Smoke from a growing number of wildfires increases borrowing costs for hospitals and other healthcare facilities, sometimes in surprising ways, finds new analysis conducted by a team that includesThe College of w88 slot, an assistant professor in theFinance Departmentof theCollege of Businessat thew88 casino games login, Reno.
In fact, a working paper developed by the researchers finds that if a hospital in w88 casino games login had issued million in bonds in 2020 to finance a construction or expansion project, it likely would have paid an additional .6 million in interest costs as the result of smoke from California wildfires.
Higher borrowing costs, in turn, may translate into higher daily costs for stays in hospitals and nursing homes during the next 10 years in regions such as the West that are particularly hard-hit by wildfire smoke. Recent devastating fires in Los Angeles further spotlighted the issue.
“Municipal bond investors realize that wildfire smoke is a growing problem and one that will continue. They have priced it into bonds,” Wilkoff said.
Some of the effects of wildfire smoke on hospital finances are obvious. Emergency-room visits for treatment of asthma and other respiratory ailments are likely to increase when wildfire smoke pours from fires.
Particularly in low-income counties, those visits may include more uninsured or under-insured patients who can’t pay for their care. That weakens the ability of hospitals to repay borrowers.
“The wildfire smoke hurts the most vulnerable populations, which can in turn increase hospital costs,” Wilkoff said.
But some of the impacts of wildfire smoke on healthcare financing are more subtle.
For instance, the researchers found that younger, better-off people are more likely to move away from counties with persistent pollution from wildfire smoke. Their departure leaves behind older, poorer people whose care will further strain hospital finances.
“Given that many older residents are Medicare-insured and many low-credit residents are uninsured, hospitals in high-smoke areas are likely exposed to greater operational challenges and credit risks in the long run,” the researchers wrote.
Because wildfire smoke often crosses state lines — sometimes delivering healthcare and financial impacts on people on the far side of the country — Wilkoff said regional or national approaches may be needed to mitigate the harm.
“The true cost of wildfires can be much larger than a state’s own costs. Living here in Reno, for example, we have had more than a few days of horrendous smoke cause by California fires,” he said. “This suggests there is a role to be played for states coming together or for federal fund to help in the mitigation of wildfires to prevent the smoke.”
Along with Wilkoff, whose research focuses on municipal finance and real estate, the co-authors include Luis A. Lopez and Dermot Murphy of the College of Business at the University of Illinois, Chicago, and Nitzan Tzur-Ilan of the Federal Reserve Bank of Dallas.
