— Job Market Paper

Financing Care or Financialization?: An Empirical Analysis of Tax-Exempt Bond Use In Nonprofit Hospitals

Municipal bonds are loans that nonprofit hospitals use to purchase medical equipment, build medical facilities, and invest in other major infrastructure projects that increase access to care. These bonds are tax-exempt, and associated with lower borrowing costs than most commercial debt. Municipal bonds serve as a primary source of financing for the nonprofit health care sector. Despite this heavy reliance, there is almost no evidence on which types of hospitals use these bonds, how these bonds are used, and whether this financing expands hospitals' capacity to provide care.

We used 2010–2023 IRS Form 990 data to identify nonprofit hospitals that used municipal bonds and describe their characteristics, including size, location, and wealth. We calculated the total amount of annual debt that nonprofit hospitals together take on in municipal bonds. To assess the impact of use of municipal bonds, we examined changes in land, buildings, and equipment after hospitals borrow using a staggered difference-in-differences event-study design. We also measured changes in hospital stock portfolios and expenses like top executive compensations to assess whether the bonds were used for alternative reasons.

— Working Paper

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— Work in Progress

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