An Association of Health Care Finance Bankers and Consultants

COMMITTEE ON HEALTHCARE FINANCING

The Committee on Healthcare Financing formed in the early 1980s when several New York investment banking firms that were significantly involved in the Department of Housing and Urban Development’s (HUD) Section 242 program found hospital finance projects faced significant obstacles both within HUD and on Capitol Hill.  After resolving a number of concerns on an ad hoc basis, the investment banking firms decided that the hospital lending industry needed a proactive presence in Washington, D.C.  

Initially, the Section 242 lenders worked through the Healthcare Financing Study Group, which was a larger group comprised of investment bankers that focused on tax-exempt financing and actions on Capital Hill.  As time passed, our membership expanded to include lenders focused on HUD’s Section 232 program, which finances skilled nursing homes, assisted living facilities, and board & care facilities.  

Eventually, our members concluded that the Healthcare Financing Study Group’s mission did not always coincide with our needs, and we determined that the HUD Section 242 and the Section 232 programs warranted separate dedication and focus.  So, we broke away and became what is today the COMMITTEE ON HEALTHCARE FINANCING.  Today, the Committee is the leading voice for government-enhanced financing of hospitals, skilled nursing facilities, assisted living facilities, and seniors’ housing. While Committee membership was initially limited to investment bankers, it has expanded over the years to include other stakeholders—mortgage bankers, health care consultants, and financial advisers. 

The Committee’s highest priority has been and continues to be preserving and strengthening the public-private partnership that is the heart of the National Housing Act.  To that end, the Committee has worked directly with HUD on administrative and policy issues, and has been active on Capitol Hill in supporting and helping to facilitate several major amendments to the National Housing Act.  Some of our key achievements include: 

  • Legislation that permitted Section 242 projects to utilize an alternative Certificate of Need procedure in states that had terminated their CON programs (for example, California, Florida, Nevada, and Texas).  As a result, a hospital, rather than the State, is now permitted to hire the feasibility consultant and thus hospitals in States that don’t have a CON and do not undertake separate feasibility review are now eligible for Section 242 financing. 

  • After increasing difficulties in the management of the Section 232 program, the Committee recommended and help realize the transfer of the Section 232 program from the Office of Multifamily Housing to the Office of Healthcare Programs.  

  • Committee members have worked closed with HUD in the implementation of its LEAN processing tool for the Section 232 program, which allowed HUD to process record volumes of Section 232 loans post the Great Recession. 

  • After nearly three years of working with HUD, multiple administrators, and HUD Commissioners, the Committee saw implementation by HUD of its first new health care loan program in decades— the Section 242/223(f) program.  Hospitals are now able to access affordable financing without having to develop a capital project, and we’re continuing to guide HUD as the program grows and adapts for today’s consolidating and changing hospital community. 

  • The Committee lead the industry in getting HUD to approve for all health care and multifamily programs the capitalization within a HUD loan certain termination fees incurred in connection with interest rate protection facility.  

  • HUD’s Section 232 loan documents issued in early 2013 required a form of Intercreditor Agreement that the AR lending industry flatly rejected.  Rather than lose the ability to combine the Section 232 financing with accounts receivable financing, the Committee formed a coalition of the nation’s largest and most sophisticated AR lenders to work with HUD in revising the Intercreditor Agreement.  As a result, HUD, the AR Lenders, and the HUD Lenders were able to agree on an improved form of Intercreditor Agreement—one that has become an industry standard. 

  • In 2010 and 2011, HUD’s biggest impediment to Section 232 production was lack of sufficient staffing.  The Committee supported efforts on Capitol Hill to increase staffing for the Office of Healthcare Programs specifically.  The Committee also spearheaded an effort supporting HUD’s hiring of outside consultants to alleviate the ever-growing backlog of Section 232 applications.  That proposal was subsequently put into place in June 2011. 

  • The Committee has also interfaced with the Department of Health and Human Services’s Office of Rural Health Care Policy to link its Critical Access Hospital (CAH) rural initiative to the Section 242 program. This included sponsoring 2003 legislation for a three-year exemption for Critical Access Hospitals from Section 242’s 50% convalescent care limitation to account for the fact that many CAHs typically provide nursing home beds at levels that, absent legislation, would preclude them from using Section 242 financing.  That legislation was extended until July 2016 as a result of Committee efforts, and we are currently working to obtain a permanent exemption. ​