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Nonprofit healthcare borrowing picks up, systems issue $18 billion in bonds

Nonprofits issued only $16 billion in municipal bonds in 2013, a 40 percent drop from the $27 billion issued in 2012.

Nonprofit hospitals have issued $18 billion in municipal bonds this year after pulling back on issuing debt for the past two years, according to new data compiled by Bloomberg.

Nonprofits had held back on issuing bonds when the Affordable Care Act took effect on 2013 over concerns that disruptions in cash flow tied to reforms would make it harder to pay back debt for capital improvements.

Nonprofits issued only $16 billion in municipal bonds in 2013, a 40 percent drop from the $27 billion issued in 2012. In 2014, systems issued even less, just $14 billion in bonds.

[Also: S&P lifts outlook on nonprofit healthcare on Medicaid, M&A activity]

This year, Trinity Health took on the greatest debt, borrowing $897 million, while the North Shore-Long Island Jewish Obligated Group borrowed $504 million. North Shore-LIJ recently changed its name to Northwell Health.

The news comes after all major credit rating services have raised their outlook on nonprofit health systems, particularly larger, integrated systems, as consolidation in the industry and the drop in uninsured patients across the United States has helped them shore up finances.

Lower interest rates is also driving the change, Bloomberg said, since new and cheaper debt is being used to pay off old bonds.

Twitter: @HenryPowderly