthcare Symposium created a unique forum for healthcare executive-level discussions on key industry trends and challenges.

Capital Markets Update
Healthcare municipal issuance through May 2018 is down approximately 23% versus the same period last year. Lighter issuance is most likely the result of the acceleration of intended 2018 bond issues into late 2017 in light of proposed tax reform and the elimination of advance refundings in 2018.

Employers Step up Their Commitment to Healthcare
Get the results of our quantitative study of employer executives which is supplemented by insights and verbatim comments from qualitative research. It covers the shape of employer-sponsored health plans, the greatest healthcare challenges facing employers, combating rising costs and coping with ACA uncertainty.

An Alternative to Taxable Advance Refunding Plans
The Tax Cuts and Jobs Act [1] prohibits advance refunding of tax-exempt bonds with tax-exempt debt, effective January 1, 2018. While the Act limits a borrower’s advance refunding capabilities to taxable financing, other opportunities to monetize savings may be realized using a forward refunding.

How Investors View the Healthcare Sector
For investors, the healthcare industry’s secular growth rate is appealing, but the profitability outlook isn’t as clear. During 2017, a key question for investors was the sluggish pace of commercial patient utilization, a trend that resulted in generally softer than expected hospital admissions and a less favorable payor mix.

Why You Should Actively Manage Your Derivative and Debt Portfolios
Recent legislation may drive the tax-exempt cost of debt higher. It is important to actively monitor and manage one’s debt and derivative portfolio. Policy implications can and do impact the composition of the balance sheet with the unintended consequence of moving a borrower along the risk spectrum. Active management can ensure the desired risk and debt composition.

Do No Harm: Can an Investment Portfolio Match a Health Care System's Underlying Mission?
We are all familiar with the medical credo “do no harm.” For healthcare systems that already operate under this premise, incorporating the credo into their investment portfolios can be the next step. Here we define how responsible investing (RI) is helping to change the dynamics between institutional investors, such as healthcare systems, and the ways they achieve their goals in alignment with their values.

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Identifying Missed Revenue Opportunities
Since 2000, there has been $538 billion worth of care provided for which no payment has been received. An unpaid claims analysis should be performed on a regular basis to measure any revenue loss that may be occurring due to sub-optimal claims management processes. An effective analysis can help organizations determine process issues, payer problems, and site-of-service issues to help staff redesign processes, improve technology integration and increase revenue moving forward. 

Hospitals in Transformation
The current healthcare environment is marked by intense pressure, rapid change and deep regulatory uncertainty. U.S. hospitals are struggling to adapt to this tumultuous and increasingly complicated environment, failing at an alarming rate. Through qualitative and quantitative research with hospital executives across the country, a new study examines how changes in healthcare today are impacting these institutions and what they are doing to survive.

Is a Securitization a Viable Financing Option For You?
Securitization may allow your company to efficiently leverage the value of your accounts receivable into a low-cost, committed financing platform.  In practice, your company will receive cash due from its accounts receivable immediately, and such proceeds can be used for any corporate purpose, including reducing more expensive debt or reinvesting into the business. 

Changes Ahead For LIBOR
The London Interbank Offered Rate (LIBOR) is a benchmark interest rate for seven maturities (overnight to 12 months) quoted in five currencies. LIBOR is widely used as a benchmark rate in lending, borrowing and derivative transactions, relating to an estimated $350 trillion of financial instruments. The Financial Conduct Authority (FCA) believes the markets supporting LIBOR are no longer “sufficiently active” to ensure the rate is representative of market conditions. Now what?

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Refunding Valuation Analysis: An Issuer’s Decision Tool
PNC Capital Markets LLC has built a new model to value call options of tax-exempt fixed rate bonds to assess refunding efficiency. Called “ReVal," it differs from standard industry practice that typically use a form of the Black-Schole Option Pricing Model.

ReVal’s pragmatic approach to defining “Peak” Present Value Savings looks at historical relationships between MMD and U.S. Treasury securities to estimate a point in time that will achieve Peak Present Value Savings. Is the ratio of Refunding Efficiency sufficient to execute the trigger for your organization?  

Identifying and Collecting Patient-Responsible Balances
With the evolution of high-deductible health plans and health savings accounts, consumers are now responsible for a larger portion of their healthcare expenditures.  Currently 29% of covered workers are enrolled in a high-deductible health plan/healthcare reimbursement account (HDHP/HRA) or healthcare savings account (HSA-Qualified HDHP). This shift can lead to a rise in bad debt.

Many leading healthcare providers identify and collect patient-responsible balances prior to service and/or at the time of service, significantly increasing the likelihood of timely payment for services performed. Find out how your organization can benefit from these best practices.

Enterprise Risk Management: Consider Both Sides of the Balance Sheet
Incorporating both sides of the balance sheet can be essential to properly managing a healthcare organization’s enterprise risk in a holistic manner. Furthermore, doing so can help to maintain a level credit rating, stabilize Days Cash on Hand, and comply with debt covenants.

By performing an Enterprise Risk Management analysis, a healthcare system can calibrate its investment portfolio to help ensure that it is optimized relative to its liabilities. Over the near term, this can help to provide continuity of operations; over the long term, we believe that this can help to fuel organizational growth.

Making Sense of Uncertainty: The First PNC Healthcare Executive Symposium
PNC Healthcare’s first annual PNC Healthcare Executive Symposium created a unique environment for executive level discussion and dialogue on key industry challenges.

Twenty-six CEOs and CFOs attended. Key organizations represented included Highmark, the Cleveland Clinic and Penn Medicine. The two-day event opened with a networking reception and a dinner presentation on cybersecurity, followed by a day of discussions about the key issues facing boards and management, including:

• Industry disruption
• The vision of an integrated delivery network
• Federal update and healthcare forecast

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A new way to evaluate liability portfolio risk
When it comes to managing liability portfolios in the healthcare industry, standard practice consists of evaluating finance alternatives based upon a comparison of cost of capital followed by an assessment of the risk of each product alternative. Developed by PNC’s Capital Markets group, a new process starts with assessing risk in your healthcare system’s existing liability portfolio.

7 trends that will drive the year in healthcare
Many healthcare systems have experienced weakness in financial performance that requires them to examine their current strategies, the adequacy of their information systems and the revenue and cost assumptions under which they were operating. This article shows how successful organizations are addressing these issues.

Benchmarking cash posting automation
PNC’s 2016 survey of Healthcare Client Advisory Board members tracks trends in cash posting and associated cost reduction potential. Survey results can help you benchmark your own processes and point the way toward improvement.

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