Time Value of Money SL4 - Essay Example

I. Surge of economic challenges. In the recent past there has been an increase in the economic challenges that makes borrowing of capital a hard tussle. Most lending institutions have to put it hard since there is much of economic crunch. This makes health care to merge so as to increase the trust for borrowing. II. High interests that are charged. There is high interest charged in borrowing that makes many health care industries to merge so as to combine their resources. The fees that banks are charging for letters-of-credit associated with variable rate debt structures have doubled or even tripled in cost. IV. Lack of access to capital.

Therefore lack of current capital accelerates consolidation in the industry through mergers, acquisitions, and closures. Hospitals making major improvements to their facility prior to the credit market disruptions will have a competitive advantage. In addition, hospitals with stronger credit profiles will have easier access to capital than hospitals with weaker credit profiles. (Giddy, 2014).Many hospitals are finding themselves unable to access capital at a reasonable cost while at the same time their existing variable rate capital structures are impaired due to credit downgrades with bond insurers, commercial banks, or interest rate swap