Study: Wildfire smoke raises hospital borrowing, patient care costs

Editor's Note

Wildfire smoke is driving up borrowing costs for hospitals and healthcare facilities, potentially leading to higher patient care costs, according to new research from the University of Nevada, Reno.

As detailed in a February 18 article in Nevada Today, findings show municipal bond investors are factoring wildfire smoke risks into their pricing, increasing interest costs for healthcare facilities in smoke-prone regions. For example, a Nevada hospital issuing $90 million in bonds in 2020 would have faced an additional $1.6 million in interest costs due to smoke from California wildfires.

According to the article, the financial impact extends beyond interest rates. Hospitals in wildfire-affected areas are likely to see increased emergency room visits for respiratory issues, particularly from uninsured or underinsured patients in low-income counties. This surge in uncompensated care strains hospital finances and heightens credit risks, further driving up borrowing costs.

The effects are not limited to immediate healthcare demands, the outlet reports. The study found that persistent wildfire smoke prompts younger, wealthier residents to relocate, leaving behind an older, poorer population. These remaining residents are more likely to rely on Medicare or be uninsured, exacerbating operational challenges for hospitals. Consequently, facilities in high-smoke areas face greater financial pressures due to a less economically stable patient base.

Given that wildfire smoke crosses state lines and affects distant regions, the researchers suggest that regional or national policy solutions may be necessary to mitigate the financial impact on healthcare systems. The article also details how the widespread effects of smoke — such as those experienced in Reno from California wildfires — underscore the need for coordinated mitigation strategies, possibly supported by federal funds, as wildfires become more frequent and severe.