THE BLOG
11/19/2014 11:05 pm ET Updated Jan 19, 2015

'Social-Impact Bonds' for Nonprofit Hospitals

My physician and other colleagues and I at Cambridge Management Group have been ruminating that as outpatient populations continue to fall, nonprofit hospitals may have to increasingly turn to such private-sector innovations as "social-impact bonds" to finance physical-infrastructure projects. Those projects will include constructing more hospital-related outpatient facilities.

For that matter, they may have to turn to them to cover regular operating costs.

With these bonds, investors get a decent rate of return, though not as high as they might get elsewhere, and the satisfaction from helping projects and institutions that address important, indeed crucial, public needs.

Given the new economic and other pressures on hospitals, they'll have to get a lot more creative in financing their projects, including many more collaborations between nonprofit and for-profit organizations as well as money from federal, state and local governments.

That's especially true in regions like New England, which have far fewer for-profit hospitals than in most of the country.

Robert Whitcomb is a partner at Cambridge Management Group (www.cmg625.com), a healthcare consultancy, a Providence-based editor and writer and a Fellow of the Pell Center for International Relations and Public Policy.