The Investing Flash Report for Hospitals uses data from the Federal Reserve, Bloomberg, ICE, and certain custodial data. The report is intended share information about markets, interest rates, performance and strategies for managing the balance sheet of hospitals, nursing home and other healthcare providers.
Inflation is like a tapeworm which contributes to financial repression. In order to grow purchasing power and financial strength, one must earn returns on average over time well above the rate of inflation. Inflation is often measured by CPI or PCE – but both estimates underrepresent the true inflation experienced by healthcare providers. Therefore, HLCM created the Hospital Inflation Indicator.
The Hospital Inflation Indicator utilizes other inflation indicators more representative of the costs pressures facing healthcare providers like the employment cost index, the producer price index and construction index. Each index is weighted according to the average proportion representing total expenditures. The result is an inflation indicator for healthcare providers that is more realistic and often higher than the traditional measure of inflation. Knowing the rate of inflation is key to determine what the return baseline needs to be in maintain financial strength. If you earn a return above inflation, the financial strength will improve. If you earn less than inflation over time, the financial strength will be compromised.
Market commentary is also provided to give context from a macro perspective the results of various economic or market indicators. No investment decisions should ever be made based on market commentary or observations, but the information is shared, nonetheless.
The “Pool” concept is used to identify common time horizons, risks to manage, and investment objectives. Each pool has natural assets that best accomplish the objectives. A one-page summary of potential strategies and commentary is shared for each pool. What is not included is the recommendations of which strategies and in what proportion make sense given the current valuation along with risk management considerations.
Hi-Line Capital Management is a firm specializing in rural healthcare investing which we refer to as “Business #2”. It is our job to assess, analyze, complete due diligence, stress test, teach and prepare all things with the various constituents and decision makers involved. We have proven the ability to provide effective executive level leadership to the investment department for rural healthcare while only needing 1-2 hours per month of the CEO, CFO and Board’s time. And time is money.
