With changes to the ACA looming and some healthcare organizations' costs outpacing revenue, there are several key areas nonprofit health systems should consider this year with respect to their investments, according to a Mercer report.
Regarding their investment programs, here are three areas of consideration nonprofit health systems should prioritize in 2017, according to Mercer.
1. Assess impact of post-election changes. With congressional Republicans working on a plan to repeal and replace the ACA, nonprofit health systems need to reexamine their investment plan. "Organizations should reevaluate their risk tolerance and investment strategies, as operating results may be significantly affected by potential changes," according to Mercer.
2. Evaluate interest rate risk. Since the U.S. presidential election, interest rates have risen and they may increase further. The rising rates may benefit some healthcare organizations, such as those with debt portfolios that are mostly fixed rate. According to Mercer, nonprofit health systems need to assess their overall interest rate sensitivity.
3. Take an enterprisewide view. Nonprofit health systems should merge their investment strategy with their financial plans and take a comprehensive view of their investment risk posture. "Organizations' risk level should account for illiquid investment strategies that may be excluded from the days-cash-on-hand calculation," according to Mercer.
For more information about key areas of consideration regarding nonprofit health system investment programs, access the full Mercer report here.
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