Abstract
This study examines the impact of COVID-19 on U.S. hospital systems' access to capital through the municipal bond market. Using hospital bond issuance data from the Electronic Municipal Market Access system matched to the American Hospital Association Annual Survey (April 2019 to February 2021), we analyze changes in the volume, cost, and composition of hospital borrowing. The total quantity of hospital bond issuances declined by 34%, with the number of issuances dropping by 13% and individual bond sizes shrinking by 23%. Despite these contractions, borrowing costs remained stable, likely due to Federal Reserve policies and COVID relief funds. The composition of borrowers shifted notably: smaller and rural hospital systems increasingly relied on external capital, while larger systems demonstrated greater financial resilience. State-level COVID-19 incidence was not significantly associated with bond market outcomes, and selection correction models confirmed that findings were not driven by selection bias. Policy interventions helped stabilize hospital capital markets, but concerns persist regarding long-term debt sustainability, particularly for smaller and rural hospital systems that may require continued financial support.