Issue link: https://beckershealthcare.uberflip.com/i/1522996
11 CFO / FINANCE estate except for four hospitals. Of those four hospitals, where once there were lease obligations that went out through 2035, now there is a defined negotiated purchase option that Prime can exercise on the remaining assets at any time. Q: What is the end goal for this strategy and how long does Prime plan to continue these real estate acquisitions? SA: e end goal is to complete the repurchase of the four remaining hospitals. Prime is currently assessing the capital market conditions to evaluate the right time to go to market for a larger refinancing of its existing High Yield notes. If the timing makes sense, it is very possible the repurchase of the remaining hospital assets could happen before the end of 2024. Q: What advice do you have for other CFOs looking to chip away at their organizations' debts? SA: ink about the optionality and flexibility you have regarding your capital structure and seek to maximize both, when possible. Markets can change overnight, so it is important to have multiple options to explore when evaluating how best to address your capital needs. So be creative, think out of the box and have as many options as possible that potentially provide novel ways for you to reduce your company's cost of capital. I will note that over the last few years when interest rates have increased 400-500 basis points, Prime has been successful in lowering its cost of capital over that period. Q: What are the key benefits of health systems owning the real estate of their hospitals? SA: Aside from enhancing the asset portfolio of a health system and providing optionality to respond to the changing healthcare needs of a community, healthcare real estate is a good investment. For evidence you need to just look at how well healthcare real estate performed in times of economic uncertainty, specifically during the COVID-19 pandemic. roughout the pandemic, healthcare asset values stayed solid. Unlike other sectors of commercial real estate that are subject to economic cycles and market volatility, healthcare real estate is characterized by stable demand. People will always need healthcare services, regardless of economic conditions, and healthcare facilities must be available to meet those needs. is makes healthcare real estate a recession-resistant asset class that offers long-term stability. Q: Do you see more systems following a similar strategy as part of their financial improvement plans? Why? SA: is is once again a differentiator of Prime Healthcare from other national health systems. Unfortunately, there are currently numerous stories in the press of national providers who financed growth via the sale of real estate but were unsuccessful in improving the performance of the hospitals they operated. As a result, they had facilities in operational distress, escalating debt service, constrained and tightening cash flow and were le having to make tough decisions that will negatively impact their ability to meet the healthcare needs of the community. On the other hand, Prime Healthcare has successfully turned around 46 hospitals, investing in new technology and services based on community need, strengthening its balance sheet, purchasing the hospital real estate and further enhancing the delivery of quality care. If it can be done, I expect other systems to do so, but it has proven extremely challenging if not impossible for others to replicate Prime's successful track record. n Gen X, Y worry about Medicare's future By Alan Condon Concern about Medicare's future is no longer unique to current beneficiaries and older Americans. Millennials and Gen Xers are concerned that Medicare may not be available to them in the future, and are willing to pay more now if it means preserving this critical benefit, according to a survey published May 22 by eHealth, an online private health insurance marketplace. Editor's note: Data is based on responses from more than 1,000 Americans ages 28 to 59, drawn from the general population. Those who indicated they were born between 1965 and 1979 are categorized as "Gen Xers," while those born between 1980 and 1996 are categorized as "millennials." Seven key findings from the survey: 1. Almost all Gen Xers and millennials surveyed value what Medicare provides: 94% said they are entitled to coverage for their healthcare needs in retirement, while 67% said that access to quality, affordable healthcare will become "much more important" to them as they age. 2. However, many are not sure exactly what the Medicare program is: Only 30% of respondents (28% of millennials and 41% of Gen Xers) know that Medicare is a healthcare program primarily intended for people 65 and older. 3. Among those who know what Medicare is, 65% worry it will not be there for them and 56% do not trust elected officials to do what is necessary to preserve Medicare. 4. Seventy-eight percent of Gen Xers and millennials feel that baby boomers and earlier generations were fiscally irresponsible and are leaving younger generations to foot the bill. 5. Most would contribute more today if it helped guarantee the survival of Medicare: 84% would agree to increased payroll taxes if it ensured Medicare was there for them in the future. 6. Half of respondents (47%) say healthcare in general is their No. 1 voting issue this year; 78% say that Medicare specifically is among their top three voting issues. 7. Gen Xers and millennials largely approve of the U.S. healthcare system, which more than 75% of respondents described as either "good" or "excellent." n