Intermountain Healthcare sets money aside for several reasons:
1. Capital improvements. We have ongoing needs for facility renovation, new hospital construction, and new technology requirements. From 2011 to 2016, it is anticipated that Intermountain will spend approximately $2.3 billion on capital improvements.
These investments will replace aging facilities, equipment and information systems infrastructure, and provide expanded and improved services to the communities we serve.
2. Insurance requirements. As a health insurance company, laws require SelectHealth to maintain reserves to guarantee financial stability and payment of claims.
3. Self-insurance. Intermountain self-insures for a variety of needs, such as medical malpractice insurance and workers compensation, and is required to maintain reserves as a guarantee of financial stability.
4. Finance. Because we borrow bond market funds, we're required to set aside money in order to maintain Intermountain's bond rating, which allows us to borrow money at lower rates.
5. Emergencies. Intermountain needs to set aside funds as a cushion against unexpected expenses and/or industry or economic downturns.
The amount we set aside is established by our Board of Trustees and is evaluated by many independent agencies such as the Utah Insurance Commissioner, bond rating agencies (e.g., Standard & Poor's, Moody's), and management consulting firms.
Like most nonprofit organizations, a percentage of Intermountain's annual revenues are generated by its investments. Every dollar of investment income is a dollar that doesn't need to be generated in patient care revenue, which helps us keep our charges lower.
Intermountain is able to issue debt in the tax-exempt bond market. Since Intermountain is a nonprofit company and can't raise capital through the equity markets by issuing stock, the ability to access funds in the bond market is critically important. Maintaining a good relationship with the rating agencies and bond market is a high priority.