Joseph Brown and Deborah Gordon Published in American Health Lawyers Association’s Newsletter
“On Syndicated Loans and Their Potential New Importance to Healthcare”

Joseph Brown and Deborah Gordon’s article, “On Syndicated Loans and Their Potential New Importance to Healthcare,” was published in the September 2009 issue of the American Health Lawyers Association (AHLA)’s Newsletter. In their article, Joe and Deborah discuss how healthcare is a capital-intensive industry that needs to raise hundreds of billions of dollars in the next few years to finance long overdue and neglected capital projects and to keep up with demand. Their article also notes that while some of the new capital may come from equity sources and some may come from the government, much will have to come from syndicated lenders.

According to their article, healthcare loans are perceived as higher-risk loans because of the high-regulation and low-margin environment. To make larger loans to healthcare providers under current conditions, private lenders need to form groups or “syndications,” so that no one lender becomes overly exposed to the credit. Joe and Deborah discuss the relevance of syndicated lending to healthcare and explain some of the unique risks associated with it.

Joe and Deborah conclude their article with a discussion of what it takes to get a syndicated deal done in today’s market. The authors note that “a healthcare provider may very well need to offer the banks highly profitable ancillary business opportunities, such as cash management, payroll and other service contracts.”