The AHA today urged the American Bankers Association to encourage its member financial institutions to commit to working expeditiously with hospital and health system borrowers who are unable to meet financial and operating covenants because of the impact of the COVID-19 pandemic, and to support relief from regulatory or other requirements that limit the lenders’ ability to provide much-needed liquidity.

AHA estimates that the financial impact to hospitals and health systems from COVID-19 expenses and revenue losses over the four-month period from March 1 and June 30 totals $202.6 billion, with losses averaging over $50 billion per month, according to a report released yesterday and shared with the ABA in today’s letter.

The letter notes that COVID-19’s “unprecedented impact on hospital borrowers – drastic decreases in revenues, significant increases in expenses, and large losses in investment portfolios as they care for a nation’s struggling population – could, at some point, result in noncompliance with operating and financial covenants in financing documents.

“Borrowers need to maintain their focus on managing the COVID-19 crisis, and need their lenders to provide prompt waivers of any technical defaults, rather than ‘forbearance’ or other agreements that leave borrowers, as well as their many stakeholders, in an uncertain position. Lenders’ waivers are crucial to avoid unintended cross-defaults under other agreements (such as bond indentures, leases, and supplier agreements), and to permit the borrower’s auditors to deliver unqualified audits.”

Related News Articles

Headline
A two-dose series of the Pfizer-BioNTech COVID-19 vaccine was 100% effective against COVID-19 in 12-15 year olds more than four months after the second dose in…
Headline
The Department of Health and Human Services today began distributing $7.5 billion of the $8.5 billion in American Rescue Plan Act payments designated for…
Headline
Centers for Disease Control and Prevention Director Rochelle Walensky, M.D., Friday expanded eligibility for COVID-19 booster shots to include all adults…
Headline
The Health Resources and Services Administration in September gave health care providers who received more than $10,000 in Provider Relief Funds between April…
Headline
The AHA, American Medical Association and American Nurses Association today released a television and digital ad in English and Spanish thanking…
Headline
Vice President Kamala Harris today expects to announce $1.5 billion in American Rescue Plan Act funding for the National Health Service Corps, Nurse Corps…