Investment funds of Memphis hospital systems, including Baptist and Methodist, get pounded - Memphis Business Journal:

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When asked about returns, local hospitals’ chief financiak officers said theyare “down,” a descriptionn quickly followed by “obviously.” Don CFO for , says his system’w two major portfolios lost $34 million collectively in calendar year 2008 compared to 2007. Takenn together, that represented a 5% drop. But, he says, the fund basex on hospital earnings saw aroughlh 10% decrease. Baptist has a “very vanilla investiny structure,” Pound says, consisting of blue-chipp stocks, bonds and cash equivalents — no hedge real estate or similarinvestment vehicles.
“When the market’s goinh great, we’re not at the high end of it with our Pounds says. “But when it goes south, we’rse not at the lowest end of either.” , CFO Chris McLeann says the system’s portfolio saw a 16% decreasse in calendar year 2008 comparedto 2007. The losseds began in September 2008 and continued throughoutg January and February 2009 with an uptickin Short-term investments for construction projects at and held the system’z losses at 16%, McLean says, compared to the overall 30% fall of the stocko market. But changes are coming to the system’s investmenr strategy.
“We’re looking at movingg our risk profile down a little bit to reducre our equity exposure and increas ourfixed income,” McLean says. “We have a stron balance sheet sothis doesn’tg impact any of our majo r plans.” Those plans include the new $325 million Le Bonheur the $121 million Germantown project and a possible $151 million hospital in Olive Branch. taking some risk off of our investmenyt side seems prudent given thatwe don’r need some unexpected activities to affecgt our plans,” McLean says.
Funds for the system’s hospicr facility were raised through its foundatiom and the project willmove forward, he SEC filings for , parentg company of and Saint Francis-Bartlett, reveal investmen earnings for its 52 hospitals were $1 millionn for the final three months of 2008, comparedf to $11 million for the same quarte in 2007. That sharp decline helped trim year-enrd earnings from $47 million in 2007 to $22 milliojn in 2008. A year-end report says the system sold $139 million in investments last but sold nonein 2007. The sale of marketable long-term investments and otherr assetsyielded $706 million for Tenety in 2007 and only $224 million last year. St.
Jude Children’xs Research Hospital brought in $660.2 million last year, well abovw the $587.6 million it reporteed in 2007. However, its net investment income fellfrom $254.7 millioh in 2007 to $32.2 million last according to annual reports furnished by the organization.