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HomeLatest NewsSDAHO EnterprisesHow to Leverage your Days Cash on Hand

How to Leverage your Days Cash on Hand

Most healthcare organizations are required to have a certain amount of Days Cash on Hand/Cash Reserves to ensure liquidity needs are always being considered. That said, even in a rising interest rate environment, most of these funds are earning close to 0%, which can become a detriment to the hospital’s financials, as cash is not being deployed to areas of the business that can generate higher yields and/or provide direct value to the organization’s day-to-day objectives.

Capaxa LLC, a trusted partner of Modern Capital, is a grantor trust backed by life insurance based assets, that allows Healthcare Organizations to better deploy a portion of their Days Cash on Hand/Cash Reserves. Similar to cash, the Participation Pool is fully liquid at all times, with the added benefit of always providing a positive yield (Guaranteed Minimum Yield = 360 BP). This is achieved by…

  • Funding New Healthcare COLI Policies.
    • As long as we can get at least 10 insureds, this will be done as Guaranteed Issue, and will not require any sort of Medical Underwriting
  • Move Said COLI Policies into the Participation Pool
    • Policy Assets being added to a Trust Fund Pool (“LifeNotes Fund I”) at Cash Surrender Value in exchange for the same dollar par value issued back to the Healthcare Organization as a participation certificate evidencing undivided beneficial security interest in the asset values and payments from the entire pool of assets (pool size is over $500,000,000).

Existing Days Cash on Hand/Cash Reserves can be converted to Healthcare COLI, and then added to the pool, with any key-person or personal death benefit retained for beneficiaries (if applicable). This will result in the current yield of close to 0%, increasing to 6% or more (based on death claims timing and as a floating rate of SOFR30 + 360bps with 15-year target duration), without negatively impacting the required liquidity needs. Click here for more information.

If you are interested in learning more, please contact Ryan Millman at rmillman@moderncap.com.

About Modern Capital

SDAHO Enterprises’ Endorsed Business Partner Modern Capital Executive Solutions is a leading consulting firm in the non-profit and for-profit space, with a niche specialty in key personnel retention & reward programs, as well as investment & expense mitigation. With over 75 years of combined, they are better positioned than ever to deliver solutions consistent with the objectives of our clients.

The SDAHO Enterprises Endorsed Business Partner program was established to provide innovative and cost-effective solutions for our member hospitals and long-term care facilities across the healthcare continuum. The business partners selected are expected to meet high-quality standards and offer products or services which are designed to assist healthcare facilities avoid costs, recover revenue, reduce operating and capital expenses, improve management and quality, increase productivity, develop staff resources, and apply new innovative strategies.

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