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Acute Care Hospitals

ACA Capital insures bonds issued by not-for-profit Acute Care Hospitals that are the providers of essential services within their market. Many ACA Capital insured hospitals are sole community providers, critical access hospitals, or providers of specialty services. ACA Capital also insures hospitals that are the market share leaders in their defined service area or serve a well established niche. The hospitals we insure have demonstrated ability to adapt and survive in the dynamically changing healthcare environment.

Key Credit Factors

In order to make a preliminary determination of insurability, ACA Capital will review the hospital for the following key characteristics:

1. Not for profit organization
2. Net revenues of over $20 million
3. Established market position
4. History of sound financial performance
5. History of stable or improving utilization

Key Legal and Covenant Provisions

Typical security and covenant provisions for ACA Capital insured acute care financings usually include the following:

• Gross revenue pledge including accounts receivable
• Mortgage
• Rate Covenant of a minimum 1.20x Maximum Annual Debt Service
• Days Cash on Hand of a minimum of 60 days
• Debt to Capital not to exceed 65%

Essential Documentation

The following information is essential for an ACA Capital review of a proposed Acute Care Hospital financing:

• Preliminary Official Statement (if available) and legal documents
• Statement of Sources and Uses
• Five years of audited and current interim financial statements
• Five years of utilization statistics
• Medical staff data including number of physicians and percent board certified