Declining reimbursement trends are not only impacting hospitals' day-to-day finances — they are also forcing hospitals to invest more in riskier alternative portfolios to make up for potential losses, according to a report from the Commonfund Institute.
The Commonfund Institute, a financial research organization based in Wilton, Conn., looked at the assets and investment data of 86 non-profit healthcare organizations, including hospitals and health systems. Researchers found that those organizations' share of assets allocated to alternative investments — such as real estate and hedge funds — have increased heavily since 2009.
"The share of healthcare organizations' assets allocated to alternative investments rose from 15 percent in 2009 to 21 percent last year," said William Jarvis, managing director of the Commonfund Institute, in a North Jersey report. "That's a huge shift in such a short period of time."
Alternative investments are usually considered to be riskier bets, but they usually lead to better returns. However, the report also found that the riskier investments did not lead to significantly better portfolios. Hospitals and health systems reported 0 percent in investment returns in 2011, compared with 11 percent in 2010 and 19 percent in 2009.
Mr. Jarvis said in the report this could be due to the sluggish overall markets, which hammered most institutions this past year.
The Commonfund Institute, a financial research organization based in Wilton, Conn., looked at the assets and investment data of 86 non-profit healthcare organizations, including hospitals and health systems. Researchers found that those organizations' share of assets allocated to alternative investments — such as real estate and hedge funds — have increased heavily since 2009.
"The share of healthcare organizations' assets allocated to alternative investments rose from 15 percent in 2009 to 21 percent last year," said William Jarvis, managing director of the Commonfund Institute, in a North Jersey report. "That's a huge shift in such a short period of time."
Alternative investments are usually considered to be riskier bets, but they usually lead to better returns. However, the report also found that the riskier investments did not lead to significantly better portfolios. Hospitals and health systems reported 0 percent in investment returns in 2011, compared with 11 percent in 2010 and 19 percent in 2009.
Mr. Jarvis said in the report this could be due to the sluggish overall markets, which hammered most institutions this past year.
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