A California state commission is reviewing how not-for-profit hospitals are providing information to bondholders in continuing disclosure filings and bond offering documents. We expect other states will follow.

A recent article in The Bond Buyer reports that the California Debt and Investment Advisory Commission is reviewing how not-for-profit hospitals are disclosing information to bondholders.

The California Debt and Investment Advisory Commission began the study after SEIU-United Healthcare Workers West raised concerns in February that not-for-profit hospitals were not providing enough information in bond disclosures about the impact of the Affordable Care Act.

SEIU claims that disclosures fail to provide any specific analysis as to how ACA will impact hospitals or steps borrowers are taking to prepare.

The California Hospital Association said they disagree with the union, and that hospitals have to put together detailed analysis of what they think their finances will be, including ACA’s impact.

CHA said that nationally, hospitals are anticipating $23 billion in cuts to Medicare payments as a result of ACA, the debt ceiling and sequestration, and that every hospital is going to include their best estimate about how that impacts them individually.

The Commission has since decided to expand its analysis beyond healthcare and review all municipal borrowers in California for disclosure related to significant events.

This recent development broadens the Commission’s review to the scope of the SEC’s MCDC initiative. For more on MCDC, read SEC Asks Hospitals to Confess.

While the federal MCDC Initiative deadline for issuers to self-report is December 1, the Commission has not set a timeline for completing its review.