Boston Medical Center Issues the First Sustainability Bonds in the U.S. for a Not-For-Profit Health Care Organization
BOSTON – Boston Medical Center (BMC) became the first non-profit health care organization in the nation to issue sustainability bonds with a $232 million bond sale this month that reflects the hospital’s commitment to carbon reduction and health equity for its patient population.
Sustainability bonds are both green bonds – recognizing BMC’s leading efforts on environmental issues – and social bonds, which reflect BMC’s role as an essential safety-net provider and national leader on health equity and social determinant of health supports in wraparound care for patients.
The bond sale was managed by RBC Capital Markets. The sustainability bond designation was certified by Kestrel Verifiers. Initial orders for the bond sale were oversubscribed by nine times, totaling over $2 billion. Due to the strong demand, BMC will save $5.4 million in debt service through lower interest rates.
“BMC is deeply committed to understanding and solving persistent health inequities in communities of color,” said Alastair Bell, MD, MBA, President and Interim CEO of Boston Medical Center Health System. “We also view continuing to take action on climate change, which disproportionally impacts communities of color worldwide, as a core and necessary leadership role within the healthcare sector. We are appreciative of the investors who share our vision for health equity in this first-in-the nation sustainability bond offering in non-profit health care.”
The sale attracted orders from more than 50 institutional accounts, with nearly $90 million directly from environmental, social and government-focused accounts. Moody’s Baa2 (stable) and S&P BBB (positive) ratings were affirmed for the new debt issuance. The bonds were issued through the Massachusetts Development Finance Agency.
BMC, an academic medical center with 514 beds on its main campus in Boston’s South End, is adding 70 new inpatient beds, including 60 medical-surgical beds and 10 ICU beds, five new operating rooms, new pre- and post-op areas, and outpatient improvements through a $222 million renovation and expansion of existing facilities. The expansion project supports BMC’s goal to become carbon net zero by 2030, while also increasing access to patient care and wraparound social supports to historically underserved populations.
BMC has reduced carbon emissions from energy consumption by 94 percent since 2011 through a series of initiatives, from a major campus redesign to partnering with the Massachusetts Institute of Technology on a solar purchase agreement to the installation of a cogeneration plant on the hospital’s rooftop. Practice Greenhealth has recognized the hospital with a Top 25 Environmental Excellence Award, the highest level of achievement, for leadership in climate action and resilience.
In September, BMC opened the Brockton Behavioral Health Center in Brockton, Mass., which was carbon net-zero for carbon emissions from energy from day one. BMC was the first hospital in the nation to issue green bonds, for more than $200 million, in 2015 and 2017 for the prior campus redesign and consolidation.
BMC has also established a wide range of services and programs beyond the traditional medical model to close disparities in health care, from the first-hospital based preventative food pantry in 2001 to nationally recognized housing, economic mobility and violence prevention programs. In 2021, the hospital launched the Health Equity Accelerator to study the root causes of racial health disparities and develop meaningful solutions to close the gaps.
“BMC demonstrates leadership in the healthcare industry through the holistic advancement of operational sustainability, health equity and climate action goals,” Kestrel Verifiers concluded in its second party opinion certifying the sustainability bonds.
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