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Challenges, and opportunities, during the financial crisis

October 1, 2008
by Douglas J. Edwards, Editor-in-Chief
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As the financial crisis dominates the headlines, some behavioral healthcare executives are worried about the credit crunch, particularly if their organizations have credit lines they are looking to renew or expand. But as Dean Adams of the Community Health Facilities Fund (CHFF) points out, behavioral healthcare executives are used to tight times.

“I think folks are used to operating on a shoestring,” says Adams, CHFF’s director of operations, “but it’s still a bit scary, particularly if you have a transaction in the works right now.”

CHFF assists nonprofit community-based behavioral healthcare organizations with accessing capital.

The recent and rapid consolidation of the banking industry also could affect behavioral healthcare organizations.

Adams notes that financial institutions often don’t understand behavioral healthcare providers’ operations. Thus, when agencies find a bank or lending team that understands their needs, they are likely to stick with them.

Yet with the spate of bank failures and takeovers, providers may need to look for other institutions with dedicated nonprofit groups, and “that’s not a very long list,” notes Christopher Conley, CHFF’s fund manager.

With so much uncertainty in the air, Adams and Conley urge caution in the short term.

“You might want to take a step back if you’re about to jump into a big new project and just see what the ripple effect [of the current crisis] is six to nine months down the road,” advises Conley.

Yet with real estate prices continuing to fall, it may be a good time to acquire property for future building projects, Adams points out.

And while some financial institutions likely will be tightening up their lending criteria, there still will be opportunities for behavioral healthcare organizations to obtain loans for capital projects. Says Adams, “We have capital, and we’re looking to put it to work.”

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