1.1 Healthcare Finance is More Important than Ever
1.2 Cost of Capital
1.3 The Effects of Health Reform
2 Legal and Economic Issues in Healthcare Lending
2.1 Healthcare Laws
2.2 Payment Issues
3 Types of Potential Healthcare Providers Needing Capital
3.1 Hospitals
3.2 Long Term Care Facilities
3.3 Life Science Companies
3.4 Medical Device and Equipment Manufacturers
3.5 Other Healthcare Providers and Service Companies
4 Various Financing Concepts and How They Work
4.1 Cash Flow Financing
4.2 Asset-Based Financing
4.3 Lockbox Lending
4.4 Real Estate Financing
4.5 Equipment Financing and Capital Leases
4.6 HUD Lending for Long Term Care Facilities
4.7 FHA Section 242 Mortgage Program
4.8 Construction Loans
4.9 Sale-Leaseback Arrangements
4.10 Vendor Financing
4.11 Bond Financing
4.12 Mezzanine Financing
4.13 Special Issues with Acquisition Financing
5 Legal Concepts and Documents Relevant to Most Healthcare Transactions
5.1 Term Sheet; Commitment
5.2 Due Diligence
5.4 Credit Agreement/Loan Agreement
5.5 Promissory Note
5.6 Legal Opinions
5.7 Deposit Account Control and Restriction Agreements
5.8 Pledge Agreements
5.9 Landlord Waivers
5.10 Commonly Negotiated Loan Provisions
5.11 Post-Default Complications Unique to Healthcare
6 Four Prototypical Deals and Their Related Documents
6.1 Type 1--Cash Flow Loans
6.2 Type 2--Real Estate Based Loans
6.3 Type 3--Asset Based Loans
6.4 Type 4--Equity Deals
7 Potential Credit Enhancement and Risk-Reduction Sources
7.1 Letters of Credit
7.2 Insurance
7.3 Guaranties
7.4 Interest Rate Risk Protection for Variable Rate Loans: Derivatives, Swaps, and Other Hedging Devices
7.5 Cross-Default and Collateralization Provisions
7.6 Equity Infusions
7.7 Subordinated and Mezzanine Debt
7.8 Syndication
7.9 Capital Markets & Securitization
8 Conclusion
Appendix A
S&P Guidelines for Long Term Care Financing
Appendix B
A Short Primer on Debt, Equity, and Legal Terminology
Appendix C
Sample Opinion Long Term Care Facility (Real Estate Loan)
Appendix D
Sample Asset-Based Opinion of Counsel
Appendix E
Example Representations and Warranties for Life Science Companies
Appendix F
Example Representations and Warranties for Healthcare Facilities
Appendix G
Flow of Funds Chart--Revolving Loan
Appendix H
Revocable Standing Medicare/Medicaid Deposit Account Service Agreement
Appendix I
Government Healthcare Receivables Deposit Account Agreement
Index
For those involved with the healthcare industry, an understanding of the underlying principles of healthcare finance is a must. Healthcare Finance: A Primer addresses all the basics, from a discussion of the particular needs of various types of healthcare entities, to specific financial arrangements and the attending documents that are integral to them. In addition, the publication includes sample documents for various types of loans, and sample representations and warranties for life sciences companies and healthcare facilities.
AUTHOR
DEBORAH GORDON, ESQUIRE, is a partner at the law firm of Seyfarth Shaw LLP. Ms. Gordon concentrates her practice in the financial, corporate, and healthcare industries. Ms. Gordon regularly structures various types of business transactions, such as mergers and acquisitions, joint ventures, asset-based loans, cash flow loans, real estate financing transactions, mezzanine financing, convertible security issuances, leveraged buyouts, private placements, and private equity and venture capital transactions. She also has experience in secondary market transactions, including syndications and participations, and workouts, restructurings, and bankruptcies involving healthcare providers. Ms. Gordon regularly advises clients in the areas of healthcare regulatory matters, including licensing, fraud and abuse, privacy, medical staff issues, pharmaceutical pricing and marketing practices, compliance, and corporate governance. Ms. Gordon holds a J.D and a B.A. from the University of Illinois and an M.B.A. from the University of Chicago. She is a member of the Illinois Bar and has earned her Green Belt certificate in the firm's Six Sigma program.
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