Hawkins Delafield & Wood LLP has a well-established national reputation for experience, creativity, and expertise in tax-exempt health care finance. The Firm serves as bond counsel, underwriter's counsel and special financing counsel on financings for some of the largest public and not-for-profit health care systems in the country, as well as clinics, nursing homes, health maintenance organizations, life care centers, continuing care retirement communities, social service centers, visiting nurse associations, mental health facilities, AIDS facilities and medical schools. The health care systems with which the Firm works include the New York City Health and Hospitals Corporation, Catholic Health East, Banner Health System, Dartmouth-Hitchcock Health System, Geisinger Health System, Inova Health System, Covenant, and BayCare Health System.

 

In addition to working with numerous multi-state and multi-facility health care systems, Hawkins serves on a regular basis as bond counsel to state-wide health care issuing authorities in New York, Connecticut, Maine and New Hampshire, and has served as bond counsel from time to time for the state-wide health care issuing authorities in Arizona, Idaho, West Virginia, Massachusetts, California, Hawaii and New Jersey, as well as for local issuing authorities in New York, New Jersey, Missouri, Arizona, Florida, Pennsylvania, Georgia, Tennessee and California.

 

Hawkins often provides clients with advice on a continuing basis with respect to outstanding financings, state and federal law, dispositions of assets, corporate affiliations, mergers and reorganizations, document amendments and replacements, disclosure issues, and bond redemptions. The value of the Firm's expertise in the health care finance field has been recognized by a wide variety of clients and has led to our involvement in a large number of diverse transactions throughout the nation. 

 

Highlights of our health care finance practice include the following:

 

Specialized Expertise in Multi-state and Multi-facility System Finance
The consolidation of single site community hospitals into large multi-state and multi-facility hospital systems has been one of the most dramatic trends in health care finance over the past two decades. Hawkins Delafield & Wood LLP has served as bond counsel or underwriter’s counsel for many of the nation's leading health care systems. Examples of such experience are as follows:   

 

• Hawkins serves as Bond Counsel for Trinity Health, based in Novi, Michigan, with over 30 health care facilities in California, Idaho, Indiana, Iowa, Maryland, Michigan, and Ohio and with an aggregate of 8,588 acute care, long-term care, skilled nursing and behavioural health beds, and 1,538 units of residential housing for the elderly.
• We serve as Bond Counsel for Catholic Health East, based in Newton Square, Pennsylvania, with over 50 facilities in 11 states, including Maine, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, North Carolina, Alabama, Delaware, Georgia and Florida, totaling in excess of 9,700 acute and long-term care beds and 3,600 living units. In 1998 Catholic Health East sold over $1,123,000,000 of long-term fixed rate “acquisition financing” bonds in eight series through six conduit issuers pursuant to a “covenant-free” parent model system indenture.
• We serve as Bond Counsel for Banner Health System, based in Phoenix, Arizona, which was formed in 1999 upon the acquisition by Lutheran Health Systems of Samaritan Health System, with 19 acute care hospitals in eight states with 2,677 acute care beds and 640 long-term care beds.
• From 1987 until its incorporation into Catholic Health East in 1998, we served as Bond Counsel to the Franciscan Sisters of Allegany Health System, based in Tampa, Florida, with nine facilities, totaling in excess of 3,300 acute and long-term care beds, in Florida, New Jersey and New York.
• From 1987 until its incorporation into Ascention Health in 2002, we served as Bond Counsel to the Carondelet Health System, based in St. Louis, Missouri, with fifteen facilities, totaling 2,828 beds, in Missouri, New York, Georgia, Arizona, California, Washington and Idaho.
• From 1985 until its incorporation into other health care systems, we served as underwriters’ counsel or Bond Counsel to the Franciscan Health Partnership, based in Albany, New York, with sixteen facilities, totaling 2,724 acute care beds, 1,177 long-term care beds and 999 independent and assisted living units, in Ohio, Kentucky, New Jersey, New York and South Carolina.
• We have served since 1985 as Bond Counsel to the Dartmouth-Hitchcock Health System, based in Lebanon, New Hampshire, with three hospital facilities, totaling 643 beds, in New Hampshire, Massachusetts and Vermont.
• We have served since 1997 as system counsel for Loyola University Health System, based in Chicago, Illinois, in connection with their implementation of a “covenant-free” parent model system indenture and the spin-off of their health care facilities from Loyola University of Chicago.
• We have served as Bond Counsel since 1996 to the New York City Health and Hospitals Corporation, the nation’s largest municipal hospital system, with eleven hospitals and four long-term care facilities totaling 7,411 beds, located in New York City.
• We have served since 1986 as Bond Counsel to MaineHealth, a four-hospital system, including Maine Medical Center, based in Portland, Maine, with 708 inpatient beds.
• We serve as Bond Counsel to BayCare Health System, a seven-hospital system based in Tampa, Florida with 2,622 licensed beds.
• We serve as Bond Counsel to Covenant Health System, a 13-facility system based in Lexington, Massachusetts, with facilities in Massachusetts, New Hampshire and Vermont.
• We have also served as underwriter's counsel for most national and many regional investment banking firms for healthcare financings, including the following multi-facility health care systems: University Hospitals Health System in Cleveland; Carilion Health System in Roanoke, Virginia; Inova Health System in Fairfax, Virginia; Geisinger Health System in Danville, Pennsylvania; South Florida Baptist Health System in South Miami, Florida; North Carolina Baptist Health System in Winston-Salem, North Carolina; Meridian Health System in Neptune, New Jersey; East Tennessee Baptist Health System in Knoxville, Tennessee; and Trinitas Health System in Elizabeth, New Jersey.

 

Acquisition Financings and Hospital Consolidations

Hawkins is at the forefront in serving as bond counsel to health care systems being formed upon the merger or consolidation of existing systems. This national trend is permitting not-for-profit hospital systems to compete in an increasingly hostile health care delivery market by centralizing management and consolidating services. One of the financing techniques employed by these hospitals is “acquisition financing,” whereby the new corporation is treated as purchasing the assets of the predecessor corporations for tax purposes. If the consolidation is properly structured to satisfy the Internal Revenue Code’s requirements with respect to control, related parties, asset allocations, and valuation of assets, acquisition financing permits the existing indebtedness to be extinguished as part of the acquisition, without the necessity of complying with the Code’s requirements for advance refundings.

 

Hawkins has served as bond counsel on numerous acquisition financings, all of which were properly and carefully structured to comply with IRS requirements. Although one of the Firm's acquisition financings was audited as part of the IRS's audits of numerous acquisition financings, we successfully represented the client in becoming the first system to be released from audit without penalty or debt restructuring. We did it right the first time!

 

Service to the Largest Municipal Hospital System in the Nation

In 1996, we were selected to serve as Bond Counsel for the New York City Health and Hospitals Corporation, which operates the largest municipal hospital system in the nation. The Corporation operates seven health care networks and has over 35,900 employees and had an annual operating budget of over $4.3 billion during fiscal year 2002. The Corporation currently operates through its seven health care networks eleven acute care hospitals operating 4,585 beds (which include major teaching and tertiary care facilities), and five long-term care facilities operating 2,826 beds. Since 1997, we have served as Bond Counsel to the Corporation in connection with six major financings aggregating in excess of $2,230,000,000 in bonds issued.

 

Use of Moral Obligation Debt for Health Care

In the fall of 1991, the authorizing legislation for the Maine Health and Higher Educational Facilities Authority was amended to create a “moral obligation” reserve fund replenishment mechanism whereby in the event a college, university or health care facility defaulted on a loan from the Authority, the Authority was authorized to request the Maine State Treasurer to deposit funds of the State into a separate reserve fund to satisfy bondholders. The Hawkins team drafted the appropriate resolutions, indentures and loan agreements to bring into effect the new State law. Maine’s moral obligation reserve fund bonds are not a debt of the State and payments are subject to appropriation. Since the implementation of the moral obligation program in 1991, Hawkins has served as bond counsel for over 30 bond issues on behalf of more than one hundred not-for-profit and for-profit educational and health care institutions.

 

The moral obligation reserve fund has assisted health care institutions in Maine, including institutions that have investment grade ratings such as Maine Medical Center, Eastern Maine Medical Center and Southern Maine Medical Center, by reducing overall borrowing costs. For example, while these institutions are credit-eligible for bond insurance, the use of the moral obligation reserve fund as security permits insurers to price the insurance based on a governmental credit instead of a more expensive health care credit. Bond insurance premiums charged by the major bond insurers on the Maine HEFA moral obligation program are less than 20 basis points. The benefit of the moral obligation program is more dramatic for the smaller institutions such as Houlton Regional Hospital, Maine Coast Regional Hospital and Penobscot Bay Medical Center, which may not have had access to the bond market without the moral obligation program.